Bulgaria will probably enter the new year without an adopted state budget – a situation that is unprecedented in our recent history. In the last decade alone, this has happened three times. What is more special this time is that the country is on the threshold of the eurozone – in less than two weeks, Bulgaria will become a full member of it.
According to former Deputy Prime Minister and Minister of Economy Nikolay Vassilev, the lack of a budget and a regular government is a problem, but not because of the euro, but because of the long-standing wasteful budget policy. “When this government started, I was happy – first, because there is a cabinet at all, and second, because there was a chance to be reformist“, Vassilev said in the program “120 Minutes” on BTV. He considered the entry into the eurozone, the progress on the Recovery Plan and the abolition of the monitoring mechanism as indisputable successes.
In his words, however, it was the budget policy that led to the collapse of the government. “The most generous, Santa Claus-like budget led to the biggest protests in decades. This proves that it is not true that by giving money to everyone, you buy public peace”, said Vassilev.
The former deputy prime minister defined the situation as a “budget swamp 3-5-8” – officially a deficit of 3%, in reality over 5%, and with capitalizations of state-owned companies and military spending – close to 8% of GDP. “I am against any deficits, because there is no need for them. The state should have a surplus every year. If this government had survived politically for another year, in two years it would have made a deficit as a percentage of GDP, as much as Videnov did more or less in his two years. So the result is the same. Expenditures are going towards 50% of GDP. The Public Finance Law says 40%. Throughout the transition, we have been between 30 and 40%. This is a dramatic change“, he stressed.
Nikolai Vassilev was categorical that the eurozone has nothing to do with budget risks. “We will enter the eurozone with or without a budget, with or without a government. This is excellent news for Bulgaria and has nothing to do with the current budget quagmire“, he said.
According to him, fears of a price shock are artificially instilled. “Prices will not explode. They have already risen due to chaotic budget policy - huge deficits, double-digit wage increases, massive spending. This is written in every macroeconomics textbook,“ said Vassilev.
The former minister rejected the theses of speculation and the need for state intervention in pricing. “In an open market economy in the EU, anyone can import goods and services. What does speculation mean? Competition will do the job,“ he pointed out.
According to him, excessive talk about regulators is “paying the gallows“, and the real problem is state spending. Vassilev called on the next administration - ex officio or regular - not to introduce an even more generous budget, but to start reforms:
reduction of the state administration
reduction of the number of ministries
concessions for infrastructure – highways, ports, airports, water and sanitation
end of permanent compensations and subsidies
switch to a saving regime, not a handout
Despite the crisis, Nikolay Vassilev does not completely write off the current parliament. “Politics has become a competition of hate – who will not govern with whom. The state needs a regular, strong and reformist government“, he said.
According to him, the only truly reformist cabinets during the transition were those of Filip Dimitrov, Ivan Kostov and Simeon Saxe-Coburg-Gotha.