Банкеръ Weekly



In September 2001 will expire the current three-year extended fund facility with IMF. No discussion of the upcoming arrangement is to be held before the parliamentary elections, expected to take place in mid June next year. IMF experts will wait for the appointment of the new government and will start the discussions on the country's need for external financing with its economic team. Currently Bulgaria has signed a three-year extended fund facility (EFF) For the moment experts are at the opinion that the new Bulgarian government will not be offered a second EFF. It will rather be able to choose between two other options - a Stand-by Arrangement or Precautionary Arrangement.

In the first case it is usually signed for a period of 12 - 18 months and credits are to be repaid within 3 to 5 years.

The second option which might be chosen by the Bulgarian government is the Precautionary Arrangement. This type of arrangemet is usually extended to countries who wish IMF to guarantee in front of foreign investors the state's good control over its finance. The term could be from one to three years. In this case, however, the country is expected to request funding by IMF only after having exhausted all other possibilities for financing.

The purpose of the other type of arrangements, offered by IMF is to provide funds for overcoming temporary problems, arising out of crises at the international capital or stock markets or realted to natural calamities. Offered interest rate for the latter are higher and the term of repayment is no longer than 30 months. New Bulgarian government might put an effort in arranging a second 3-year EFF, since upto 2004 repyment of foreign debt is considerable and in the last year of the mentioned period it will amount to USD1.4BN

Currently representatives of the ruling majority have hinted that they would prefer the signing of Precautionary Arrangement. That will mean high ranking for the government, but it is not yet clear whether they deserve it.

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