This arrangement will succeed a three-year, SDR 627.6 million (about US$781 million) credit under the Extended Fund Facility (see Press Release No. ), which expired in .
“The Fund supports the Bulgarian authorities’ economic program centered on the currency board arrangement, prudent and flexible fiscal policy, a strict incomes policy, and privatization and other structural reforms. This program offers good prospects for rapid sustained growth, sound external balances, and lower unemployment and poverty.
“Prospects for 2002 are generally favorable, with output growth expected to reach 4 percent. The external current account deficit is projected to remain at around 6 percent of GDP, mostly financed by foreign direct investment. Nevertheless, it should be monitored closely, in light of the uncertainty surrounding the recovery in Western Europe. Inflation increased in January owing to administrative price hikes and other one-time effects, but should remain subdued in the remainder of the year. The banking sector is well supervised, highly capitalized, profitable, and resilient to foreign exchange and interest rate risks.
“The fiscal deficit target of below 1 percent of GDP in 2002 is appropriate, and the authorities’ intent to reduce the fiscal deficit further over the medium term is welcome. To this end, expenditure pressures should be curbed through a continuation of fiscal and structural reforms, and revenue collection should be enhanced by improvements in tax and customs administration. These measures would create room to strengthen further the social safety net, and gradually lower direct tax rates.
“The incomes policy should be implemented strictly, and labor market flexibility should be improved to maintain competitiveness and enhance growth. Other priorities are to continue with the reforms in health care and education, restructure the transportation and energy sectors with a view to improving efficiency and reducing risks to the budget, liberalize trade further, and develop a public debt management strategy aimed at lowering the debt-to-GDP ratio and reducing portfolio and roll-over risk,” Mr. Sugisaki stated. LINK
The attached Supplementary Memorandum of Economic Policies (SMEP) describes our performance under the program supported by the stand-by arrangement (SBA) with the Fund and discusses the policies that the Government and the Bulgarian National Bank plan to implement in 2003. The core of our policy objectives remains as described in the Memorandum of Economic Policies (MEP) dated . We will continue to strengthen macroeconomic stability in support of the currency board arrangement and promote sustainable economic growth.
Performance under our economic program has been strong. The macroeconomic situation has improved considerably in recent months, and we expect growth to remain robust and inflation subdued in 2003. All quantitative performance criteria through end-September were observed, as were most structural benchmarks through end-December. Given the delay in completing the second review, end-December performance criteria are legally controlling for the purchase associated with this review. In this context, we request a waiver of applicability for the end-December performance criteria on the general government fiscal deficit and on the wage bill of the 60 closely-monitored state-owned enterprises, both of which we fully expect to be met.
In addition, the last two large public banks should be sold to well-qualified strategic investors, structural impediments to private sector credit growth eliminated, and the privatization of non-infrastructure enterprises finalized
In support of this program, we request that the second review under the SBA be completed. In addition to analyzing economic policies and conditions in general, the third review will focus on measures to strengthen tax administration and on reforms in the financial sector, while the fourth review will focus on the 2004 budget and related reforms. We will continue to consult with the Fund on a regular basis regarding any additional measures that implementation remains on track. We agree to publish the SMEP after the IMF Board has approved the second review.
It takes time for society to change its habits from top to bottom – a point noted by my young city tour guide. “The old communists still have a lot of power, ” he claims. Other civil servants also admit that the apparatchik is still in place making it hard for young change-minded Bulgarians to really get a foothold. It is this difficulty to confront change or make change happen that is one of the of biggest challenges facing the spirited women who run Animus – the first NGO dealing with trafficking in women, domestic violence and child protection to be set up in Bulgaria. They are having to force a huge attitude change in the country. Until December last year there was no legal definition of trafficking of women. “Our society has a rigid attitude towards violence” says psychotherapist Maria Tchomarova, Arizona car title and payday loans “it victimises the victim”. The women say they run into “active opposition” from some parliamentarians. “They are postponing, postponing, postponing [new legislation]” continues Tchomarova. Bulgaria is a good destination for trafficked girls “to be broken” says Animus because police and society “are not organised”.
The Executive Board of the International Monetary Fund (IMF) today approved a two-year stand-by credit for SDR 240 million (about US$299 million) in support of Bulgaria’s comprehensive economic program
I did not know that the leva/euro peg was an IMF requirement; that certainly explains some things. Bulgaria itself seems to be improving marginally, but the whole place smells, as before, of corruption.
This one goes back to . You know I try to defend the IMF, I don’t respect Stiglitz at all, Rogoff seems to be doing his best, but this beats me. I mean, where the hell do they drag this one up from: “this program offers good prospects for rapid sustained growth, sound external balances, and lower unemployment and poverty”. Where the inspectors too busy out clubbing it to think? When will they ever learn.