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SOFIA, Feb 13 (Reuters) - Bulgaria's current account deficit widened to 24.3 percent of estimated annual GDP last year, from 21.8 percent in 2007 due to a growing trade gap, central bank data showed on Friday.
The deficit, Bulgaria's biggest economic headache, expanded to 8.28 billion euros ($10.59 billion) in 2008 from 6.3 billion euros the previous year, the data showed.
The gap makes Bulgaria vulnerable to any big outflows of foreign cash and some analysts say the Balkan country may be the next in line to seek aid from the International Monetary Fund and the European Union to back up its finances.
Strong economic growth and credit-based domestic demand were the key drivers of the deficit, as consumers had rushed to buy after decades of austerity under communism, while companies imported machinery and investment goods to expand production.
The Socialist-led government and analysts see the external deficit contracting this year as imports and exports are likely to decline due to the global economic downturn. The IMF expects the gap to fall to 15 percent of GDP.
The deficit for December fell to 802 million euros from 940.7 million in the same month of 2007, showing a downturn in trade has begun as Bulgaria's key exports market -- the European Union -- has entered recession.
Imports rose by 17.3 percent to 24.1 billion euros in the full year 2008, data showed, outpacing exports which grew by 13 percent to 15.3 billion euros. But both imports and exports fell in December when compared with the same month a year ago.
Foreign direct investment, the country's key revenue to make up the external gap, dropped by 1.1 billion euros to 5.3 billion in January-December and covered 65.6 percent of the deficit, central bank data showed.
To counter the risks arising from the gap, Bulgaria runs one of the tightest fiscal policies in the European Union and plans to run a budget surplus of 3.0 percent of GDP this year, flat on its 2008 fiscal windfall.
The EU newcomer operates under a currency board regime which curtails central bank operations and makes fiscal policy its key tool to influence the economy. (Reporting by Tsvetelia Ilieva; editing by Stephen Nisbet)