Bulgaria's fiscal deficit should drop below 1% of GDP this year, beating the official 1.3% target and enabling the country to avoid tapping global debt markets, Finance Minister Simeon Djankov said on Thursday.

Bulgaria registered a small surplus at the end of May, showing one of the European 's poorest states is on track to deliver one of its smallest budget deficits.

The Balkan country is trying to shield its fledgling economy from the economic and financial stress of the euro zone crisis and protect its currency peg to the euro. It plans to further cut its fiscal shortfall and balance its budget by 2015.

"We are currently running a balanced budget, even actually a small surplus. In the budget for 2012 we've said 1.3% deficit, I think it's going to be below 1%, the way that it's going," Djankov told reporters on the sidelines of an IMF conference in Vienna.

The centre-right government took rigorous steps to cut tax evasion, cut spending and froze public salaries and pensions, managing to almost halve its fiscal shortfall to 2.1% in 2011 from 4.0% a year earlier.

These steps and low levels of debt -- at about 15% of GDP -- allowed Bulgaria to successfully tap international markets earlier this month, untainted by the troubles of neighbouring Greece.

Sofia sold 950 mln euros worth of new five-year benchmark Eurobonds in the country's first tap of international markets in 10 years to refinance maturing Euro bond next January..

Djankov said there were no plans to raise funds in this way again yet. "We just don't need it because we are running a balanced budget," he said. "For the next couple of years we don't intend to enter the markets."
 

financialmirror.com