Bulgaria: 2010 Article IV Consultation: Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Bulgaria
IMF Staff Country Reports, June 2, 2010
Source details
- Canonical URL
- Bulgaria: 2010 Article IV Consultation: Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Bulgaria
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Bibliographic details
- Published: June 2, 2010
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781455207473.002
Executive summary and macroeconomic context
- Large capital inflows generated a domestic demand boom in Bulgaria and led to strong employment growth.
- A sharp reduction in capital inflows led to a contraction of domestic demand.
- The recession in Bulgaria’s trading partners caused a drop in exports.
- Capital inflows are likely to remain low, and domestic demand is expected to decline further, requiring substantial adjustments by both the private and public sectors.
Key findings
- Domestic demand boom driven by large capital inflows produced strong employment growth.
- Subsequent sharp reduction in capital inflows triggered a contraction of domestic demand.
- Export performance deteriorated because of recession in trading partners.
- Fiscal and public policies need to respond to a domestic demand-driven revenue boom by adjusting spending growth to the new environment.
Policy implications and recommendations
- Public policies should attune to the domestic demand-driven revenue boom.
- Spending growth should be adjusted to reflect the new environment of lower capital inflows and declining domestic demand.
- Both the private sector and the public sector will need to undertake substantial adjustments as capital inflows remain low and domestic demand declines.
Subjects and keywords
- Subject: Capital inflows; Expenditure; External debt; Fiscal policy; Labor; Public debt; Wages
- Keywords: authorities' plan; Bulgarian authorities; CR; currency board arrangement; deficit; Eastern Europe; Europe; GDP; Global; government; ISCR; payment; payment commitment; private sector vulnerability; revenue boom; Southern Europe; Wages
IMF Staff Country Report: Bulgaria: 2010 Article IV Consultation: Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Bulgaria (June 2, 2010).