A few conclusions from yesterday's sale of new 3.2 billion euros of debt:
The good thing is that the interest rates on it are relatively low - an average of about 4 percent. For Romanian bonds in euros for the same periods, they are over 6 percent.
This was commented on "Facebook" by Vladislav Panev.
However, so far with the good. The debts withdrawn since the beginning of this year are already for 16.2 billion leva. Only a small part of them is for covering old debts. The main ones are for the deficit and probably for increasing the capital of BEH and BDB. The reason for this is the extremely difficult situation of state-owned energy companies.
When the budget was adopted, I said that it was designed to last within normal limits until the convergence report was released, and then the dogs ate it. My words are confirmed. The Ministry of Finance is even hiding the performance for June, which should have been published more than two weeks ago.
Something more. Populism is gaining ground, which means that expenses not only for this year may increase significantly. The salaries of the police and the military are the basis on which all state sectors strive to equalize. And they go out on the streets and seek their own.
The deficit and the pouring of money means inflation.
The measures that are announced "against speculation" are meaningless if the state policy is for a significant increase in the money supply. And that's exactly what we see. When money in circulation grows, demand for goods and services grows, and production decreases, what else can happen but price increases?
And why are we losing competitiveness? Well, companies' costs are growing and there are no people. Separately, the situation is such that our main trading partners are experiencing economic difficulties. With Germany at the forefront, but now Romania too. The new US tariffs have not yet had an impact on this.
So the government's populist policy is extremely harmful, and the fight against "speculation" is for blinding and PR.
Prices will grow precisely because of the cabinet's policy.
What needs to be done? Budget expenditures should be within normal limits. Otherwise, my warnings are starting to come true. Bulgaria is becoming addicted to cheap government debt. Just like Greece was addicted to one 20 years ago. And they still can't get over it. Cutting the fat for the Flamenco is mandatory, but that's not the only solution.
The administration in many sectors is bloated. State orders are massively overpriced. The energy sector needs urgent reforms to start winning, not losing. There is a lot of work, but in exactly the opposite direction to the one the cabinet is demonstrating.