ECONOMY

Bulgaria’s Velchev says he is serious candidate for IMF post

LONDON (Reuters) – Bulgarian Finance Minister Milen Velchev, who has been nominated by his government to become the managing director of the International Monetary Fund, said on Sunday he was a serious candidate for the job. «Bulgaria is increasingly going to be a country that will provide candidates for important international posts,» Velchev told Reuters in an interview at the European Bank for Reconstruction and Development (EBRD) annual meeting in London. Bulgaria is expected to join the European Union in 2007 and traditionally Europe picks the head of the IMF. The front runner at the moment is ex-Spanish finance minister Rodrigo Rato, who is supported by the United States and Britain, as well as by a host of smaller EU states. France and Germany want EBRD President Jean Lemierre. Velchev, a 38-year-old former banker who is widely respected for reforming Bulgaria’s economy, said his candidacy had received support from some countries, but he declined to say which. He stressed that his candidacy had a broader appeal outside Europe and said that he wanted a transparent process. «I would not want to rely on my qualification of being European,» he said. Earlier at the EBRD meeting, billionaire financier George Soros said the current IMF selection process was «atrocious.» «The IMF is supposed to promote good governance. To select a candidate in backroom dealing is not the way,» Soros said. Moving to domestic issues, Velchev said that Bulgaria, whose economy is growing strongly, may look to impose further budget cuts and aim for a balanced budget this year. The fiscal gap for this year is forecast at 0.4 percent. Bulgaria already meets many of the inflation and budget targets for joining the eurozone, but is in the second wave of accession, hoping to join the EU in 2007. However, Velchev said it may end up in the eurozone at the same time as countries which join the EU in just 12 days. «We may well be entering (the eurozone) with the current round of acceding countries,» he said. Countries joining the eurozone normally have to hold their currencies within fixed bands for two years within the so-called Exchange Rate Mechanism (ERM-2). However, Velchev said that Bulgaria should be able to count its time using its existing currency peg. Bulgaria is seeking a legal opinion on whether it will be liable for extra payments on its discount bonds due to a rise in gross domestic product, Velchev told Reuters. Analysts say Bulgaria could be liable for up to $228 million in additional payments, depending on the terms used to define GDP and language of the bond contract. Under the terms of the bonds, Bulgaria must make additional payments if its gross domestic product exceeds 125 percent of its 1993 level. Speaking at the annual meeting of the EBRD, he noted that in any case the bonds were trading at par and said that if legal indications were that there would be a liability, the Bulgarians would call the bonds at par.