IMF predicts slower growth, urges Bulgaria to fix banking ‘weaknesses’

The International Monetary Fund (IMF) has said that it expected Bulgaria’s economy to grow at a slower rate in 2015 and urged the government to address the weaknesses exposed by the failure of the country’s fourth-largest lender, the Corporate Commercial Bank (CCB).

In its annual review of the country’s economy, known in IMF parlance as an “Article IV consultation”, the Fund said that it expected growth to “moderate this year to about 1¼ per cent”. Last year, Bulgaria’s gross domestic product increased by 1.7 per cent, falling between the official government target of 1.8 per cent and IMF’s forecast of 1.6 per cent.

The IMF said that Bulgaria faced increased risks as “the coalition government may face challenges in pushing through the difficult measures required to reduce macro-financial risks and raise growth,” while high corporate debt and non-performing loans and associated encumbered collateral could act as an additional drag on future investment and growth if they were not addressed.

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(IMF headquarters building at 1900 Pennsylvania Avenue in Washington, DC. Photo: AgnosticPreachersKid/Wikimedia Commons)