The International Monetary Fund (IMF) and Bulgaria reached an agreement over the budget surplus to be sought in 2007, Business Week reported.

Budget surplus is to be set at two per cent in 2007 and is needed to deal with the expected increase in the current account deficit, the report said.

On December 20, IMF concluded its final mission to the country. An agreement between Bulgaria and the fund is to be valid three more months and will end because of Bulgaria's upcoming EU entry.

Draft budget 2007 initially envisioned a smaller surplus but Finance Minister Plamen Oresharski said that a compromise was made.

Head of IMF mission to Bulgaria Robert Hagemann said that the current account deficit remained the main cause of concern. For 2006 it is expected to go beyond predictions and reach nearly 15 per cent.

"While foreign direct investment will continue to provide large cover ... of the current account deficit, gross private external debt could reach 77 percent of GDP by end-2007," Hagemann said as quoted by Business Week.