November 5 2008
The World Bank has approved two loans to Bulgaria worth 142 million euros, aimed at raising employment, productivity and living standards in the European Union newcomer, the lender said on Wednesday.
The Balkan country, which joined the EU in 2007, is the bloc’s poorest member with the lowest incomes per capita and has one of the lowest productivity rates.
The global financial crisis is expected to hit Bulgaria’s so far booming economy and possibly raise jobless rates as foreign investments and a domestic credit expansion, which supported growth in the past few years, are slowing.
The World Bank said in a statement that one of the loans worth 102 million euros will support Bulgaria’s reform agenda in the areas of health, education, and social protection.
‘Maintaining the momentum of reforms has become more urgent at this time of turbulence in the global financial markets, and the support of the Bank to the reform agenda … has gained additional significance,’ the statement said.
The bank’s project will support policies to increase employment, lay the foundations for long-term productivity growth by providing incentives for job creation and improving quality of education and promote fiscal sustainability, it said.
The second loan of 40 million euros is designed to stimulate social inclusion by helping low-income and marginalised families educate their children and reduce early drop-outs.
Economists and ratings agencies have warned that Bulgaria’s dependence on foreign cash to fund its huge current account deficit and foreign debt make the country vulnerable in times of tight global liquidity and credit conditions.
Sofia’s debts to the World Bank stood at 573.3 million euros at the end of September and account for 17.7 percent of the state public foreign debt, finance ministry data showed.
(Reporting by Irina Ivanova; Editing by Toby Chopra)