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IMF: Foreign Investments Won't be Back Soon in Eastern Europe

Date: 03.09.2009

The banking sector, which triggered the global economic crisis, now holds to key to finding a way out of it

Eastern European countries see for the first time since 2007 a revival of investors' interest in the region, but foreign investments and crediting for people and companies will not be here soon, says an analysis of the International Monetary Fund.

The banking sector, which triggered the global economic crisis, now holds to key to finding a way out of it, say the experts, as cited by Deutsche Welle.

The analysts from the global lender believe that the crediting in Eastern Europe is one of the most difficult problems to solve, since it this is very much dependent on the Western banks, operating in the region.

The piles of debts continue to be a source of financial instability, the article points out.

According to Fitch Ratings, Bulgaria has USD 26.2 B of debt coming due in 2009, equal to 64% of GDP.

Bulgaria's gross foreign debt totaled EUR 36,925 B at the end of June, long term-debt dues stood at EUR 8.397 B, while short-term liabilities stood at EUR 6,6 B.

According to Fitch agency Bulgaria may be forced to consider outside funding as the second half of 2009 gets under way despite recent assertions by newly elected Prime Minister Boyko Borisov that no IMF loan will be necessary.

The problem for Bulgaria is said to be not necessarily foreign currency-denominated lending (household-sector foreign currency-denominated lending is actually quite low), but rather years of high current-account deficits that required trade financing and corporate lending.

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