The International Monetary Fund (IMF) lowered its forecast for Bulgaria's 2012 economic growth to 0.8% from 1.3% projected at the end of last year, mostly reflecting external headwinds.
The fund sees Bulgaria's economic growth speeding to 1.5% next year, the IMF said in a statement issued on Thursday following a visit of its team of experts to the Southeast European country.
These growth rates, however, are contingent on euro area growth recovering and much stronger EU funds absorption by Bulgaria, it added.
The IMF team led by Catriona Purfield visited Sofia between May 1 and 9 to hold discussions with the Bulgarian authorities about recent economic developments and government policies.
"Prudent and decisive policies along with strong buffers ensured Bulgaria's resilience through the global crisis. Complementing the strong policies with higher fiscal buffers will safeguard this resilience going forward. Boosting potential growth by implementing bolder structural reforms is also a priority," Purfield said in a statement.
IMF projects 2.0% inflation in Bulgaria this year. "Risks to the outlook, particularly emanating from an intensification of the euro area crisis, remain to the downside."
The fund also said fiscal buffers need to be raised to safeguard the country's resilience, including increasing Bulgaria's fiscal reserve. "Tapping international markets to secure funds to cover both future rollover needs and bolster the reserve would be a good option."