EconMin: Demand Is Key Problem for Bulgaria

Bulgaria's Economy and Energy Minister, Delyan Dobrev, opposes the temporary price freeze of basic food staples in the country. Photo by EPA/BGNES

Demand remains the main problem faced by Bulgarian economy, according to Economy and Energy Minister, Delyan Dobrev.

Speaking Sunday for the Bulgarian National Radio, BNR, he stated that despite some positive signs, the situation remains grave and the challenges huge.

The Minister stressed that savings of Bulgarians that are kept in banks are a short-term concern for the economy because they are not used by it, but in long-term these savings would turn beneficial as loans given to different companies.

According to Dobrev, one of the positive signs is the increase of foreign investments – 7 times in the first half of 2012, compared to the first half of 2011. These investments are now estimated at BGN 470 M.

"The cabinet will propose a new law to encourage foreign investments. The Public Debate Act, published during the week, provides additional encouraging measures for investments in the country. Top investors, who establish certain manufacturing and production, and hire people with 2-year labor contracts, will not have to pay social security and insurance for them. This means their labor costs will be reduced by 18% for the first two years. This is very important because Serbia offers subsidies in the amount of EUR 5 000 – 10 000 for one job opening and Romania also has program for encouraging foreign investments," the Minister said.

He pointed out the said incentives will turn Bulgaria once again into the country with the best conditions to attract foreign investors, all while the measures will not have any negative influence on the budget.

On the topic of the cabinet successfully negotiating with three large supermarket chains a temporary freeze of prices of basic staples, Dobrev said it was a short-term solution that would not resolve the problem and bears risks for a price hike after the lifting of the moratorium.

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