Банкеръ Weekly



The fifth mission leader of the International Monetary Fund (IMF) for Bulgaria will be confronted with the outlook of the tenth Government in this country's modern history (after November 10, 1989) on the development of domestic economy. In end-July 2001 the IMF new mission leader Jerald Shiff toured around Bulgarian institutions to get acquainted with them. He talked with Premier Simeon Saxe-Coburg-Gotha, with the Management Board of the Bulgarian National Bank, and with the newly appointed heads of all economic ministries. However, the real work of Mr. Shiff will begin in September when he will arrive in Bulgaria to discuss the terms at which the Government could close a new stand-by agreement with the IMF.
Bulgarian financiers who know Jerald Shiff claim that he is a typical representative of the school of Michael Deppler, IMF European First Department Director, who was also the patron of former IMF mission leader Anne McGuirk, and had almost forcefully imposed the strict requirements of the currency board arrangement in this country. So, the ministers of Simeon's Cabinet will undergo hard times if they are resolved to advance extravagant economic ideas in front of the new IMF mission leader for Bulgaria. Mr. Shiff is 43, married, and has a son. Jerald Shiff cast in his lot with the IMF in 1989. From January to March 2001 he had the opportunity to work with representatievs of the already stabilized economies of the Baltic countries Lithuania, Latvia, and Estonia, which are also operating under a currency board arrangement. Mr. Shiff is well-acquainted with Russian fianances, which he has been watching directly since 1998. Therefore, Bulgaria's recent financial past and present are not likely to surprise him anyhow.
Jerald Shiff replaced Juha Kahkonen, who headed the IMF mission to Bulgaria in September 1998 when financial stabilization was already a fact in this country. Quite logically, the presence of the Finn Juha Kahkonen marked one of the most successful periods in the relations between Bulgaria and the IMF. Mr. Kahkonen has already been sent to another, partly Balkan region - Turkey.
I can smell success in Bulgaria, the Finn said during his first working visit to this country in the beginning of 1999. Although he was firmly vindicating the principles of the 3-year agreement between Bulgaria and the IMF, Mr. Kahkonen was inclined to make concessions on some issues which the government failed to solve in time. Unlike his predecessors he was extremely cordial and did not have problems in his contacts both with the government and the mass media. After busy workdays of negotiations and meetings he did not mind to have a holiday at the Borovets mountain resort or in the town of Sandanski. His informal meetings were usually accompanied by a lunch in the Sofia posh restaurants Krim or Talisman. His almost constant companion was the then deputy premier Alexander Bozhkov, who had attained perfection in creating a cordial atmosphere around IMF missionaries.
Of course, there were many problems in the negotiations between the Bulgarian government and the IMF, which inevitably caused tensions. The energy sector was the most controversial point on which even the patient Finn frequently showed signs of nervousness. Albeit difficult, he succeded to force in 1998 and 1999 a hike of electricity and heating energy prices. As of mid-2000, however, Mr. Kahkonen seemed to relent in vindicating his stance. The reason was hardly his pending departure from Bulgaria. Moreover, in the beginning of 2001 Mr. Kahkonen connived at the half-and-half energy bill, although he was aware of its inadequacy and of the impossibility for its redrafting and passing by parliament prior the elections. He also softend down to former finance minister Mouravey Radev's demand for postponing the introduction of VAT on tour operators' services.
Mr. Kahkonen's compliance to the never-ending Bulgarian problems was appraised by the media as well. Despite all the compromise, however, the 3-year agreement with Bulgaria was successfully finalized, and for the first time the IMF was not like a hundred-headed dragon, trying to kill the hero. On leaving Bulgaria Juha Kahkonen recommended the government to avoid increasing budget expenditures prior the elections. However, the cabinet of former PM Ivan Kostov was accused of exactly that sin by the economists of the National Movement Simeon II after the parliamentary elections.
Mr. Kahkonen, himself, was not appointed to a more quiet position after the end of his successful mission to Bulgaria. His IMF superiors have obviously decided to get him specialized in extinguishing financial fires. Before coming to Bulgaria he was a mission leader of the IMF for Albania. After leaving Bulgaria, his IMF superiors flung him to Turkey, which is being shaken up by an economic crisis. Mr. Kahkonen assumed his duties and on April 8 began his first negotiations with the Government of Bulgaria's southern neighbour country.

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