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man mark, chosen as reserve currency because of the leading share of EU tradeand investment in the country and the prospect of Bulgaria joining the EMU. Thepolicies introduced by the currency board arrangement resulted in considerabledecrease of inflation, increased credibility of the national currency and reducedinterest rates. The sharp decrease in lending interest rates reduced governmentdebt interest payments, as well as the share of short-term debt issued to financethe budget deficit.Source: National Statistic InstituteThe economy started to recover in 1998 as the year was marked by events withfavourable impact on market reforms and the three-year IMF agreement. Privatisationwas accelerated, liberalisation of the agricultural sector continued consistentlywith the Government program for structural reform. Significant tradeand price liberalisation was achieved and state control on prices of agriculturaland food products were eliminated. Bulgaria successfully dealt with the economicpressure arising from regional conflicts and the lasting negative effectsof the global financial crises in 1999.A broad international acknowledgement of the political and economic changesin Bulgaria was the invitation to start accession negotiations with the EU in December1999 and their initiation in March 2000.The macroeconomic data in 2000-2006 indicate a period of sustainable economicgrowth and controlled inflation. Despite the slowdown in economicgrowth in the EU countries - the main Bulgaria’s trade partner in 2002 -2003,GDP growth in Bulgarian economy during the period 2000–2004 was in thewww.sme.government.bg 7