Bulgaria could do well without the direct help of the International Monetary Fund (IMF), Bulgarian National Bank (BNB) governor Ivan Iskrov said on May 2.

Iskrov was speaking in Sofia at a joint BNB – IMF seminar, entitled Bulgaria – from Transition to Convergence: The Challenges Ahead.

“Bulgaria could succeed in carrying out its economic policy without the direct involvement of the IMF and without its regular revision missions provided that it learns from its experience and clearly formulates its priorities,” Iskrov said.

The overall framework of European Union economic policy and Bulgaria’s commitment to become a member of the eurozone represent the external anchors of Bulgaria’s economy policy, which would perform the role IMF played in the past 15 years, he said.

He was speaking in the presence of Robert Hageman, head of the IMF Mission to Bulgaria, who, together with other IMF officials, began an eight-day visit to Bulgaria on May 1.

Hageman said that the challenges facing Bulgaria included the ageing of population, which would threaten the public sector and public finances.

“Bulgaria is in good economic shape, however, inflation is still a reason of concern,” Hageman said.

State spending plans had to be programmed very carefully to reduce inflation to minimum, he said. Another cause for concern, Hageman said, was the current account deficit, which was 16 per cent of GDP. The deficit also showed a loss of competitiveness in the environment of a fixed currency rate in particular.

As for the continuing subject of reform in Bulgaria, Hageman said that a certain fatigue could be felt in Bulgarian society, but Bulgaria had no other choice but to press on with reforms, both in the real economy sector and in the labour market.

On April 24, Bulgaria paid back its remaining debt to the IMF, borrowed under the terms of its three-year agreement signed in 1998.
The final payment of 204.8 million special drawing rights, the artificial currency used by the IMF, was made long before the loan’s maturity expired.

Over the past 18 months, Bulgaria paid back the rest of its debt to the IMF, a total of 584.5 million leva. After paying back its debt to the IMF, Bulgaria had a public debt worth of 8.5 billion leva, about equal to 16.6 per cent of the country’s GDP. The fiscal reserve is 5.6 billion leva.