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Bulgaria: IMF Mission Says Currency Board Best Choice

Washington, 13 November 1996 (RFE/RL) - An International Monetary Fund (IMF) mission in Sofia says it is "encouraged" by the increasing interest in Bulgaria in adopting a currency board form of central bank, a move the team of experts says offers "the best prospect" for solving the country's serious economic and financial situation.

In a statement released through IMF headquarters in Washington, the team in Sofia says that after ten days of talks with government officials, parliamentarians and others, it is clear there is "need for a decisive change in direction" in Bulgaria to "establish a new foundation for economic stability and growth."

The team says that while it remains open to consideration of alternative approaches, it believes that adoption of the strict monetary rules of a currency board by the central bank would restore confidence, achieve stability and make the "needed break with the inflationary policies of the past."

The mission will remain in Sofia through Thursday to complete technical work on the steps involved in introducing a currency board. A currency board form of central bank would establish a set exchange rate for the lev with a major international currency such as the dollar or the deutschemark, thereby cutting inflation, but eliminating the bank's ability to lend to the government to make up budget deficits.