Банкеръ Weekly

Briefs

BUDGET BARGAINING BETWEEN GOVERNMENT AND IMF HAS STARTED

The one-week visit of the IMF Mission in Bulgaria, ended September 23, left without an answer the problematic issues regarding the amount of budget revenues and expenditures for 2005 and the minimum working wage. The fund's experts and the Government failed to reach an agreement on these issues and postponed the bargaining for October when the annual meeting of the IMF and the World Bank will be held in Washington, and for December when the fund's next visit to Sofia for the decisive negotiations is due. Then it will become clear if the Cabinet will continue the precautionary agreement signed in June, 2004 or will fail shortly before the end of its mandate.At the press conference on September 23 the IMF Mission Leader for Bulgaria Hans Flickenshield made quite a pessimistic macroeconomic forecast. According to him, the deficit in the current account of the country's balance of payments will increase due to the continuous upward movement of oil prices on global markets. For that reason Mr. Flickenshield expects inflation to go up and economic growth to slow down. For the first six months of 2004 the latter was 6% of Bulgaria's GDP, but IMF's Mission Leader pre-estimates it at 5.3% at the year-end. Briefly, the Government faces quite difficult negotiations with the IMF by end-2004, the outcome of which could be hardly predicted.

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