Expert: Eurozone Integration Could Drive Bulgaria’s Economic Growth and Investment

Economist Rumen Galabinov has stated that Bulgaria's potential future membership in the Eurozone could significantly benefit the country's economy, leading to an increase in GDP. According to Galabinov, the positive economic impact seen in other countries that joined the Eurozone is expected to be mirrored in Bulgaria. He also believes that this membership will boost tax revenues, insurance contributions, and duties. Schengen membership, which would further facilitate free movement, could also be a catalyst for business growth and investment, particularly in sectors such as transit transport.

The caretaker government is set to present the 2025 state budget to the National Assembly next week, with a projected 3% deficit. The budget will not raise tax rates or social security contributions for workers. However, it will include salary increases for police officers, military personnel, and teachers. The government also plans to implement new taxes on bank profits and underground resources, as well as increase excise duties on alcohol and cigarettes. Some reduced tax rates will also be eliminated.

Galabinov emphasized the importance of meeting the Eurozone entry criteria, with the target date for Bulgaria’s accession set for July 1, 2025, though an alternative entry date of January 1, 2026, is also possible. The economist stressed the necessity of ensuring the country maintains the 3% deficit, alongside the requirement of average annual inflation within acceptable limits.

Galabinov also pointed out that some of the proposed measures in the 2025 budget, such as the amnesty, may have limited benefits for taxpayers. He noted that the Covid pandemic has passed, and the government could consider phasing out pandemic-related measures. He believes unifying the VAT rate is a logical step, and expects the increase in excise duties on cigarettes and alcohol to be a necessary policy. Discussions around the taxation of diesel and gasoline may also arise.

Despite Bulgaria’s progress towards Eurozone membership, Galabinov pointed out that some Eurozone countries, including France, still fail to meet all the entry criteria, such as a deficit below the prescribed threshold.

Source: Bulgarian National Radio (BNR)