Barroso urges more fiscal consolidation from Bulgaria

(SOFIA) - European Commission President Jose Manuel Barroso welcomed Bulgaria's move to cut its budget deficit during a visit here Friday, but called for further fiscal consolidation to reassure the markets.

"Bulgaria has taken a number of important measures in terms of fiscal consolidation and we have been able to remove Bulgaria from the excessive deficit procedure," he said at a press conference in Sofia.

He added nevertheless that "to pursue fiscal consolidation efforts is fundamental in the interest of the country" as it would allow Bulgaria to "keep the confidence of the financial markets and borrow at acceptable interest rates and finance its future."

"This is the way to attract more foreign direct investment, because sound macroeconomic policy is a prerequisite for confidence."

EU finance ministers decided in June to remove Bulgaria from a list of countries facing the threat of sanctions, after it brought its deficit under the EU limit of 3.0 percent of economic output.

Bulgaria's deficit, which reached 3.9 percent of gross domestic product in 2009, was slashed to 2.1 percent last year.

The Balkan country has weathered the world economic crisis well and managed to preserve its macroeconomic stability, making it one of the EU members with the lowest public debt ratio of just 15.6 percent of GDP.

Its currency, first tied to Germany's deutschemark in 1997, has since been fixed to the European currency at the rate of 1.9558 leva to the euro.

But the quality of life remains extremely low in what is the EU's poorest member.

"A real push is needed on pension reform, fight against poverty, youth unemployement, administrative capacity and to improve living standard and keep the Bulgarian economy growing," Barroso appealed on Friday.

He was in Sofia for a one-day visit, during which he also inaugurated a new metro line built with EU funds.