Wed Mar 13, 2013 6:34am EDT
By Tsvetelia Tsolova
SOFIA, March 13 (Reuters) - Bulgaria's interim finance minister cut the forecast for 2013 economic growth on Wednesday, underlining the vulnerable position of the EU poorest country, which has been rocked by protests against low living standards.
President Rosen Plevneliev has appointed an interim administration to run the country until a May election, after the rightist government resigned due to demonstrations against high utility prices, low wages and corruption.
On his first day in office, Kalin Hristov - on leave of absence from his position as central bank deputy governor - said he expected the economy to grow by 1 percent to 1.5 percent this year, compared with the previous government's forecast of 1.9 percent, as the euro zone's recession hit exports.
"This is conditional, assuming that the euro zone - which is Bulgaria's key trading partner - would start recovering in the second half of the year," Hristov told reporters.
The small and open economy expanded by a real 0.8 percent last year - way below the rates of 6-7 percent before the economic crisis burst a financial and real estate bubble in 2009. Weak exports to the euro zone and sluggish domestic demand were the culprits.
Hristov pledged to maintain fiscal stability and that he would ensure revenues were sufficient to meet Bulgaria's fiscal target for this year, despite the lower growth forecast.
Economic analysts said the expected lower growth should not endanger the planned budget gap of 1.3 percent of gross domestic product this year, one of the European Union's lowest shortfalls.
"A growth of 1.5 percent is twice what we had last year, and still Bulgaria managed to end 2012 with a shortfall of 0.5 percent. The slower growth in that range does not look like a serious challenge for the budget," said economist Georgi Angelov with Open Society Institute.
Bulgaria has to keep tight fiscal policy to avoid risks for its currency peg to the euro.
"Maintaining the fiscal stability is paramount and should not be questioned," Hristov told reporters.
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