Dimitar Glavchev, Deputy Chairman of the parliamentary Budget and Finance Committee: Only countries with currency board arrangements have fiscal reserves

- Mr. Glavchev, after its last mission to Bulgaria, the International Monetary Fund (IMF) made a number of recommendations to the Government. Which of them is the most important one in your opinion?
- One of the most important recommendations made after the recent visit of IMF experts to Bulgaria was to recover the money from the fiscal reserve spent during the crisis. Among the important things in IMF’s evaluation of Bulgaria’s economy is the expectation of a 3% actual GDP growth in 2011 and a 4% increase in the medium term. In the first place, I would like to note that the accumulation of funds in the fiscal reserve is directly dependent on the implementation of the consolidated budget and the latter is in turn connected with the economic environment. The governments before that of GERB (Citizens for European Development of Bulgaria) worked for a long time amid international economic comfort resulting in budget surpluses. These were used for various purposes, including the increase of the fiscal reserve. The latter comprises of the money in all accounts and deposits of the Government. The fact is that the fiscal reserve has been decreasing in recent years because of the global economic crisis which, I would say, was transmitted to our country due to the open type of Bulgaria’s economy.

- The opposition has repeatedly criticised GERB for having reduced the fiscal reserve. The same can be heard from the IMF now...
- Given the conservatism of the IMF, I think it is quite normal for it to be concerned about the amount of the fiscal reserve because, at present, there are risks for the development of the European economies as a whole. For this reason, I guess, the fund’s experts have recommended to us to have more money set aside for improving safety in the field of finance. It is worth noting that only countries with currency board arrangements have fiscal reserves and that the Government complies with the requirements in the State Budget Act stipulating that the fiscal reserve should not fall below BGN 4.5 bn.

- Bulgaria has been advised to collect proceeds from privatisation.
- The State Budget Act includes parameters for privatisation proceeds of BGN 450 mln. This is a measure aimed at improving the budgetary balance because these are budget revenues, despite the fact that 100% of them will go to the Silver Fund and cannot be spent on anything else.

- What was IMF’s assessment of the Finance Minister Simeon Djankov’s Financial Stability Pact?
- The other important thing worth noting is IMF’s evaluation of the Financial Stability Pact. According to the fund’s experts, GERB’s Government gives a signal that Bulgaria has committed itself to pursuing a prudent fiscal policy. The fund has also registered once again the stable banking system in our country.

- Nevertheless, the IMF has recommended an optimisation of public spending.
- Yes, the fund recommends to us to optimise public spending in order to improve its efficiency and free resources for the spheres of education, healthcare and infrastructure. This fully coincides with GERB’s priorities. Our efforts as a ruling party have been directed mainly at these sectors.

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