IMF Mission Chief Upbeat on Bulgaria's Economy

During its Sofia visit in October the IMF mission was headed for the first time by Ms. Catriona Purfield, who is pictured here together with Bulgaria's Finance Minister Simeon Djankov. Photo by Bulgara's Finance Ministry

The International Monetary Fund expects Bulgaria's economy to grow 0% to 0.4% in 2010, facing a sluggish recovery from last year's crisis, according to IMF's new mission chief for the country.

"Bulgaria is benefiting from stronger exports and the economy is poised to stage a gradual recovery," Catriona Purfield said Wednesday in an interview for Deutsche Welle.

She pointed out that another reason for the improving economy is the due to the so-called "big fixing", in which the current account deficit is constantly shrinking and may even go down to 2-3% at the end of the year.

"Despite the good news, growth remains weak and vulnerable, while exports are the only driver of the economy. That's why we see many risks as well," Catriona Purfield warned, adding among them high jobless rate and fiscal deficit.

Bulgaria, the European Union's poorest country went through its first recession in 12 years in 2010 after a three-year lending boom stalled and foreign investments dried up.

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

'Recouping the shortfall in tax collection seen through August by the year end will be challenging and shortfalls may occur. Safeguarding the 2010 deficit target will therefore require strong spending control,' the Fund said.

Earlier this year, the government adopted a package of austerity measures, freezing public pays and pensions in a bid to reduce the bloating deficit.

It revised up to 1% its economic growth forecast for this year, pinning its hopes on increasing exports.

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