The International Monetary Fund (IMF) has recommended that the Bulgarian government curb the pension system deficit, the Finance Ministry said, quoting conclusions of an IMF Technical Mission on pension reform.

Mission Leader Emanuele Baldacci presented the preliminary report of the Technical Mission to the Finance Ministry's team coordinating relations with the international financial institutions. The report looks at options for easing pressures on expenditures in the short term and for eliminating shortfalls in the pension system in the medium tern.

In a summary of the report's conclusions, Baldacci stressed that to maintain fiscal stability, Bulgaria should introduce further measures to ease the pressure on expenditures and increase revenues in the medium term. The Mission assumed that without reforms, the pension system deficit might remain high, exceeding 7 per cent of GDP in the medium term.

The preliminary report also says that the latest measures proposed by the government will ease but will not eliminate pressure on the budget, the Finance Ministry said. The Mission concluded that short-term reform would help to limit the increase in pension expenditures and reduce the pension system deficit.

The IMF suggested measures in addition to the planned freeze of benefits in 2011-2012, including an increase by 2 percentage points of contributions for first-pillar pensions to 18 per cent as of January 2011; increasing by six months a year the length of service required for a full pension both for men and women as of 2011; transferring the payment of early retirement pensions to the second pillar as of January 2011; and tighter control of disability pension beneficiaries through random examinations by medical commissions of the National Social Security Institute.

The IMF experts also said that in view of the demographic trends, further reforms are needed to guarantee the financial stability of the public pension insurance system.

Source: BTA