SOFIA (AFP) -- The International Monetary Fund said that Bulgaria's current account deficit would deteriorate further than expected in 2007 to 16.6 percent of gross domestic product, and that inflation would also be higher than initially forecast.

"The current account deficit has deteriorated a little bit more than we had anticipated and at this point we are looking at 16.6 percent (of GDP) for this year - somewhat higher than previously expected," IMF resident representative Robert Hagemann told journalists on Monday.

The latest IMF world economic outlook issued in April forecast Bulgaria's current account gap at 15.7 percent of GDP in 2007.

The current account is a broad measure, covering trade in goods and services as well as certain financial transfers.

Hagemann added that inflation was coming down less rapidly than previously expected and would reach 4.4 percent at year end.

He urged authorities to push ahead with structural reforms of the economy to lower inflation and make the country more competitive.

Meanwhile, growth was projected to remain "hovering around 6.0 percent" after reaching 6.1 percent in 2006.

Hagemann said that a 2.3 percent budget surplus initially targeted by the government to buffer additional spending demands or external shocks to the economy was likely to be surpassed.

He urged the authorities to aim for a similar surplus in 2008.

Bulgaria, which joined the European Union on January 1 this year, fully repaid in April its debt to the International Monetary Fund, which was one of the country's biggest creditors.

An austerity policy imposed by the IMF in 1997 in exchange for emergency funds enabled Bulgaria to emerge from a severe economic crisis following the fall of communism in 1989.