Bulgaria, the European Union's poorest member, pledged economic growth of at least 6% a year in a three-year program that aims to raise living standards to EU levels. Bulgaria to hire workers from India, Philippines, Moldova.
The program, approved by the government yesterday, plans to reduce inflation to 3% in 2008, and 2.9% in 2009 from 7.2% in January. It also aims to reduce unemployment to 8.6% this year and 8% in 2009 from 9.7% in January. „The program is centered on sustaining high growth levels and a tight fiscal policy,”Finance Minister Plamen Oresharski told journalists in Sofia yesterday. „The government will continue to maintain annual budget surpluses of around 1%.”He forecast annual food inflation of around 1.5% „given there are no external shocks in the industry.”Bulgaria joined the EU on January 1 and has a per capita income that is a third of the bloc's average. The economy grew 6.7% in the third quarter of 2006 and 5.5% in 2005, powered by exports, a lending boom, low taxes and foreign investment. Prime Minister Sergei Stanishev predicted growth for 2006 to reach 6.5%, in an interview on February 8. The government posted a budget surplus of 3.7% of GDP in 2006, the fourth surplus in a row and used part of the money to repay debt to the International Monetary Fund and the World Bank.
The government plans to keep its currency pegged to the euro until the country joins the euro zone in several years, according to the plan. The document does not contain a date for euro adoption. „The euro zone is not a priority until 2010,”Oresharski said. Bulgaria in the spring will join the exchange-rate mechanism, the precursor to adopting the euro, according to Stanishev. To adopt the euro, Bulgaria must maintain a budget deficit that is below 3% of GDP. Reducing inflation will be Bulgaria's most difficult task in meeting the euro-adoption criteria. Estonia and Lithuania, two former Soviet republics, joined the exchange-rate mechanism a month after they entered the EU in 2004, with the intention of being part of the euro region at the end of 2006. Their plans were foiled after economic growth, among the fastest in the EU, fueled inflation.
The Bulgarian Industrial Association, which groups together the Balkan country's businesses, said on its Web site yesterday that it will help companies find medium and highly qualified workers from abroad. Bulgaria joined the European Union on January 1 and some 15,000 Bulgarians are expected to seek employment abroad this year, according to a Labor Ministry survey. „Construction companies have already told us that there is already a labor force shortage of between 20% and 40%,” Vesselin Iliev, an economic cooperation officer at the Bulgarian Industrial Association, said in a phone interview in Sofia yesterday. Bulgaria's construction industry grew around 30% last year, while tourism rose some 10%, increasing demand for qualified workers. Bulgaria is the EU's poorest member with an average monthly salary of around $300. More than one million Bulgarians have fled the country in the past 18 years. Nine EU countries including Britain, Germany and Greece have denied free entry to Bulgarian workers, imposing a one- or two-year transition period to relieve pressure on their domestic job markets. Bulgaria has a workforce of some 3.5 million people. The unemployment rate in January was 9.7%. (Bloomberg)