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Economic Challenges to Bulgaria


Public lecture
17 July, 2003

On 17 July, 2003 Piritta Sorsa, Resident Representative of the International Monetary Fund to Bulgaria delivered a lecture at the Military Academy "Georgi Rakovski". The event was organized by the Center for the Study of Democracy and the Military Academy as part of the series of lectures to senior staff from the Bulgarian security forces on issues related to good governance and the new security threats.

In her presentation Ms. Sorsa focused on the Bulgarian economy and made prognosis about its short-, medium- and long-term development.

In her opinion the economy is doing well. Low personal incomes and small percentage of FDI (20% of GDP) will represent the main problems for the economy in a long term. Ms. Sorsa pointed out the key elements of a right economic policy:

  • maintenance of macroeconomic stability (currency board, prudent fiscal policy);
  • continuation of structural reforms to increase efficiency (business environment, privatization, energy sector and public administration reform);
  • restructuring of the economy;
  • supporting social policies to cushion social impact on reforms

She also highlighted the need to maintain a low budget deficit and to rationalize the expenditure in the energy and health systems. Structural reforms are still anticipated and it is important to proceed with them because the delay could influence the growth in a long term. NATO membership and EU enlargement should always be taken into consideration because they will ensure the development of specific areas which will, on their part, influence the underdeveloped sectors of the economy.

In conclusion, Ms. Sorsa said that Bulgaria has made a progress in economy but it should speed up structural reforms and social policy. The role of the IMF is to consult the government which takes all the decisions regarding the budget, she underlined.

During the questions and answers session Ms. Sorsa said that despite the commitment of the present and previous governments the reforms are usually slower than expected. She is convinced that the private sector will create new jobs, not the public one. The fiscal reserve, although larger than the expected foreign debt costs, should not be used in the real sector because this will affect the fiscal one. The reserve is necessary to prove Bulgaria's stability and to draw foreign investments, Ms. Sorsa concluded.

See Ms. Sorsa's presentation "Economic Challenges of Bulgaria" (Power Point Presentation)

Piritta Sorsa
Bio data

Before coming to Bulgaria Piritta Sorsa was the resident representative of IMF in Honduras. She is doctor in economics from the Geneva Institute for International Relations. Before joining the IMF in 1994 she held positions at the World Bank (1985-1988 and 1990-1994). From 1988 to 1990 she worked at the Organization for Economic Cooperation and Development (OECD). She is author of a number of publications.
She was born in Finland.

See also:

Lecture of Roderick Moore at the Military Academy

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