The Bulgarian government is ready to do its best to achieve a new agreement with the International Monetary Fund. All necessary efforts will be made by the Economy Ministry, the Finance Ministry and the Cabinet to sign the new agreement.

This firm statement was made on Tuesday by Minister of the Economy Nikolai Vassilev after a meeting with the IMF mission that is now visiting Bulgaria, headed by Gerald Schiff.

The IMF officials discussed the Cabinet's economic program. This included opportunities for economic growth in the next couple of years, problems of privatization, liquidation of companies, restructuring of the economy, income policy, direct foreign investment, corporate management and bank privatization. Changes in the energy sector, a new law for energy generation, the program for public investment, foreign trade, and whether or not to impose VAT in the tourist sector were also on the agenda of Tuesday's meeting, Vassilev told reporters. He said he is strongly against the idea of imposing VAT on tourist products in 2002.

Schiff announced that the IMF wants to support the efforts of the government. "I believe we will reach an agreement but cannot say if it will be for one year or for a longer period," said the IMF official. He added that the size of funding depends on Bulgaria's needs and government's program.

"The important thing for the IMF will be the macroeconomic aspects of the cabinet's economic measures and their impact on growth," said Schiff. He added that he is worried about the fiscal policy to be implemented by the end of the year and by the end of 2002 but added that it is subject to discussion.

Speaking about the budget deficit and the planned tax reforms, Schiff said that these are issues which are as yet unsolved and are being discussed. "We are worried about the possible reduction of budget revenues," he said.

Vassilev said there is no doubt about the need for an accord with the IMF and the Cabinet will do its best in order to reach an agreement. "However, this does not mean that there will be a lot of bargaining between Bulgaria and the fund," he said.

"The aim of the current visit is to reach an agreement, if possible. If this does not happen, the government and the IMF will continue to talk with each other, one way or another," said Schiff.

"The tax reforms planned by the government will not harm the macroeconomic stability in Bulgaria and I believe that we will be able to prove this to the IMF mission and sign an agreement," said Finance Minister Milen Velchev after meeting Schiff on Tuesday.

The IMF mission leader said that he is optimistic and sure that an agreement will be reached.

A stand-by agreement will be signed in any case, said Velchev but added that it is not yet known what it will entail. According to him, within the 2001 budget the revenues will be redistributed without overshooting the planned budget deficit.