08.10.2010

The two-day mission of EC on the Bulgarian National Reform Program preparation and the implementation of the Europe 2020 Strategy was completed by a meeting with Deputy Prime Minister and Minister of Finance Simeon Djankov. The purpose of the EC working mission was to assess the readiness of the Bulgarian government to implement structural reforms in the light of the exit from the crisis and the ongoing efforts for fiscal consolidation.

The need for a strong political signal about the readiness of the government to put the country back on the track of sustainable economic growth was emphasized during the discussions. The Bulgarian government must ensure fiscal stability and sustainability on the background of the extremely insecure environment in the region. "We recommend that the government should maintain a fiscal policy to achieve a budget deficit target of below 3%", said Joost Kuhlmann, Head of the DG "Economic and Financial Affairs" Unit responsible for Bulgaria. The need for clear communication of all reforms and observance of already made political commitments was also emphasized. The aim is to preserve the market confidence and to ensure predictability and transparency of the business environment. The key reforms to achieve fiscal consolidation should be in the field of healthcare, the pension system and the administration.

As regards the proposed by the EC excessive imbalances procedure the Bulgarian side expressed concerns about the logic behind the setting of thresholds for all EU Member States, the lack of coherency in their consideration and the failure to take account of the different starting positions of individual Member States. The Bulgarian side proposed that different indicators should be introduced for the Euro zone countries and those outside the Euro zone, that the notion "sustainable convergence" and the application of the procedure itself should be further clarified and that thresholds for each state should be introduced to better take account of the national features of the economies.

The EC representatives pointed out that it was necessary to frontload the reforms in the future National Reform Program because of the not yet firm growth perspectives. According to them such an approach would foster fiscal consolidation and would send a strong and unequivocal signal to the markets.