ECONOMY

Bulgaria offers a balanced budget, IMF demands surplus

SOFIA (AFP) – The Bulgarian government presented a balanced draft budget for 2006 yesterday, despite calls from the International Monetary Fund (IMF) for a target surplus of as much as 3 percent of gross domestic product (GDP). The draft proposed to Parliament envisages a zero deficit, with both government revenues and expenditures projected at 18.258 billion leva (9.3 billion euros), or 40 percent of GDP. But «if we end up with more money than projected, we will save a large part of it in order to compensate for the negative tendency of an increasing current account deficit,» Finance Minister Plamen Oresharski told a press conference. Bulgaria’s external current account deficit has widened dramatically in 2005 and is projected to reach 13.3 percent of GDP by the end of the year and 12 percent for the whole of 2006. An IMF mission to Bulgaria last week called the negative tendency «a substantial deterioration within the span of half a year» after it agreed with the Bulgarian government in May on a 7.6 percent deficit. IMF’s head of mission, Hans Flickenschild, also said he was «concerned about an inadequately tight fiscal policy in 2006» as his mission failed to reach agreement with the government for a 3 percent target budget surplus to be set for 2006. The 2006 proposed budget is based on targets of 5.5 percent growth or 45.615 billion leva (23.3 billion euros) and 5.8 percent annual inflation next year, Oresharski said. Sofia hopes to review the surplus issue with the next IMF mission in December or January.