IMF Keeps Bulgaria's 2014 GDP Growth Forecast at 1.6%
Friday, 31 January 2014
The International Monetary Fund (IMF) said it expects that Bulgaria's economic growth will accelerate to 1.6% in 2014 from 0.5% in 2013 as domestic demand recovers gradually.
Gross domestic product (GDP) growth will be backed by an expected rise in exports and in foreign direct investment, which will benefit from recovery in Europe, the IMF said in a statement issued upon the completion of an Article IV consultation with the country. The fund's projection for Bulgaria's economic growth this year is identical to the one it made in November.
Inflation is projected to be subdued in the short term, rising to 0.8% in 2014 from 0.4% in 2013, it added.
“Directors generally agreed that the structural fiscal stance under the 2014 budget, which sets the deficit close to national limits under the fiscal rule, strikes an appropriate balance,” IMF said in the statement. "While the strong fiscal position provides some room to support growth, they underscored the importance of maintaining credibility in the context of the currency board by observing national and EU deficit rules."
Fiscal buffers should be rebuilt over time by targeting a balanced structural budget, the IMF also said. In the event revenues fall short in the coming year, the authorities should be prepared to adjust spending to achieve the deficit target.
"Bulgaria ranks much lower on measures such as enforcing contracts, resolving insolvencies, and some areas of red tape. More generally, the judicial system is viewed as problematic, and corruption and cronyism as widespread," the IMF noted. "These shortcomings will need to be addressed for Bulgaria to unlock its growth potential."