IMF tells Sofia budget surplus target still stands

SOFIA (Reuters) – The IMF said yesterday that Bulgaria’s new way of calculating its current account gap would not affect the Fund’s demand that the Balkan state shoot for a sizeable budget surplus this year. The central bank introduced new methodology, slashing levels of the external deficits from the last two years, to 11.9 percent from 14.9 percent in 2005 and 5.8 percent from 8.5 a year earlier. But International Monetary Fund Representative to Sofia James Roaf said the Fund was still looking at the underlying trend rather than changes in methodology. «It doesn’t change the fact that the current account deficit is very large and it grew a lot in 2005,» Roaf told Reuters. Bulgaria has agreed with the Fund to aim for a surplus of three percent of gross domestic product – one of the tightest fiscal policies in Europe – if its 2006 current account shortfall stays above 12 percent of GDP. The central bank has not recalculated this year’s 12.7 percent of GDP estimate but said the new system will likely result in it being lower to a similar degree. Roaf, however, said the IMF would use the old methodology when discussing the need for a surplus, because the two sides had agreed under that system for the current fiscal target.