Presentation for the

1
Structural Reforms The Unfinished Agenda

• Presentation for the
• Joint BNB-IMF Seminar on Bulgarias Future
  Challenges
• Bulgaria- From Transition to Convergence The
  Challenges Ahead
• May 2, 2007, Sofia
• by
• Dr. Georgy Ganev
• BMA, SUFEBA, CLS

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Bulgaria and the IMF overview

• Relations started 17 years ago
• 4 unsuccessful and then 4 successful agreements
  between Bulgaria and IMF
• Many reforms implemented
• No more agreements deemed necessary, with good
  reasons,
• Yet this does not mean the reform agenda is done
  and over with

Structural Reforms The Unfinished Agenda
Dr. Georgy Ganev Joint BNB-IMF Seminar,
2007-05-02, Sofia
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What reforms remain framework

• The general idea of the IMF is for a country to
  have a sound economy
• This involves
• a certain structure of the economy,
• a certain economic governance,
• a certain macroeconomic policy mix
• There are serious reform items left in all three
  areas

Structural Reforms The Unfinished Agenda
Dr. Georgy Ganev Joint BNB-IMF Seminar,
2007-05-02, Sofia
4
What reforms remain economic structure - 1

• Some components of economic structure, just as an
  example for remaining issues
• Private property, which needs much more
• Secure property rights
• Privatization, as in energy, health, education,
  private provision of public goods
• Competition, which needs more
• Deregulation
• Less protection
• Less exceptions, privileges, special treatments,
  caveats

Structural Reforms The Unfinished Agenda
Dr. Georgy Ganev Joint BNB-IMF Seminar,
2007-05-02, Sofia
5
What reforms remain economic structure - 2

• Some more components of economic structure, just
  as an example for remaining issues
• Physical capital, which needs more
• Infrastructure of all kinds
• Human capital, which needs
• Education (initial and life-time)
• Health
• Incentives (as in the labor market)
• Entrepreneurship
• Security of contracts
• Level playing field

Structural Reforms The Unfinished Agenda
Dr. Georgy Ganev Joint BNB-IMF Seminar,
2007-05-02, Sofia
6
What reforms remain economic governance

• Some components of economic governance, just as
  an example for remaining issues
• Better regulation, including
• Clearer motivation and definitions
• Both ex ante and ex post regulatory impact
  assessment
• Much more clear rules for rule-making
• Better administrative services, especially
• Timely, with explicit deadlines
• Consistent, ergo predictable
• One-stop shop
• Possibly most important, and also relevant for
  the next slide, fundamental reform the the
  expenditure side of the budget

Structural Reforms The Unfinished Agenda
Dr. Georgy Ganev Joint BNB-IMF Seminar,
2007-05-02, Sofia
7
What reforms remain macroeconomic policy mix

• Some components of macroeconomic policy, just as
  an example for remaining issues
• Lower taxes
• Less distortionary tax structure
• More competition as a policy towards inflation
  under a Currency Board
• Preparation for the eventual return to potent
  monetary policy as a member of the Eurozone
• Programmatic budgeting

Structural Reforms The Unfinished Agenda
Dr. Georgy Ganev Joint BNB-IMF Seminar,
2007-05-02, Sofia
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Conclusion

• A lot has been done, usually the hard way
• A lot remains, there should be no illusions
• Reform is an endless agenda
• EU money cannot substitute for political will
• A general vision about Bulgarian society and its
  participation in the common economic space of
  Europe is a sine qua non
• While the IMF and the EU have been and will be
  eager to help, the generation of such a vision is
  the sole responsibility of the Bulgarians

Structural Reforms The Unfinished Agenda
Dr. Georgy Ganev Joint BNB-IMF Seminar,
2007-05-02, Sofia