In one month - from February to March - the budget deficit has increased by 1 billion euros, and this caused the government's hysterical reaction to reduce the capital of the Bulgarian National Bank. This is harmful. This was said by journalist Petar Iliev on the air of "Hello, Bulgaria".
Vasil Velev from the Association of Industrial Capital in Bulgaria pointed out that at the moment we are not in such a critical situation, since the fiscal reserve has money for several months ahead. But we should not wait for it to completely thin out, because then the markets will charge much higher interest rates, he added, emphasizing that "we are actually doubling this new debt from 2024 to 2028, if we follow this trajectory. From 2024 to 2026, we reached an external debt of 24 billion euros to 37.5 billion euros."
Economist Nikola Filipov explained that for the first four months of the year, our expenses increased by 17%, and revenues by 10%, which leads to a deficit. We cannot constantly spend this money and finance expenses with debt, because this will lead to financing ever higher interest rates, he added. Filipov specified that the situation is currently good, but structural reforms need to be made.
Experts believe that there is a risk of reaching the Greek and Romanian options.
Iliyev believes that the idea of reducing the administration, which would reduce current expenses, is good, but it does not solve the problem. According to him, until a moratorium is imposed on the growth of the minimum wage and pensions, no problem can be solved.
Velev explained that over the past few years there has been an increase in wages between 10 and 14%, and productivity has grown by between 1 and 3 percent.
Filipov was categorical that the amount of the minimum wage should be frozen, “since it directly punishes private business”. The second thing that needs to be done is to abolish the automatics, the financier believes.
Velev added that the automatics apply not only to the minimum, but also to the average salary in a number of sectors - the Ministry of Internal Affairs, defense, education and others. “The budgetary sphere is overcrowded - we have 1/4 more employed people than the population it can serve. Not only is it a lot, but the salaries are also significantly higher than the private sector, which fills the budget and pays salaries”, he further specified.
Iliev gave the following statistics - 1.5 million people in the private sector support 2 million pensioners and 600 thousand people in the public sector. Filipov and Iliev agreed that civil servants should pay their own insurance.
The economist also said that if the minimum wage is frozen and automatic payments are canceled, this will help stabilize public finances. And Velev added that there should be more measures - for example, removing the COVID-19 supplement to pensions. Filipov explained that such measures will prevent new debt, but will also reduce inflation. Iliev was categorical that all these measures can lead to a balanced budget. However, Velev does not expect such a result to be achieved so quickly.