Bulgaria: "The Eurozone in 5-6-7 Years at the Earliest - If At All"

Politics | April 25, 2023, Tuesday // 11:18|  views


"1.8% - this is the optimistic option for the growth of the economy. The Bulgarian National Bank, for example, predicts 0.4% growth. This is a positive realistic option. There are also options with a recession, which are even more frightening. What the government shows is not the scariest thing." This is what the economist Vasil Karaivanov, a lecturer at the Faculty of Economics of the University of St. Kliment Ohridski, said in an interview with the National Radio.

"A new, record debt for Bulgaria is at stake, and the more important question is whether we will be able to borrow money, is there anywhere to borrow them from? Just a few months ago, Britain, the sixth largest economy in the world, could not borrow on the markets and the central bank had to do an extraordinary operation, which has not been done for decades", the economist explained.

"All kinds of scenarios are possible. We're still in the field of scenarios. The budget itself and the recovery plan. Right now we have a plan for a plan. Right now we're more in the field of discussing an option - one scary, another scarier, but the more important things keep running away from us," commented Vasil Karaivanov on the radio.

"The money for capital investments will depend on a package of laws that the National Assembly must adopt - for the Recovery and Resilience Plan. The first tranche has arrived, but the next tranches are hostage to the work of the National Assembly," he pointed out.

According to him, we are currently faced with the dilemma of whether to have a difficult year, and then to have "not so difficult years, to have relatively stable financial discipline", or "to allow the large deficit - either 6.4% or higher percentage, it can jump both 7 and 8".

With a large deficit this year, we will not have penalties from the EC, but "a momentum is starting from which it is very difficult for us to come back". In addition, there will be sanctions from the EC and the money from the funds will decrease, the expert warned.

Returning the standard VAT rate of 20% for everyone and everything will not be enough, Karaivanov added. If the deputies do not want to raise taxes, expenses must be cut, he explained. According to him, the increase in pensions from July 1 should be abolished.

"The Eurozone at the earliest in 5-6-7 years, if at all," he stressed, when asked how far we are moving away from the Eurozone with the current budget deficit.

The time of preferential taxes has long passed, said Karaivanov.

"Both the revenue and expenditure parts of the budget should be refined and re-examined", said Violeta Ivanova from the Institute for Social and Trade Union Studies at the National Council of National Statistics. She expressed a firm position against income cuts.

"There are enough buffers to balance the budget. First we need to talk about increasing the revenue part, and not touching the expenditure part for the 'wages' sector. To cut pensions and wages is unacceptable. It will create tension and serious shocks in sectors."

Only Bulgaria and Hungary have a 10% profit tax, a directive is being prepared in the EU, which recommends that the corporate tax be at least 15%, noted the trade union expert.

If the profit tax is increased, more than 2.5 billion in revenues can come in, according to Ivanova.

"We completely deny the 22% option, in this way end users will be burdened," she pointed out regarding the proposal to raise VAT.

We are in for a tough year, Violeta Ivanova summed up.

/Bulgarian National Euro

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Tags: Bulgaria, Eurozone, budget, Karaivanov


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