Expert's Warning: Bulgaria's Eurozone Ambitions Under Threat

Economist Mihail Krastev has pointed out that while Bulgaria focuses on meeting the inflation criterion in its bid to join the Eurozone, there is a significant risk of failing to meet other essential requirements, such as the size of the deficit. He highlighted that in April, the budget would have been in deficit if not for a one-time contribution of BGN 660 million from the Bulgarian National Bank to the treasury.

Krastev criticized the 2024 budget for miscalculating various criteria and forecasts, leading to shortfalls in revenue from indirect taxes, excise taxes, personal income tax, and corporate tax. He expects that a budget update will be necessary due to these miscalculations. Despite the economy performing well, public finances are lagging and are increasingly being managed poorly.

He emphasized that Bulgarian public finances need to be managed with stability, sensibility, and a long-term perspective rather than focusing solely on one criterion like inflation. Krastev believes that a more favorable scenario for business and the economy would be for Bulgaria to join the Eurozone in 2026.

Reflecting on the recent years, Krastev asserted that Bulgarian politicians are to blame for the country's unpreparedness for the Eurozone. He urged politicians to learn from past mistakes and improve their management of public finances to meet all necessary criteria for Eurozone entry.

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