An International Monetary Fund mission, headed by Reza Baqir was in Bulgaria over the past ten days or so for its annual review. Its task was to make an assessment of the economy, see how the banks, just out of their stress tests are faring, how the reforms are going, what state public finances are in, how far the battle against the grey economy and corruption has come. In fact, the IMF experts were here to make an overall review and analysis of Bulgaria’s economy and finances.

Missions like this are no exception, they are a regular IMF practice with regard to the countries with what are known as emerging markets. Evidently, Bulgaria is still seen as a country in need of a certain amount of oversight, even though it is a member of the prestigious club of the rich, as the EU is sometimes called.

The Bulgarian authorities welcomed the inspectors from Washington with open arms and broad smiles and no diplomatic efforts to conceal their pride at having good things to show the IMF. Sure enough, politicians, observers, economic experts and international think tanks firmly believe that at this time, the Bulgarian economy is healthy and fit, functioning at full throttle and delivering amazing results. Something the Fund experts saw for themselves during their stay in Sofia. To such an extent that they revised their GDP growth forecast for the year from the initial 2.3 to 3 percent. Though it may seem meagre compared to the world average which is well over 3 percent, it is not at all bad within the bounds of the EU where some of the member countries are still grappling with the consequences of the 2008 world economic and financial crisis.

This assessment gave the Bulgarian authorities genuine pleasure as they had become so accustomed to having their economic policies constantly criticized by the IMF, the World Bank and the EU itself. It should not be forgotten that Bulgaria’s economy is the least well developed in the EU and that this is mostly due to the incompetence or unwillingness of the government to put through much-needed, albeit socially painful structural reforms. As well as to the widespread corruption, closely allied with an all-powerful grey economy.

Such were the principal conclusions by the IMF mission which is now over and the experts have flown back to Washington. It acknowledged what Bulgaria has done, but poured a cold shower on the economic euphoria by delivering much more sobering forecasts and assessments. So far, so good, the Fund experts said, but in the mid-term you have problems in the offing and there can be no question of an untroubled future lying ahead.

According to the IMF, over the next few years economic growth will slow down to 2.5 percent for several reasons. The first is that some crucial structural reforms have either not been broached at all or have been left hanging and forgotten. Secondly, businesses have increasingly been having trouble finding qualified staff. Education is below par and cannot provide the staff businesses are looking for. Moreover, the pick of the crop have either emigrated or intend to emigrate in search of a better life abroad. One more problem that puts a spoke in the wheels of economic growth in the foreseeable future is the uneven development of the regions in Bulgaria. There are some regions that are business giants, in others all there is is a corner grocery store. All of these imbalances go hand in hand with an enormous and formidable grey economy sector that pays neither taxes nor insurance. And the icing on this pyramid of problems is the corruption that permeates central and local authorities at all levels, sapping private businesses, deforming the very idea of free competition. The fact that there is an anti-corruption law on which so much hope was pinned, waiting to be endorsed for over a year is proof enough that this is a knotty problem that will be really difficult to solve.

English version: Milena Daynova