Bulgaria Finance Minister: No IMF Bailout Loans, No Eurobonds

Bulgarian Finance Minister Djankov gave a press briefing on Friday. Photo by BGNES

Bulgaria will not seek bailout from the International Monetary Fund and will not issue eurobonds because it does not need to, Finance Minister Djankov declared Friday.

“There haven’t been talks with the IMF over the budget deficit and we don’t need any. The issuing of eurobonds is financially unjustified, and the government will not go ahead with such a measure in 2010,” said Simeon Djankov at a briefing responding to criticism from the right-wing allies of the Borisov government, the Blue Coalition, whose leaders recently demanded IMF bailout and a bond issue in order to prevent a financial collapse of the Bulgarian state, in their words.

“We expect a zero economic growth in the second quarter of 2010, and a positive growth of 1% by the end of the year. As the export increased in the recent months, the internal consumption is expected to follow suit in the middle of the summer,” said the Finance Minister.

“The EU countries registered the steepest declines of their GDPs in the first and second quarters of 2009. However, in Bulgaria the effect of the economic crisis was felt the strongest at the end of 2009 and the beginning of 2010,” explained Djankov.

He is confident that the government has taken up the right approach in dealing with the economic crisis based on three pillars: first, reducing state spending; second, trying to prevent an extreme rise of unemployment – including by funding infrastructure projects; third, abstaining from tax increases as, according to the Minister, global experience shows that once the taxes go up, governments get used to that, and start spending more.

By the middle of the next week, Djankov promised he would make public the referrence framework of the government about how much money can be spent from the fiscal reserve.

“The absolutely minumum will not be BGN 4.5 B,” he said reacting to media publications that the government planned to spent about BGN 2 B from the BGN 6.6 B fiscal reserve leaving it at a bare minumum of BGN 4.5 B.

“I am not losing the trust of the Prime Minister – to the country, I am enjoying increasing trust,” said Djankov. He explained he was convinced that the wealth redistributed by the state should drop down to 35% instead of its current level of 40% of the GDP.

In his words, reforms are best executed in a time of crisis because that is when there is a pressure on the budget. He pointed out that because of the parliamentary elections in mid 2009, the previous Bulgarian government delayed the anti-crisis measures, which exacerbated the situation – not unlike what happened in Hungary and Romania.

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