Банкеръ Weekly



ONLY ONE REQUIREMENT HAS NOT BEEN ENTIRELY FULFILLEDThe Executive Board of the International Monetary Fund (IMF) approved on July 22 the report on the first review of the implementation of its two-year agreement with Bulgaria. IMF's executive directors approved the disbursement of the second tranche, worth SDR26MN (or almost USD35MN), under the loan from the fund. The IMF Board made a positive assessment of Bulgaria' macroeconomic stabilization. At the same time, the fund's executives emphasized the importance of further speeding up the implementation of structural reforms and improving the business climate in this country. According to the IMF, doing this was imperative to cope with the problems of unemployment and poverty.The supplementary agreement to the memorandum for economic policy, which has now successfully past the test in front of the financiaers from Washington, was signed two months ago, on May 23, when IMF's mission in Bulgaria concluded the review of the implementation of the stand-by agreement with the fund, signed late last year. The agreement itself was approved by the IMF Executive Board on February 27, 2002. One of Bulgaria's commitments under the approved programme - the passing of the law on bank insolvency - has not been fulfilled yet and was postponed for end-July. The new IMF mission will arrive in Bulgaria in November when the next test on the fulfillment of undertaken commitments and maintenance of the economic stability will be held. According to the fund's experts, the international economic situation and the implementation of structural reforms may pose risks for Bulgaria. If the recovery of Bulgaria's main trade partners is delayed, there is risk of slackening the country's growth and increasing the current account deficit. On the other part, the slow pace of reforms in the energy sector, railways, healthcare and education, could increase the necessity of allocating finances by the Government to these spheres, which would decrease the flexibility of the fiscal policy and economic stability.

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