State spending in the budget sphere is growing uncontrollably, which will shoot Bulgaria's budget deficit to 5% of gross domestic product by the end of the year. Although the officially set deficit is 3%, the lack of real reforms and pre-election spending create serious risks for fiscal stability. This was stated by the Chairman of the General Assembly of the Association of Industrial Capital in Bulgaria (AIKB) Vasil Velev on NOVA.
According to Velev, the trajectory of public finances in our country has not been good for several years, and the traditional surplus in the first months of the year has already melted. The main reason for the accumulated deficit is excessive spending on state administration.
„There has been a doubling of wages in the last five years with low productivity growth. This leads to the corresponding disproportions, which could be the cause of the so-called Greek scenario“, warned Vasil Velev.
Business reports that the growth of salaries in the public sector last year was the largest in the entire European Union, reaching between 12 and 13 percent.
Two weeks before the early parliamentary elections on April 19, the topic of finances is key. Velev noted that GERB and the newly formed coalition around President Rumen Radev – – "Progressive Bulgaria", which is leading in the sociological surveys, are proposing steps towards budget consolidation. Only the BSP insists on introducing a progressive tax scale.
„All the others are proposing sound public finances. For this to happen, there is a need for budget discipline and reforms. However, no one is talking about how they will implement these reforms in the administration before the elections, except with artificial intelligence. "No one is saying that we should cut a quarter of the budget sector," the chairman of the AIKB categorically stated.
Velev also commented on the escalating crisis in the Middle East, where military actions between Iran and the US have led to a real blockade of shipping through the key Strait of Hormuz. According to the employers' organization, the severe economic consequences of the tanker shutdown are yet to hit Europe and Bulgaria.
“The worst is yet to come”, predicted Vasil Velev, insisting on an urgent revision of the European emissions trading system in order to mitigate the blow to the industry's competitiveness.