The Euro helps our economy stabilize and inflation to be lower than it would be if we were not in the Eurozone. This was said in the program “120 Minutes“ by the Chairman of the Bulgarian Economic and Financial Institutions Kiril Domuschiev.
“The main sign that something is wrong for employers is the increase in the money supply relative to production and investment and the gap that is opening between wages and productivity“, he explained.
According to him, it is evident that the state is taking out loans and wages in the administration and in the public sector are increasing. “The reason is that a bunch of state-owned enterprises are being subsidized, which are mostly loss-making“.
“The increase in the money supply, which I have already spoken about several times, is critical. A 19% increase compared to a 9% drop in productivity leads to very high inflation and will continue to lead to it“, Domuschiev believes.
According to him, a recent example is Romania, which this week was left without a government due to this problem. “Inflation there has already reached nearly 10%. They have much better parameters than us - their increase in the money supply is about 9%, and the decline in industry is only 2.5%, but despite this, they are in very severe stagflation. It is difficult to get out of it without unpopular measures“.
“I would not say that Bulgaria entered the eurozone unprepared. On the contrary, our entry was very successful, technically it was very well prepared“, he explained.
Domuschiev said that the advantage of the eurozone is that small countries and small economies like ours, when they enter with a small currency, benefit from the advantages of the large European economy and the euro. “Accordingly, they also comply with the criteria that restrict and limit us in many ways“, he added.
“Inflation in Bulgaria is not mainly due to entering the eurozone. In all countries that entered in recent years, there has been a small increase in inflation, but it is not at the levels that it is at the moment“, Domuschiev pointed out.
According to him, the euro helps our economy stabilize and inflation be lower. “The fact is that Romania, which is not in the eurozone, has much higher inflation. This shows that the euro is not to blame for inflation in Bulgaria“.
„Bulgaria was developing a very good conservative fiscal policy until about 4-5 years ago. We had reached almost two-thirds of the productivity per capita of the European Union“, he explained.
In his words, Assen Vassilev opened Pandora's box and began a policy of taking on debt and social spending - not investments in infrastructure and important projects that would have a return.
„This led all politicians to compete to see who would give more, who would take out more debt and promise more social benefits. And a huge resource was directed into an unproductive sphere - a resource that was taken on credit and which our children will return“, Domuschiev believes.