Bulgarian Finance Ministry Denies Talks on IMF Loan

IMF denies offering a loan to Bulgaria during a meeting in Washington DC in September, saying an option suitable for it, was simply presented during the talks. File photo

The Bulgarian Finance Ministry confirmed Thursday the country is in no need of assistance and financing from the International Monetary Fund (IMF).

The information was reported by the Bulgarian daily "Dnevnik," citing own sources.

On Wednesday, the private Darik radio informed Bulgarian representatives have declined an IMF loan offer during the annual meeting of IMF and the World Bank at the end of September in Washington DC..

The head of the IMF representation in Bulgaria, Yana Paliova, confirms there are no talks between Bulgaria and the Fund for a loan agreement. IMF also deny reports of such negotiations.

Paliova explains a new opportunity, suitable for Bulgaria, has been presented at the meeting in Washington, but not directly to the Bulgarian representative there – Deputy Finance Minister, Boryana Pencheva.

"Dnevnik" and Darik radio sources are quoted saying a team of IMF experts is expected in Bulgaria in weeks, most likely lead again by Emanuele Baldacci, head of the October 13-25 mission on issues related to the retirement reform in Bulgaria.

Bulgaria's Finance Minister, Simeon Djankov, has reiterated on several occasions the country will have no need to raise taxes or hold talks with the International Monetary Fund over a bailout loan for its ailing economy to bottom out of the crisis.

After the general elections last summer, the winner - the Citizens for European Development of Bulgaria (GERB) party first said they would immediately sign a stand-by agreement with the IMF to serve as a guarantee for the country's financial stability, but then made an u-turn on the issue.

While some of Bulgaria's neighbors, such as Greece, are completely dependent on EU and IMF, the GERB cabinet, after an assessment, decided aid is unnecessary.

At the beginning of October, the International Monetary Fund wrapped up its two-week review and projected Bulgaria's economy to grow from 0% to 0.4% in 2010 and 2% in 2011.

It said this year's inflation will be moderate, while the current account deficit is expected to fall below 3% of gross domestic product.

Bulgaria currently operates in currency board regime and the lev is pegged to the euro.

Bulgaria is among the top ten countries in the world with the lowest effective rates and is preceded only by Hong Kong, tax havens like the Bahamas Islands and petro-states like Saudi Arabia, according to an analysis by KPMG consultancy.

Effective rates are derived by taking total income tax and/or social security over gross income prior to deductions.

As of 1 January 2008, Bulgaria introduced a 10%  flat tax applicable for all income levels.

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