IMF Rebuts Reports of Criticism against Bulgaria Govt

Bas Bakker (R), the IMF’s mission chief, held a meeting with the leader of the small opposition conservative party „Order, Law and Justice“ Yane Yanev (L) in Washington. Photo by BGNES

The IMF has vehemently denied reports about the meeting of the Mission Chief for Bulgaria with the leader of the opposition conservative party "Order, Law and Justice".

“We did not say that the 2010 deficit would be almost 4% of GDP. The almost 4% figure refers to the 2009 deficit on an accrual basis. Last week the government announced that the 2009 deficit had been revised up to 3.7% of GDP, and this is what the discussion referred to,” a statement from the office of Bas Bakker said a day after the meeting with Yane Yanev.

The Mission Chief for Bulgaria denied to have said that “the fiscal strategy (of the government) is risky“.

"The concluding statement noted that there were risks to the government’s cash deficit target of 0.7% of GDP in 2010—in particular revenue shortfalls and settlement of arrears,“ the statement says.

It points out that at the time of the mission, in early March, IMF has projected a deficit of 1.8% of GDP.

"Since then, arrears have turned out higher and revenues have disappointed, but this will be in part offset by the new fiscal measures.”

The statement denies to have criticized the government or endorsing or criticizing Mr.Yanev’s strategy. It points out that the Staff Report will be discussed by the Executive Board of the IMF on May 5.

According to a press release, issued by the press office of Yane Yanev's party on Wednesday, the International Monetary Fund has harshly criticized the Bulgarian center-right government for lack of decisive structural reforms, saying it talks too much, but acts too slow.

According to Yanev's statement IMF mission chief said the country is facing more serious fiscal problems than expected, while its present finance policy is too risky and can trigger a deepening economic crisis in Bulgaria.

During its visit to Bulgaria at the end of February, IMF projected Bulgaria’s budget deficit to stand at 1,8% of gross domestic product this year, which totals nearly BGN 1,2 B.

The Washington-based global lender forecast this year’s inflation at 2,2%, economic growth at 0,2%, and the current-account gap at 5,5%.

The mission warned that meeting the 0,7% deficit target this year will be “challenging” and was cautious in his comments on plans to reduce the valued-added tax rate from 20% to 18%.

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