Bulgaria, Czech Republic Vow to Steer Clear of 'Euro Zone Debt Union'

Finance | October 4, 2011, Tuesday // 20:27|  views

Czech PM Necas (left) with Bulgarian PM Borisov in Prague. Photo by EPA/BGNES

The Prime Ministers of Bulgaria and the Czech Republic have made it clear their nations will abstain from seeking accession to the euro zone for the time being because of the ongoing debt crises.

"We will join the euro zone when we see clear rules over there. Otherwise, it is turning from a pillar of stability into a place to give money, to support those in trouble, and its aims is actually completely different," Bulgaria's PM Boyko Borisov said at the opening of a Bulgarian-Czech business forum in Prague Tuesday, as cited by Focus.

His Czech counterpart Peter Necas expressed a similar view over the debt crises and the enlargement of the euro zone.

"The governments of the Czech Republic and Bulgaria completely refuse to declare a data for accession to the euro zone because nobody knows what will happen with this project," Necas is quoted as saying after meeting with Borisov.

"Besides, we can all see how the currency union is turning into a money transfer union, or even a debt union," Necas stated at his joint news conference with the Bulgarian PM earlier on Tuesday.

"Bulgaria is country with the second smallest foreign debt in the EU, we have a stable fiscal reserve, which is a good precondition for the stability of the Bulgarian lev," Borisov told the potential Czech investors.

He reminded that Bulgaria's government and opposition have been debating amending the Constitution to incorporate into it the so called Financial Stability Pact, a brainchild of Finance Minister Simeon Djankov, which is supposed to guarantee legally a ceiling on the budget deficit as well as low taxes.

"These provisions need to be obligatory for the entire euro zone. Otherwise, the following thing will be happening constantly: in some countries, there will be political parties in power that will spend more than their countries make out of populism. Somebody will have to pay for that afterwards. Even if there are efforts to save Greece now, when this happens in another state, eventually, the EU won't be able to assume the burden. None of the EU taxpayers wants to have their money poured to help a state that doesn't want to comply with the rules," Bulgaria's PM stressed in Prague.

At the business forum, he reiterated the suggestion that he made earlier at his joint press conference with Necas that EU states in trouble with deficits and public debts should lower their government salaries and retirement pensions before they can seek bailout aid from the rest of Europe.

"I told the Prime Minister and President of the Czech Republic – the countries with severe fiscal problems should reduce their pensions and salaries to Bulgaria's level. After that, the EU can bail them out. Because the states in trouble have higher pensions and administration salaries than you do here in the Czech Republic; not to mention how much higher they are than those in Bulgaria and Romania," Borisov elaborated on his innovative idea on how to tackle fiscal problems in the EU.

The Bulgarian PM emphasized before the Czech businesspeople that "Bulgaria has the lowest taxes in the EU, and will retain the lowest taxes in the EU", referring to the flat 10% corporate and income tax rates.

"You are welcome to enjoy this fiscal stability, domestic stability, great investment environment, and low taxes. Bulgaria is a wonderful place for investments," Borisov argued.

He absolutely refuted any suggestions that Bulgaria might need a bailout loan from the IMF.

Before the Czech business sector, Borisov stressed his Cabinet's efforts to develop e-government in Bulgaria and to boost the absorption of EU funds.

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Tags: Boyko Borisov, Petr Necas, Prime Minister, Czech Republic, business forum, Prague, euro zone, Eurozone, debt crisis, debt crises, greece, EU, IMF, bailout, FDI, Foreign investors, Financial Stability Pact, bailout fund, bailout loan, bailout


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