IMF nods at Sofia’s looser fiscal reins

SOFIA (Reuters) – The IMF has agreed to support Bulgaria’s plans for a slight fiscal loosening next year, for which the government would compensate by balancing the 2003 budget, officials said yesterday. Finance Minister Milen Velchev told a news conference the government had been given the International Monetary Fund’s consent to raise next year’s budget deficit to 0.7 percent of annual gross domestic product from an initially targeted 0.5 percent. But to counter risks emerging from a widening current account gap, the government agreed with IMF demands to balance this year’s budget rather than run a deficit of 0.7 percent, as had initially been planned. «We have agreed that a stronger fiscal tightening this year would allow for a more liberal approach in 2004,» Velchev said. The IMF, with which Bulgaria has a two-year $300 million deal, had initially opposed government plans for belt-loosening next year and said it should aim for a lower budget deficit at a time of a sharply rising current account deficit.