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Budget 2025: Freeze the salaries of teachers, military and police

Such a measure is necessary but will not solve the fundamental problem of balancing revenue and expenditure

Nov 13, 2024 23:05 120

The caretaker government has launched the procedure of discussing the state budget for 2025 year. The Finance Minister has announced plans to freeze pay rises for teachers, military and Home Office staff.

Docent Shteryo Nozharov, an economist from the Bulgarian Chamber of Commerce, commented in the program "Bulgaria in the morning": "Economic growth is a function of innovation and investment, there are no measures in the budget to stimulate them. For 10 years, we have been well below the average level for private investment in the European Union, our economic growth is lower than Romania, Croatia and other countries around us.

According to the expert, the proposed increase in insurance contributions will lead to an additional burden of BGN 69 for a salary of BGN 2,300, and for the minimum insurance income - by BGN 32. "With direct and indirect taxes, you will be charged over 40 cents from every leva. If you're being charged almost half of every levy, you'll want to avoid that. Higher insurance rates are not a solution", emphasizes associate professor Nozharov.

The expert notes that qualified personnel are attracted to the public sector, where salaries are increasing by more than 20 percent. "The efficiency of the work is not considered there. Thus, the business loses qualified personnel, there are no incentives for the private investments of the business, which are 17 percent against the required 23 percent", he adds.

Calculations show that postponing the salary increase in the public sector until 2026 will free up a financial resource of BGN 2.7 billion.

Georgi Vuldjev, an economist, commented on Bulgaria ON AIR: "The only meaning of such a measure is if next year there is a serious discussion on how to restructure the expenses, which are growing too fast compared to the revenues,", explained Vuldjev.< /p>

Revenues from the return of the 20 percent value added tax rate for bread and the restaurant business are expected to reach BGN 400,000. "The sector brightened a lot on the basis of the low VAT. In a number of countries in the European Union and outside the European Union, the VAT on bread is 0 percent. It is a kind of social policy. The budget has no strategy, there are conflicts and contradictory things", concludes Associate Professor Nozharov.