Bulgaria is confidently entering a new stage of its economic development after adopting the euro and is already positioned among the countries with the highest expected growth in the eurozone. Macroeconomic indicators indicate that our country is becoming a growth engine, overtaking traditional leaders on the continent.
„Before discussing the macroeconomic situation, we must pay due attention to the fact that Bulgaria has been a member of the eurozone since January 1. "Bulgaria adopted the euro successfully," emphasized economist Rumen Galabinov, BGNES reported.
He admitted that some of the effects after the introduction of the single European currency were fully expected by experts, including the adaptation processes in the banking system and the initial fears of citizens about inflation due to the rounding of prices.
“What surprised us was the war in Iran“, the expert noted, referring to the external geopolitical shocks on the markets.
According to Galabinov, the European Central Bank (ECB) and the Bulgarian National Bank (BNB) will play a key role in controlling inflationary processes and regulating lending in the future. After a period of interest rate cuts, there is a real possibility that the ECB will switch to a reverse restrictive policy.
A possible increase in key interest rates will also directly affect the Bulgarian credit market. “It is very important to monitor the behavior of the European Central Bank in the next meetings“, he said.
According to the economist, in the second half of last year, a serious brightening of the domestic economy was observed. This process led to record revenues in the banking system and generated a subsequent strong growth in creditor collections. However, Galabinov does not consider a dramatic risk to the state treasury, categorically emphasizing: “The budget situation is not catastrophic at all“.
Membership in the monetary union provides the country with completely new tools for managing public finances.
“The need for this reserve to support the exchange rate of the leva against the euro has disappeared. Part of it can be used to optimize the new debt“, said the economist, referring to the freed resource after the currency board was abolished.
He paid special attention to the sustainable growth of budget revenues and the strategic role of the funds under the Recovery and Resilience Plan, which should support the economy in the long term.
Galbinov also commented on the debate about future tax policies in the country, explicitly warning that in the current year 2026, no abrupt changes in taxes should be allowed. At the same time, he admitted that in the coming years a serious discussion will begin on more flexible taxation of businesses and citizens.
“I like the idea of a 15% general income tax with a non-taxable minimum“, said Galbinov. He also raised the issue of a possible reduction in the VAT rate on basic food and medicines, as well as the inevitable future debates on increasing health and pension insurance.
Despite the geopolitical challenges, the most important fact, according to the expert, remains the country's positioning among the best in economic growth in Europe.
“Bulgaria is among the countries with the highest economic growth forecast - between 2.6% and 2.9%. Germany is around 1%“, he said. The economist even defined our country as an engine for development in the currency union. “We are already measuring ourselves against economies such as Indonesia and India. Bulgaria is an engine for economic growth, albeit small, of the entire eurozone“, added Galabinov.
At the end of his analysis, he categorically defended the adoption of the euro, highlighting the country's enormous progress. “We have achieved something that is unthinkable for countries like Hungary or Romania“, summarized Galabinov.
Source: www.dunavmost.com