Банкеръ Weekly

Briefs

IMF REMINDS US OF PRIVATISATION AGAIN

The Bulgarian Government received the successive, sixth tranche under its two-year agreement with the International Monetary Fund (IMF). On July 9 the IMF remitted to the Bulgarian National Bank (BNB) 26 million special drawing rights (SDR), or about USD36.5MN. The tranche was released after on July 7 the Execututive Board of the IMF approved the third report on the implementation of the Government's economic programme. IMF's Executive Board has recommended to speed up reforms in the judiciary and simplify business regulations. According to Ann Krueger, IMF Deputy Managing Director and acting Chairperson of the Board, these will be the key factors for the attraction of more foreign investments and reductiion of unemployment. Ms. Krueger underlined that the Government's privatisation programme should be quickly and transparently completed in order to raise foreign investors trust in Bulgaria. She emphasized on the need to sell the Bulgarian Telecommunications Company (BTC) and Bulgartabac Holding. According to Ms. Krueger, the speeding up of the structural reform would enable the Government to achieve sustainable and steady growth and improvement of the living standard. Macroeconomic results in Bulgaria are still strong despite the unfavourable situation on the international markets, Ms. Krueger said after the meeting. She appraised the stable growth of the country's economy, the controlled inflation rate, the strong foreign trade position and the reduction of unemployment. Regarding tax policy, Ms. Krueger points out that in case the situation on foreign markets gets worse, the Government should continue to be prudent and should be ready to show flexibility in order to keep the maximum admissible budget deficit of 0.8% for this year. The expenses for the municipalities and health care exceed projections, but could be compensated by the expected revenue surplus. Yet, more fundamental reforms in these two spheres will be necessary in 2004, Ms. Krueger added. The Government's strategy for balancing the budget till 2005 and reducing the tax burden together with increasing the expenses for social activities and Eurointegration, seems reasonable to IMF's heads. However, they recommended to tighten tax discipline and rationalize subisdies and economically unjustified expenditures. The progress of structural reforms in the sectors of power engineering, railway transport and tax administration, and the sale of the last state-run bank, DSK, was reported as well. However, Ms. Krueger underlines that vigorous efforts are necessary in other key spheres as well in order to ensure sustainable growth above the medium level. The present stand-by agrement for a total of USD337MN was approved by the IMF on February 27, 2002. Bulgaria has received about USD191MN under it so far.

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