Bulgaria to wean itself from IMF

SOFIA (Reuters) – European Union aspirant Bulgaria said yesterday it could do without a loan deal with the IMF, its main economic mentor, next year provided its economy continued its strong performance. Breaking ties with the International Monetary Fund would give Sofia more economic freedom, because so far the IMF has had a huge say in Bulgaria’s economic decision-making since communism collapsed in 1989, analysts have said. Sofia’s current $300 million two-year deal with the International Monetary Fund expires next year. «The government does not intend to sign a new agreement with the IMF if the economy maintains its current pace of development,» Finance Minister Milen Velchev said during an online chat on the ministry’s Internet site. Velchev has previously said Sofia’s independence from IMF funding would be a strong signal to investors that Bulgaria has begun to catch up with better performing EU candidates. The government led by the ex-king Simeon Saxe-Coburg, which took over in July 2001, has won respect abroad for accelerating painful economic reforms at the expense of public discontent. Its efforts yielded robust macroeconomic results, a series of credit rating upgrades, a lower debt burden and prompted the EU to set 2007 as an entry target date. The Bulgarian economy grew by 4.8 percent last year. The IMF has said growth might reach 5 percent this year. The government outperformed most of the IMF-prescribed economic targets last year, including lower-than-expected budget and current account deficits. It posted a budget surplus of 110 million levs ($67 million) in January-March this year instead of initially forecast deficit of 304 million levs. The country’s level of fiscal reserves (higher than the IMF-prescribed) of at least $2 billion, meant Sofia could easily cover its annual foreign debt payments of around $1 billion without help, the Finance Ministry has said.