IMF Board Completes Second Performance Review Of Bulgaria

The IMF executive board completed the second performance review under the pre-cautionary standby arrangement with Bulgaria, according to a press release published on Fund's Web site yesterday. The Board's decision approves a waiver request in three areas of non-observance of end-September structural performance criteria, including selection of winning bids for the sale of three large thermo-power plants; the adoption of the National Revenue Agency procedural code in parliament; and the incorporation of judicial all BGN-denominated judicial accounts into the budgetary payments system.

The Fund also approves a request for merging the third performance review into the fourth one, which is expected to take place before Sept. 5 this year. As recalled, the two-year standby arrangement expires in September this year but the ministry of finance has discussed with the IMF a possible extension until the spring of next year.

IMF First Deputy Managing Director Anne Krueger comments that the local authorities are determined to increase the general government surplus this year, keep expenditures to the agreed limit by cutting discretionary transfers and limiting pressure for social expansion. She adds that the fiscal stance will be further tightened if the CA does not improve as envisaged under the program. The central bank's efforts for curbing the credit growth are positively mentioned by Krueger in view of the newly imposed credit expansion limits until end-2006, such as higher penalties for non-observance of these limits, new prudential measures for household credit, strengthening of banks' balance sheets and the launch of regular reporting on leasing companies.

On the structural side of the standby program, Krueger comments that the set of reform targets incorporates a number of measures including judicial reform in the context of EU accession, new business register, health and education reform, labor market liberalization, privatization and concessioning of state assets.