Press Release: Commission assesses convergence programmes of Bulgaria, the Czech Republic, Estonia and Latvia

Having examined its updated convergence programme, the European Commission found that Bulgaria's budgetary stance was sound. The programme proposed an upward revision of the medium-term objective (MTO) from a balanced budget to a surplus of 1½% of GDP, which will be comfortably met throughout the programme period. To safeguard macroeconomic stability in a context of rising external imbalances and high inflation, continued tight fiscal policies will be required. While the Czech programme is consistent with a correction of the excessive deficit in 2008, the good starting position in 2007 should be used to achieve this by a wider margin, and to accelerate fiscal consolidation afterwards. For Latvia, the risks to the budgetary targets are high owing to large macroeconomic uncertainty and past slippages from expenditure plans. A considerably tighter fiscal stance is urgently needed to meet the programme's aims in a context of large economic imbalances and excessive demand pressure. Estonia's programme plausibly aims to maintain a sound budgetary position throughout the period with continued surpluses above the MTO. However, macroeconomic imbalances that have accumulated in the economy are expected to moderate only gradually.