Reducing bureaucracy will boost competitiveness, says the IMF
Bulgaria's economic future is bright, but it must be prepared to handle the pressures of globalisation, says Michael Deppler, director of the International Monetary Fund's (IMF) European Department. His comments came in the authoritative The Report: Emerging Bulgaria 2007, produced by Oxford Business Group (OBG), the UK-based publishing research and consultancy service.
Mr Deppler pointed out that economic growth remains steady, inflation is moderate, and employment and incomes are rising. But he included an important caution: "Bulgarian authorities need to remain mindful of pressures stemming from globalisation. They need to continue to pursue and strengthen policies that enhance competitiveness. These include macroeconomic stability, a healthy financial system, a welcoming business climate, good infrastructure, an education system that delivers the required skills, and a flexible and adaptable economy."
He added: "Bulgaria has made significant progress in a number of areas over the past 10 years, such as privatisation, streamlining public administration, abolition of the portability of seniority bonuses, and improvements in the education and health system. Yet Bulgaria still ranks too low among emerging European nations in terms of various indicators of structural reform. Given the vital importance of the flexibility of product and labour markets to sustaining competitiveness, regulatory reforms must be pursued vigorously."
Mr Deppler's message also contained an important warning about pay and bureaucracy. "Wages are still set by inflexible collective agreements. Completing the long overdue electronic business registry will reduce corruption and stimulate business formation. Lower minimum capital requirements would also help. Much more progress is needed in terms of reducing administrative burdens that stifle entrepreneurship," he said.
Concerning entry into the Eurozone, Mr Deppler commented: "We do not expect the country to have problems meeting the budget deficit and public debt requirement of the Maastricht Treaty. However, meeting the inflation criterion will be a challenge. The right policies will need to be maintained to make the economy more flexible."
About Oxford Business Group
Oxford Business Group (OBG) is a UK-based publishing, research and consultancy services organisation. OBG publishes economic and political intelligence on the markets of Eastern Europe, North and South Africa, the Middle East and Asia. Through its range of print and online products, OBG offers comprehensive and accurate analysis of political, macroeconomic and sectoral developments, including banking, capital markets, energy, infrastructure, industry and insurance. Written by a team of seasoned analysts, based on the ground for six months, the critically acclaimed series of economic, political and business reports have become the leading source of intelligence on the rapidly developing countries in the regions they cover. OBG's online economic briefings provide up-to-date in-depth analysis on important issues for thousands of subscribers worldwide.
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*Andrew MacDowall, Oxford Business Group analyst