There is currently no crisis because of the war in the Middle East, we are talking more about a shock and upheaval. This opinion was expressed in the studio of “Hello, Bulgaria” by the acting Minister of Economy Irina Shtonova. She commented on the cabinet's measures to deal with rising prices.
“The balance in these measures is very important. We started working on the topic at the first signals of the escalation, which surprised the whole world. We still do not know where it is going. It is very important how we will get through this shock. We should not underestimate the effect that the increase in fuel prices has on people and individual sectors of the economy. But we should not throw all possible actions at the very beginning. In an economy, consumption is also of great importance and it is normal that when prices rise, people stop consuming as much and the system balances out”, explained Shonova.
According to her, over the years, some businesses have not taken sufficient measures to protect against such price shocks, such as long-term energy price negotiations or the use of financial instruments to hedge the risk. At the same time, however, the state cannot remain indifferent, since the ultimate goal is to prevent inflationary pressure from being passed on to consumers.
„Our focus is on the direct protection of households. If inflation unfolds, it will affect everyone – both business and citizens“, said Stonova.
The minister specified that if necessary, additional instruments will be activated to deal with the crisis, and the approach will remain gradual and carefully assessed.
“We cannot exhaust all options at the beginning. The measures must be targeted so as not to lead to further easing of inflation through excessive spending“, pointed out Stonova.
In agriculture, priority is being given to ensuring liquidity by bringing payments forward. According to the minister, although the prices of fertilizers and fuels are increasing, in Bulgaria they are still relatively low compared to other European countries, which creates a certain competitive advantage.
However, not only the price, but also the availability of fertilizers and plant protection products is emerging as a serious risk, she explained. According to her, this could be a decisive factor for final food prices in the coming months.
„It is important to ensure that there will be sufficient quantities. This is key to price stability“, emphasized Stonova.
As for ideas such as eliminating or reducing excise taxes on fuels, the minister claims that such decisions could only be considered in the event of a severe deterioration in the economic situation. However, at the moment they are not among the priority instruments, as they would have a serious effect on the revenue side of the budget.
She also commented that the government remains cautious regarding universal measures such as differentiated VAT or broad tax breaks, instead relying on more targeted interventions. The goal is to avoid spending significant public resources without a guarantee of a real effect on prices for end users, added Stonova.
At the end of the conversation, the minister explained where the money for the cabinet's anti-crisis measures comes from. “Some of them are from the budget, and others are budget-neutral. For example, one of the wishes of the transport sector was to postpone lease payments for several months. This will be taken over by the Bulgarian Export Insurance Agency, which already has capital and the ability to provide more such guarantees, so there is no need for additional funds from the budget“, she explained.