## Press Release: IMF Executive Board Completes Fourth Review Under Stand-By Arrangement for Bulgaria

_IMF News, March 16, 2007_

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## Bibliographic details
- Published: March 16, 2007

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### Review completion and waivers
- The Executive Board completed the fourth and final review of Bulgaria's economic performance under the Stand-By Arrangement for Bulgaria for the period from August 6, 2004 to March 31, 2007.
- The authorities continue to treat the arrangement as precautionary.
- The Board approved waivers for non-observance of:
  - the October 1, 2006 structural performance criterion on the acceptance of new company registrations by the new business register; and
  - the October 31, 2006 structural performance criterion on the selection of winning bids for the western and eastern plants of Ruse district heating company.
- The Stand-By Arrangement was approved on August 6, 2004 for an amount equivalent to SDR 100 million (about US$148.4 million). (See Press Release No. 04/175.)

### Macroeconomic assessment and vulnerabilities
- Findings:
  - Bulgaria is experiencing solid real per capita income growth, falling unemployment, and broadly moderate inflation.
  - Mounting underlying vulnerabilities exist, in particular a high current account deficit and external debt.
- Policy implication:
  - Prudent fiscal and financial policies and continued structural reform are necessary to maintain competitiveness and guard against risks.

### Fiscal stance and public spending
- Findings:
  - The authorities have maintained a firm fiscal stance that supports the currency board arrangement.
  - There was a record budget surplus in 2006, attributed to strong spending restraint and dedicated revenue collection efforts.
- Projections and guidance:
  - With the current account deficit projected to remain broadly unchanged, prudence should guide economic policies going forward.
  - Despite a planned sizeable increase in real public spending in 2007 in the context of buoyant private demand, the authorities remain firmly committed to tightening the fiscal stance should external risks warrant.

### Financial sector soundness
- Findings:
  - Maintaining the soundness of the financial sector has been a key preoccupation of supervisory authorities.
- Recommendations:
  - Continued prudential vigilance and close cooperation with foreign bank supervisory agencies are needed to ensure a strong financial sector resistant to adverse shocks.

### Structural reform challenges and priorities
- Observations:
  - Furthering structural reform has been challenging, with delays in the implementation of some measures.
  - The government's commitment to continued structural reform should become evident with the start-up of operations of the electronic business registry.
- Priority reform areas:
  - Improve the business climate.
  - Further rationalize the education and health care sectors.
  - Lower disincentives to the demand for, and supply of, labor.

### European Union integration and euro adoption aspirations
- Guidance:
  - Succeeding in the European Union will require strong policies.
  - Given Bulgaria's aspirations for euro adoption and the country's commitment to the currency board arrangement, a high premium must be placed on sustained fiscal prudence, vigilant financial sector oversight, and sustained structural reform.

*Press Release No. 07/54 — March 16, 2007 — International Monetary Fund*

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## References

- [Bulgaria and the IMF](http://www.imf.org/external/country/BGR/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Press Release No. 04/175](https://www.imf.org/external/np/sec/pr/2004/pr04175.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0754_