The biggest risks facing the Bulgarian economy are precisely the political ones at the moment. Especially from the point of view of the main priorities facing the country: the Eurozone and the NPVU. We need a government with a clear economic strategy of modernizing the country and dynamizing the economy, comments Prof. Gancho Ganchev, economist for Bloomberg Bulgaria.
An eventual minority government could be sustainable for 1-2 years, depending on the configuration. If Bulgaria manages to enter the Eurozone during this period, it would be good for the country, Ganchev said.
Macro data for the country shows some decline in industry, although it does not affect all industries. The more alarming indicators are the decline in imports and exports, as imports bring revenue to the budget through VAT and excise duties. On the other hand, the fiscal report does not show worrying data, with revenues and expenses going according to plan.
The economist explained that our country is too dependent on indirect taxation in the form of VAT and excise duty, which is 10 to 15 percentage points higher than it should be. He added that the only way to break this dependence is by introducing progressive taxation, which can be implemented in parallel with a reduction in indirect tax.
Economic growth is expected to be lower than budgeted, but by the end of the year this trend could be reversed, especially if we see some interest rate cuts by the ECB to spark a revival. He added that the biggest risk facing the Bulgarian economy is precisely political.
„The risks are very high, especially from the point of view of the main priorities facing the country: the Eurozone and the NPVU. The biggest risks facing the Bulgarian economy are precisely the political ones at the moment. We have no extraordinary economic risks.“
It can be seen that in recent years a competitive private sector has been taking shape in Bulgaria, but the Currency Board, through the large minimum mandatory bank reserves, is preventing investments in our country. The minimum required reserves are about 12 times larger than those in the Eurozone, which means that this resource is “frozen” in the banks, bringing higher interest rates with them.
The high-tech sector in our country is a potential for the growth of the economy, as it can be seen that even without the help of the state it manages to grow. However, the problem is the labor shortage, for which the guest believes that a solution can be found in an increase in the minimum wage.
This move would create two strategic benefits for Bulgaria: the first is that it will attract foreign workers and Bulgarians working abroad, and the second is that with the increase in wages, the worker begins to value his workplace, which would increase productivity .
„If the government has any strategy, it should be expressed in this – to quickly enter the Eurozone and to continue with the policy of raising wages. We need a government with a clear economic strategy of modernizing the country.