During the recent years IMF missions express concerns on deteriorating deficits in the current account. There are indeed reasons for concern. However, they, along with the Bulgarian authorities look for stabilisation of the current account in a wrong direction. The main reason for the deficit in the current account is the huge deficit in the trade balance, which is twice as high as the deficit in the current account.

The reduction of the deficit in the trade balance is the major source for stabilisation of the current account. This could be achieved through GDP growth rate of 6-8% until 2010 and outstripping growth of exports compared to growth of imports and GDP. The problem of Bulgaria is not the large import, but the small export.

The increase of export is possible through growth of production and higher efficiency and competitiveness of the economy. The analysis however confirms that efficiency is deteriorating. Bulgarian goods are not competitive on the domestic and external markets. Low technology goods with high resource intensities – capital, energy, materials and unskilled labour, dominate the composition of exports. The share of high technology goods is negligible. The Bulgarian export prices to EU by commodity groups are 3-4 times lower than the average import prices of the Community for the respective groups of goods.

Substantial improvements in these indicators are possible only through proactive investment, structural, technological, innovation policies, supported by flexible macroeconomic policies.