Ex Cabinet Advisor Predicts IMF Bailout for Bulgaria

Finance | March 23, 2010, Tuesday // 11:03|  views

Financier Kolio Paramov believes Bulgaria is in need of an IMF bailout. Photo by BGNES

Bulgaria will not be able to make it in the current financial crisis without bailout aid from the IMF, according to financier Kolio Paramov.

Paramov’s name spurred a scandal in the ruling rightist majority as PM Borisov appointed him for his advisor but Paramov had to resign within a week over violent protests on part of Borisov’s rightist partners from the Blue Coalition claiming that he is partly to blame for the collapse of Bulgaria’s financial system in the mid 1990s, and that the policies he favored would endanger the stability of the currency peg.

“Bulgaria will not be able to make it without raising state revenue. The proposed increase of the VAT will lead to slight inflation – if the VAT is raised, the inflation is going to grow. But this is one of the secure ways to raise money that is currently lacking in the state budget. We will not be able to make it without a bailout agreement with the International Monetary Fund as well,” Paramov stated on bTV Tuesday commenting on the idea of the government to increase the value-added tax from 20% to 22%.

In his words, the VAT increase is an inevitable measure; otherwise, Bulgaria will end up in a situation in which the state cannot operate properly.

Paramov expects that the heated discussions of more and more anti-crisis measures are just starting as, in his view, the state needs further reforms including in the healthcare system.

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Tags: Kolio Paramov, IMF, anti-crisis measure, VAT, anti-crisis program

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