IMF Foresees 0,5% Bulgaria Budget Deficit for 2009

According to Bakker, there is a possibility that in the end of 2009 there is a balanced budget. Photo by BGNES

The International Monetary Fund (IMF) have forecasted a budget deficit of 0,5% in Bulgaria for 2009.

This became clear Monday after a mission of the IMF presented a report on the current economic situation in Bulgaria.

The results of the report have been reported by the head of the IMF mission to Bulgaria, Bas Bakker. The mission has been invited by the new government to help it assess the fiscal situation in 2009 and 2010.

According to Bakker, there is a possibility that in the end of 2009 there is a balanced budget.

"This a difficult, but not impossible task. Depending on the effectiveness of the government's measures for increasing incomes and cutting expenditures, the 2009 budget may end with a 0,5% deficit", Bakker said.

The IMF corrected its forecast for Bulgaria economy shrinking by 7% in 2009. The current assumption is that the economy will go down by 6,5% in 2009, and by 2,5% in 2010. The Bulgarian Finance Ministry foresees a decrease of 6,3% of the gross domestic product (GDP) in 2009, and 2% in 2010.

The International Monetary Fund has welcomed the anti-crisis measures of the GERB government.

"For the first seven months of the year the huge surplus of 6,3% of GDP turned into 0,6% deficit. Inadequate measures of the previous government led to this. There was a 10% decrease in the incomes, and a 24% increase in expenditures. Without the measures of the new government the hole in the budget would have gone over 3,5% of GDP", Bakker explained.

In his words, the new government is trying to deal with the fiscal disbalance and to reach balanced budgets for 2009 and 2010 through measures, that concern incomes and expenditures.

The government must act quickly, he added. The plans for lowering the insurance weight must be enforced only if there is an adequate pension system reform. Keeping the financial system in good health is the key to restoring the economy, Bakker said.

In order for Bulgaria to go out of the financial crisis there should be developed a new growth model, which should be based on the trade sector, he explained. The salaries growth must be controlled. According to the official statistics the salaries growth in the private sector is over 14%.

Bakker also said that there have not been held any negotiations between the Bulgarian Government and the IMF discussing loans from the organization.

 

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