Economist Kuzman Iliev warned of the risk of a debt spiral and tax increases in Bulgaria. Speaking on Euronews PrimeTime, he described the country’s economic model as increasingly unsustainable and linked the danger to rising government debt, high levels of borrowing and declining industrial production.
“We are producing at increasingly higher costs and in ever-smaller quantities, taking on debt and importing foreign goods,” Iliev said. In his words, a possible interest rate hike by the European Central Bank would make loans more expensive for households, as well as the government’s financing.
Deficits Instead of Investment
According to the economist, the accumulation of budget deficits to finance social spending instead of investment in production is deepening the problems. Among the possible measures, he pointed to curbing spending and streamlining the public sector.
Iliev called for a change in the economic model and policies that encourage production, private investment and competitiveness. In his view, without such changes, rising expenditure could be offset through higher taxes and new loans.
Concerns Over Private Pension Funds
The economist also expressed concern about possible intervention in private pension funds due to the shortage of funds in the National Social Security Institute. He said that better oversight of the funds was needed, but stressed that the money accumulated in them was the private property of citizens.
Regarding the possibility of using pension savings to cover government deficits, Iliev commented: “In the long term, I do not think this will be sustainable in our society’s interests.”
Sources: euronews.bg