Home > Bulgarian Economy > Bulgaria to keep currency board, peg despite crisis

Bulgaria to keep currency board, peg despite crisis

Bulgaria is determined to keep its currency board regime and peg to the euro despite turbulence caused by the global economic crisis, officials said on Wednesday, rejecting any devaluation options.

Central Bank Governor Ivan Iskrov and Prime Minister Sergei Stanishev told an economic forum, the crisis had not changed the European Union newcomer’s intention to maintain the board until it joined the euro zone.

‘Whatever changes and adjustments occur in the Bulgarian economy, and even though some of them will be company bankruptcies …all of it will go under the currency board,’ Iskrov said.

‘We don’t plan to make any experiments,’ he said. ‘All countries in the region which have floating currencies have gone mad trying to tame the currencies. I don’t lose even one minute of my time worrying about that.’

Bulgaria introduced the International Monetary Fund-prescribed regime in 1997 and pegged its lev currency at 1.95583 per euro after a financial and economic meltdown wiped out a third of its banks.

The regime significantly limits monetary policy, leaving fiscal policy as the main tool to steer the economy.

Bulgaria is heavily dependent on foreign cash to fund its current account gap and some analysts have said slowing economic activity and falling foreign investment could put enough pressure on the lev to force Sofia to devalue its currency.


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