Taking loans to increase one's income is a "perpetuum mobile". This was stated in "Face to Face" by financier Lyubomir Datsov. He criticized the country's budget policy over the past 5 years and explained that "unpopular measures" are necessary, otherwise the state will face bankruptcy.
„We inflated the expenditure part from a balanced 38% of GDP, the size of the public sector, to some 40-43%. This is a policy that has happened in the last 4 years. People think that it is easy to make a budget and change direction, which is not the case – imagine a big truck that has to take a turn at speed“, explained the financier.
According to him, automatic formulas reinforce this budget policy, giving an example with the formula for calculating the minimum wage and for remuneration in the state sector.
“This creates a problem at the macroeconomic level, because it overheats the economy and creates imbalances in it. I would like to see how all those who support these formulas will react when the economy goes backwards. And this could happen very soon, looking at what is happening in Western Europe“, Datsov pointed out.
The financier also commented on the loans withdrawn by the state in recent years. According to him, this policy was started by the former Minister of Finance and Chairman of “We Continue the Change“ Assen Vassilev and was continued by the following cabinets.
„Taking loans to increase one's income is „perpetuum mobile“ (b.r. perpetual motion machine that has not yet been discovered). This year's budget is the same as that of previous years. It has no significant difference. When a system strengthens and you want to change direction, you need time to do it“, the expert added.
He gave the example of Romania, where the country's financial problems began in 2018. 8 years later the country declared bankruptcy.
„We are more or less in the fourth or fifth year. We are very similar in this respect. If we do not change this direction of budgets and do not take unpopular measures, the scenario will be the same. (…) It is expected that next year's GDP will grow by 6-7% - that is, there will be no money for anything other than salaries,“ said Datsov.
He explained that there are two options - either to increase the deficit, or for the government to start cutting expenses. According to him, the number of civil servants should not exceed 390 thousand people, and they are currently about 470 thousand people.