Can the state afford the social payments planned for next year? Former Deputy Prime Minister Ivailo Kalfin commented on the topic in the program “Crossroads”.
“Obviously it can, after they have assessed that there is also the necessary revenue for the relevant expenses. The minimum wage actually has a positive impact on the budget. It does not spend money on it, because for the most part it is paid by the private sector. This means more revenue for the budget, not more expenses”, commented Kalfin.
According to him, social tension can come from many places. “It is mainly related to the increase in the cost of living in recent years, as well as the instability around us – geopolitical, but also political within the country. This is difficult to balance with social measures,” Kalfin commented.
“If there is one good thing about this government and this coalition, it is that there is a certain stability. We have experienced two years of continuous elections, in which parliaments and governments were basically preparing for the next elections. Then, quite unreasonable decisions were made from a financial point of view. Now at least the government has a longer horizon. And this populism that we saw with caretaker governments and short-lived parliaments is no longer there”, said Kalfin.
“The problem is that this budget does not show any major reforms. This is a status quo budget – it provides stability. But at the same time, we do not see anything that will significantly change in the country”, said Kalfin.
He sees no risk of entering an excessive deficit procedure. “The government knows very well what the consequences would be. They will be heavy if such a procedure is entered into. The government itself has no interest in this happening, because it is responsible for the implementation of the budget and for the consequences of this. Of course, if the revenues turn out to be smaller than planned, there is always the possibility of limiting expenses. What is not visible in the budget, but is a legacy of previous years, is the lack of a buffer in the event of a major crisis - as was the case with COVID or the war in Ukraine, which increased the prices of energy resources. Such buffers are not visible in the budget,” said Kalfin.
He does not see a risk in the fuel situation, because Bulgaria is an open market. “The problem with “Lukoil“ is not only related to the fuel market, but also to the fact that until a few years ago it was one of the main sources of revenue for the budget. However, in the last two years, exports have decreased significantly and “Lukoil“s fuel contributions have fallen - which is a loss for the budget. So, in my opinion, what is happening has more of a budgetary impact - less revenue - than the risk of running out of fuel or its price going up significantly," said the former deputy prime minister.
The 2% increase in social security contributions will not have such a severe impact on employers, Kalfin also believes. "The problem is different - this increase is being made only because there is not enough money in the National Social Security Fund. These 2% will not fill the deficit in the National Social Security Fund," said Ivaylo Kalfin. According to him, reforms are needed there too.
He is not worried about stagflation either. "I do not think this is likely for Bulgaria. Our problem is low growth. In Eastern Europe, growth is higher, but Bulgaria is lagging behind - in productivity and economic growth," said Ivaylo Kalfin.