If Bulgaria manages to cut spending, then the question of increasing rates of taxes on certain income groups might become reasonable for discussions, outgoing International Monetary Fund (IMF) regional representative for Bulgaria James Roaf told The Sofia Echo on September 14.

“But this is not an issue today,” Roaf said.

Roaf was asked about a proposal by the Bulgarian Socialist Party, the majority partner in the governing tripartite coalition, that people in the higher income bracket should pay an increased rate of personal tax.

At a news conference at Bulgarian National Bank, Roaf presented his successor, Juan Jose Fernandez-Ansola, who will be the new IMF senior regional president representative in Romania and Bulgaria. Fernandez-Ansola will represent the IMF in Bulgaria in the coming seven months, a period which will see the ending of a series of agreements between the IMF and Bulgaria. The present agreement expires in March 2007 and will not be followed by another one because Bulgaria is scheduled to join the European Union at the beginning of next year, and “Bulgaria no longer needs such an agreement with the IMF,” Roaf told journalists.

The IMF had a positive view of the slowing down of imports and the acceleration of exports reported recently in Bulgaria’s balance of payments.

Listing the IMF’s priorities in the next seven months, Roaf said that there would be at least two IMF missions in the country.

On September 27, Susan Schadler, IMF deputy director of the European department, is to visit Bulgaria in view of the Budget 2007 discussions. An IMF informal staff visit is scheduled to take place in mid-October, again focusing on budget preparations. The fifth and final review of the programme that Bulgaria is following with the IMF is to be done in December, Roaf said.

Roaf said that the fact that Bulgaria had no need for future agreements with IMF was “a positive sign for the country’s development”.

However, the IMF would continue to keep its office in Bulgaria open after March 2007 and would continue to give its view on certain matters.

“We would no longer focus on specific targets in Bulgaria’s financial stability and fiscal policy but we would give our opinion on certain matters,” Roaf said.

Bulgaria had to continue following its current fiscal policy and the IMF would be looking once again for a surplus by the end of 2006, Roaf said.

“We know that there is a lot of pressure on Bulgaria’s budget coming from the EU.” However, the IMF would be looking for the current deficit to end at 12.5 per cent for 2006 even though the current account deficit for the first half is 14 per cent.

The IMF projects that growth would come to six per cent, “although this number is not a certain one and might change in the future”, Roaf said. 

For Fernandez-Ansola, Bulgaria is not the first South East European appointment in his 15-year-long career with the IMF. He has been IMF representative for Bosnia and Herzegovina, Slovenia, Slovakia and Croatia, and said he was looking forward to working with Bulgarian authorities. He said that he would visiting the country at least twice a month since his office would be based in Romania.

Asked by The Sofia Echo whether the fact that his office would be in Romania but not in Bulgaria had some kind of significance for Bulgaria’s performance, Fernandez-Ansola said that by all means “this is a positive sign for Bulgaria showing the country’s maturity”.

Fernandez-Ansola declined to make comparisons between Bulgaria and Romania, which are scheduled to join the EU simultaneously in 2007, but he said that there was “much room for more co-operation between the two countries”. 

As an area that needed more attention, Fernandez-Ansola noted communication between the two neighbouring countries.

“From my own experience I can say that driving from Romania to Bulgaria is not such an easy thing since there is only one bridge over the Danube,” Fernandez-Ansola said.

As one of his priorities in the next seven months, Fernandez-Ansola said that he would focus on the way Bulgaria implements the signed agreements with the EU because  “it is one thing to sign under a document such as the EU chapters, but it is another thing to implement them”.

The last agreement between Bulgaria and IMF was extended this summer by six months, to play the role of a bridge to EU accession. In total there have been eight agreements. The first was signed in 1991 and the last was signed in 2004 for a period of two years. All agreements except for the Extended Fund Facility agreement signed in 1998 were stand-by agreements. The total amount agreed for the whole 15 year-long-period has come to 2 313000 SDRs, while the amount drawn has come to 1 8386760 SDRs and the total amount outstanding to 632 504 SDRs. SDRs (Special Drawing Rights). The SDRs represent a basket of currencies, consisting of the euro, Japanese yen, pound sterling, and US dollar. It is calculated as the sum of specific amounts of the four currencies valued in US dollars, on the basis of exchange rates quoted at noon each day on the London market.