2024-05-13 15:50:26
We concluded a long time ago that Bulgaria is giving up on its goal of entering the Eurozone in 2025.
This is what Lyubomir Datsov, a member of the Fiscal Council and former Deputy Minister of Finance, told BNR.
“Inflation in our country is almost twice as high as the required criterion. In the case of Bulgaria, inflation is starting to look like the smaller problem and more realistic to achieve than the possibility of not meeting the deficit criterion this year. Let me explain – when the 2024 budget was made, it was made with a projection of a much higher GDP, which turned out to be nearly 9-10% lower than what was projected.
And taxes are usually calculated as a percentage of GDP, and there the relationship is 1:1. If we keep in mind that this year’s GDP will be lower by about BGN 9 billion, this means that the budget will not receive about BGN 3 billion. If we do not reduce the expenses in the budget by BGN 3 billion, other things being equal, we will have a deficit of at least BGN 3 billion more. This adds more than a 1% deficit to the one that exists, which means we will go far, far above the fiscal sustainability benchmarks.”
He predicted that the government would sacrifice some capital spending to avoid going into an excessive deficit procedure.
In Bulgaria, inflation is falling, as it is falling in the entire European Union, he also said and explained that this is the reason why the expected increase in pensions from July 1 will not be by 11%, but by 10%.
Lubomir Datsov disagreed with the IMF’s recommendation to introduce a progressive tax:
“We have played both games. We currently have a modern and well-functioning tax system, another issue is that there is much more to be desired in tax administration. The administration will be much more expensive than what we have now as a system. We don’t need to change our system, we can make an improvement in its administration.”