The International Monetary Fund (IMF) was concerned about the state of the Bulgarian economy, Deutsche Welle Radio reported.

The increased current account deficit was financed mainly through foreign investment, an IMF report quoted by Novinar newspaper said.

Foreign debt exceeded 69 per cent of the GDP in the end of March. The percentage represented a nine per cent increase since the end of 2003, Novinar reported.

Strict fiscal policies were needed to counter deficit and rising inflation by the end of the year, the IMF report said.

Credit expansion and inflation increase were the other two major problems experienced in Bulgaria. The Bulgarian economy became vulnerable as a result of such negative tendencies. It was dependent on developments on the international markets and other foreign influences, the report said.

Bulgaria’s EU entry could limit the effect foreign influences had on the Bulgarian economy, the report said. The country had to work on the utilisation of EU funds, Novinar reported.