Bulgarian FinMin: Eurozone Could Be Extinct in 6 Months

Finance | November 29, 2011, Tuesday // 11:32|  views

Deputy Prime Minister and Finance Minister, Simeon Djankov, assures budget 2012 will sustain the EU-wide economic crisis. Photo by BGNES

Very bad things happened in the last few months in Europe, which imposed changes in Bulgaria's fiscal policy, says Deputy Prime Minister and Finance Minister, Simeon Djankov.

Speaking in an interview for the TV channel bTV Tuesday morning, Djankov responded to criticism that he had made promises for more funding to different sectors earlier and is now retracting them.

He explained it with planning for more revenues, which had not materialized.

According to the Minister, there is a real chance the Eurozone could fall apart in the next 6 months. He pointed intentions of former Greek Prime Minister, George Papandreou, to hold a referendum on austerity measures as a prime accelerator of difficulties across the European Union.

"This made the bailout for Greece questionable and toppled their cabinet; then the crisis spread to Italy and Belgium," Djankov explained, adding Germany is Bulgaria's biggest market, followed by Italy thus their confirmations they will suffer economic crisis in 2012 are calling for adequate reaction from Bulgaria.

"Luckily, we have not introduced the EUR, so we will not be affected that much. People's bank savings are guaranteed, but there is a threat for our export – we must redirect it to Asia and Russia, which cannot happen in the course of several months," the Minister pointed out.

He further stressed that in the beginning of the year there were plans for a conservative 2012 budget over assurance Greece's bailout will receive green light, but now, over a more unstable situation in the EU, the budget must have buffers.

According to Djankov, the draft budget is optimistic because it has been calculated on the basis of 1% economy growth, with expectations the latter will be larger.

He assured that the 2012 budget will be able to sustain the crisis and the deficit will end up being lower than 2.5% - second or third in the EU. He noted that if the Eurozone is replaced by a fiscal union as alternative, Bulgaria would be one of the 8 countries to be immediately admitted there.

Regarding protests of Bulgarian farmers, the Minister declared there was no money whatsoever so any protests were futile. He reiterated that expectations for the Customs Agency and the National Revenue Agency (NRA) to collect more money have not materialized and there are no grounds for negotiations since there is no funding to distribute.

He pointed out that about 8 grain producing companies were collecting half of the State subsidies and have become millionaires – one company had gotten BGN 30 M in 2011.

"But we are changing the system now – we want to eliminate such monopoly and make sure the money reaches smaller producers," Djankov said.

He offered apologies to the farmers as they demanded a day earlier, saying: "If the subject is not money, but apologies, I apologize."

The Minister confirmed that the amount of retirement pensions would not be updated and increased, and that only the minimum monthly retirement wage will go up in May 2012 by BGN 9, saying wages in Greece are down by 60% in 2011, 30% in Romania, 20% in Bulgaria and 15% in the Netherlands.

"We must produce more in order to have higher salaries and pensions," he explained.

Regarding the strike at the heavily-indebted State Railways BDZ Holding, Djankov also declared that the cabinet would not give up on the reforms since there was no other way to solve the issue. He warned that if the strike was to continue for 10 or more days, BDZ would have to shut down for good.

The Minister said the plan is to privatize freight transport and create a new company for the passenger one, which would be burdened by the staggering debt of BGN 800 M of BDZ.

Djankov forecasted that his ruling, center-right Citizens for European Development of Bulgaria party (GERB) will win a second term in office, but added he would not be Finance Minister then.

When asked to elaborate he replied laconically: "I have other plans."

We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!

Tags: Eurozone, crisis, EU, greece, bailout, grain producers, subsidy, budget, Strike, protest, machines, farmers, Simeon Djankov, Bulgarian State Railways, railway workers, BDZ, Bulgarian State Railways, trains, state railways, retirement pensions, wages, minimum, monthly, years of service, syndicates, Strike, Retirement age, reform


» Related Articles: