Vienna Institute Economist Sees No Rush on EuroFinance | July 12, 2010, Monday // 15:13| views
Earlier this year Bulgaria's government announced it has abandoned plans to apply to join the bloc's exchange-rate mechanism, the so-called eurozone waiting room. Photo by EPA/BGNES
Bulgaria shouldn’t rush to adopt Europe’s common currency given the euro- region’s turmoil and the limited benefits of the switch, says an economist from Vienna Institute for International Economic Studies.
“I don't think Bulgaria should be very impatient to enter the eurozone, because now it has its problems,” Gábor Hunya said in an interview for Darik Radio on Monday.
He stressed that by adopting the euro Bulgaria will gain lower interest rates and more freedom to develop unreasonable financial policies, adding that the price is too high for such prizes.
The interview came shortly after the Vienna Institute for International Economic Studies published a report, which said the economic crisis in Bulgaria has deepened due to the wrong anti-crisis measures the government has taken.
In a report on the economics of the countries from Central and Southeastern Europe, the experts have stated that while most of the European countries have started to recover from the economic crisis in the first three months of the year, Bulgaria's GDP has dropped by 3,6% in comparison to the same period last year.
Gábor Hunya voiced his skepticism at expectations that Bulgaria will exit the crisis in the autumn, an opinion ardently embraced by the center-right government.
“It depends on what you mean by saying that the country will exit the crisis. If you mean that the GDP growth will be positive in the fourth quarter of the year, this is highly likely. Still the main thing is that Bulgaria's economy will not grow by more than 1-2% in 2011, which is negligible,” said Hunya.
According to him none of the countries included in the report will recover in the next few years.
Bulgaria is still struggling to exit the recession after its economy contracted by 3.6% on an annual basis in the first quarter of 2010 from 5,9% in the previous quarter. The government however hopes for a 1% economic growth for this year as recovering exports bolster the expansion.
Earlier this year the cabinet announced it has abandoned plans to apply to join the bloc's exchange-rate mechanism, the so-called eurozone waiting room, over a larger than expected 2009 deficit caused by unaccounted procurement deals, signed by the previous Socialist-led cabinet.
Joining the exchange-rate mechanism was assigned top priority for this year by the new Bulgarian center-right government, which was the reason why it stuck to tight financial policy at the end of 2009 and delayed payments to businesses in a bid to keep low the budget deficit.
Countries must be members of ERM II for two years before they can formally join the eurozone. Bulgaria so far believed that it could be ready for euro entry by 2013.
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