SOFIA (Bulgaria), December 11 (SeeNews) – Bulgaria expects to have robust economic growth to 2010 and will run high budget surpluses in that period to counter external imbalances, the country said in a three-year programme for convergence with other European Union countries.
“A main priority of the government is retaining macroeconomic stability and a high rate of economic growth in the medium term,” Bulgaria's Convergence Programme for 2007 – 2010, posted on the Finance Ministry's website, said.
The country expects 6.4% real growth in gross domestic product in both 2007 and 2008, according to the programme. Growth is seen accelerating to 6.8% in 2009 and 6.9% in 2010.
Generating substantial positive budget balances in the programme period are aimed at lessening inflationary pressure on the economy and countering rising external imbalances, the programme said.
It said the main factors for speeding up economic growth will be structural reforms, improving the business climate and raising institutions’ efficiency.
The country’s current account deficit, which rose to 13.8% of projected gross domestic product through September from 8.4% a year earlier, is among the main concerns of the Socialist-led government coalition in the country, which joined the EU in January.
The main instrument for maintaining macroeconomic stability of the country, which operates a restrictive monetary mechanism called a currency board system, is the surplus in the government budget.
Food prices have recently been on the rise as a snowless winter followed by unusually dry spring weather damaged crops in Bulgaria and throughout most most of southeastern Europe this year. Bulgaria hopes to adopt the euro early in the next decade but high inflation is seen as a major obstacle to its entry into the eurozone.
Bulgaria will keep the currency board at the present peg of 1.95583 levs against the euro, the programme said. The government and the central bank have already formulated the countries’ commitments as needed for entering the ERM-2, the euro's two-year waiting room, it added.
BULGARIA MACROECONOMIC FORECAST:
|
|
2007 |
2008 |
2009 |
2010 |
| Real GDP growth (pct) |
6.4 |
6.4 |
6.8 |
6.9 |
| EU Harmonised Inflation (pct end-year) |
9.3 |
4.5 |
4.7 |
3.6 |
| EU Harmonised Inflation (average) |
7.2 |
6.9 |
4.4 |
3.7 |
| C/A balance (pct of GDP) |
-21.0 |
-21.9 |
-21.2 |
-21.1 |
| Trade Balance (pct of GDP) |
-27.5 |
-29.1 |
-29.0 |
-29.3 |
| Budget Balance (pct of GDP) |
3.0 |
3.0 |
3.0 |
3.0 |
| Unemployment (change, pct points) |
-1.8 |
-0.4 |
-0.3 |
-0.1 |