High prices, inflation and the state's plans for the 2027 budget were among the main topics that Lyubomir Datsov, a member of the Fiscal Council and former Deputy Minister of Finance, commented on bTV.
When asked what is happening to prices and whether the increase in prices is due to the adoption of the euro, Datsov rejected this thesis.
„The truth is that the euro cannot raise prices, because how will the euro raise prices? Someone, when asking this question, should explain it“, he said.
According to him, the main reason for the increase in inflation is the state's policy over the past four years.
„The main reason for the increase in inflation is the state. The state with its policy that it has been leading over the past 4 years“, said Datsov.
He pointed to the deficit as one of the main factors for the increase in inflation.
„Every normal person should know that when there is a deficit in this country, this does not only mean higher expenses. And accordingly other things. But a deficit is the main reason for the increase in inflation in a country“, said the member of the Fiscal Council.
According to him, the growth of wages also has an impact on prices. Datsov pointed out that over the past two years, the average monthly wage increase set in the budget has been around 20-26%.
„Currently, there is already a cooling off and it is somewhere around 11-12% on a monthly basis, compared to the same period of the previous year“, he said.
Datsov noted that about 500-600 thousand people work in the budget sector, which, according to him, represents approximately 20-25% of all employed people in the country.
„You can see this burden even more, because when wages increase so sharply in one sector, it affects all the others“, he pointed out.
According to him, inflation is also a consequence of „overheating of the labor market“, with the shortage of people, especially qualified ones, being among the factors footage.
Datsov also commented on the influence of external factors, including the Gulf War, oil and fuel prices. According to him, the situation will not be much better next year, especially with food.
However, he stressed that one cannot expect an automatic three-fold increase in food prices just because of higher production costs.
Datsov cited fertilizers and fuels as an example.
“The entire harvest that has been prepared was done with fertilizers, which, for example, are three times higher, with fuels that have increased by 15-20%“, he said.
According to Datsov, Bulgaria's membership in the European Union and participation in the common market contribute to the country's relative stability.
“Thanks to the fact that Bulgaria participates in Europe, in the common market, and Europe as a whole actively trades with absolutely all corners, it seems to have slightly escaped these wars and squabbles that are occurring in the world and are intensifying. But this more or less helps Europe, including Bulgaria, to have relative stability“, he said.
According to him, Bulgaria cannot influence external processes, but it can take measures regarding the domestic economy.
According to him, the economy is already starting to cool down, but this is not due to good state policy in the field of public finances or the economy, but to natural cyclicality.
Datsov predicts that the slowdown may be felt more strongly in 2028. He pointed out that in the coming years the state must have a clear strategy regarding public finances.
“And we, for example, in the Fiscal Council, here I also say a common position, not only my personal opinion, as it was until now, in fact, the strategy to reduce the deficit a little, as it was publicly announced, in our opinion is not the best. There should have been a clearer reduction in the deficit in order to have a clearer cooling of the system“, he said.
According to Datsov, the current moment is suitable for reforms, since the economy is still in good condition, and the labor market can absorb people who are laid off during restructuring.
„And in fact, in such a period when the economy is still good, even if there is a restructured labor market, the labor market can absorb people who are laid off from one place and come to another, without any problems“, Datsov said.
He also commented on the upcoming presentation of the draft budget for 2027, indicating that in his opinion, reform should not be just a formal action.
„It is not enough to do something automatically or to put some crazy idea into power, because reform is when you have a real analysis and you address the real problems“, he said.