Bulgaria Ex Finance Minister Calls for Fiscal Buffers

Bulgaria's ex Finance Minister Plamen Oresharski (middle) has criticized his successor Djankov for failing to set up fiscal buffers. Photo by BGNES

Bulgaria’s former Finance Minister Plamen Oresharski has stated that the present government has to create fiscal safety buffers.

“The Borisov Cabinet adopted an inadequate state budget withouth buffers. They need to be cautious, and to set up buffers in order to mitigate the problems,” Oresharski said on the Bulgarian National Radio.

The Finance Minister of the three-way coalition government in 2005-2009 pointed out that in 2008 the level of public spending was the lowest – 38% of the GDP, and that the budget surplus was the highest – 3%.

“I have no idea what we were going to do with this deficit now if we had not had that fiscal reserved. There are objective factors that make it very hard for any Finance Minister under the present conditions.

“My criticism is directed against the demonstration of self-confidence and the cooling of the economy with the current restrictions,” said Oresharski regarding the policies of his successor Simeon Djankov.

In his words, the Bulgarian economy switching from overheating to cooling so that firms are struggling to pay their taxes and lay off workers.

“The decision to increase the health insurance payments by 2% is very rash, it has been made because there are no fiscal buffers,” the former minister and current MP from the Socialist Party stated.

He commented on the idea floated by Finance Minister Djankov as an alternative to increasing the health insurance payments by 2% - to make state employees cover their own health insurance which is now paid for by the state.

Oresharski reminded that back in the days when the Civil Servants Act was adopted, the MPs decided that their salaries would not be very high but at least the state would cover their health insurance.

“It would be fairer for the government to admit there is no money and to lower the salaries of the state employees rather than make them pay for their health insurance,” the ex Finance Minister concluded.

Speaking on the BNR before Oresharski, another former Finance Minister, Milen Velchev (2001-2005) commented that he approved of the views and instincts of Simeon Djankov but that Djankov did not have sufficient support within the ruling GERB party in order to carry out the necessary reforms.

Velchev declared that Bulgaria urgently needed to attract at least EUR 1 B of foreign funding. He denied the claims that he was lobbying in favor of the IMF but said that the government is running out of time, and might have to seek the foreign funds in question from the Fund.

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