site.bta Bulgaria Has Macroeconomic Stability, But Reforms Are Called for, IMF Recommends

Bulgaria Has Macroeconomic Stability, But Reforms Are Called for, IMF Recommends


Sofia, November 12 (BTA) - Bulgaria ranks among the first
countries in Southeast and Central Europe in terms of
macroeconomic stability, which is very important to achieve
economic growth, but this does not suffice. The country has to
make efforts and undertake important structural reforms to
achieve economic convergence and the standard of living in
Western Europe, Guillermo Tolosa, International Monetary Fund
(IMF) Resident Representative in Bulgaria and Romania, said in
an interview for BTA.

Tolosa and James Roaf (Senior Resident Representative, CEE
Regional Office, Warsaw) presented an IMF special report
entitled "25 Years of Transition - Post-Communist Europe and the
IMF".

There is sufficient proof of a close connection between reforms
and convergence, even if the effect of the reforms made does not
materialize immediately, Tolosa said. Roaf also noted that,
even if they lost some economic sectors and products, the CEE
countries which undertook cardinal structural changes after 1990
won new ones and their economies began to develop faster as a
whole.

The initial transition recessions were accompanied by high or
hyper-inflation in countries like Bulgaria, as prices moved to
market levels and as governments resorted to monetary financing
of gaping fiscal deficits. But through the 1990s countries
successively brought fiscal deficits and inflation under
control, albeit only after false starts in some cases.

In contrast to the turbulence and divergence of the 1990s,
growth patterns in the early and mid-2000s were uniformly
strong. With favorable global conditions and increasing
confidence in rapid convergence with Western Europe, average
growth for the region was 6 percent, with no country growing at
less than 3 percent annually - a faster rate than most countries
have consistently managed before or since. However, while
soundly based at the start, growth in this period became
increasingly imbalanced, driven in many countries by large-scale
borrowing for consumption and construction, the IMF experts
commented.

The process of building market economies has been harder than
many expected 25 years ago. While reforms have proceeded at very
different speeds across the different countries, the sequencing
has tended to follow the same pattern, the IMF analysts say. A
critical element of the reform process has been to build a sound
business environment in which firms can start, invest and
expand, and, where necessary, die. Creating these conditions
requires far-reaching legal, administrative, and institutional
reforms across a broad front. Bulgaria ranks nearly last among
CEE countries as one with a high percentage of corruption,
followed only by Moldova, Albania, Belarus, Russia and Ukraine,
the report shows.