Bulgaria already meets all the criteria for membership in the Eurozone, and the positive assessments of the European Central Bank and the European Commission confirm this. The exchange rate at which Bulgaria will enter the Eurozone is 1.95583 leva for one euro. As for the currency conversion process itself - it will be completely free for citizens, at least in the first six months. If after this period commercial banks decide to introduce fees, this will be allowed, but not mandatory. The BNB will exchange leva for euros for free forever. What awaits us… Dr. Plamen Ivanov, Financial Director, speaks to FACTI.
- Mr. Ivanov, the European Commission and the European Central Bank (ECB) gave a positive assessment of Bulgaria joining the eurozone. Is now the right time, are we too late… What do you think?
- The positive assessment of the reports should not surprise anyone. Especially after our admission to the ERM 2, then to “Schengen”, a logical sequence of economic processes and political decisions in recent years. There is nothing strange or different. A difficult-to-achieve goal of integration with European systems and markets, I hope, and with European rules, regulations and order. The noise that is being made at the moment is extremely late. This is a game with people's fears. It is used only by populists and for purely commercial reasons. There is no right or wrong moment, no rush or delays. When our economy is mature enough, or the European ones are so far behind - we must seek to catch up and seek competitive equality with the other more advanced countries.
- In the ERM 2 system of rules, we waited more than three years. Did we not take steps, or were we told to wait?
- These three years are due to the consequences of the pandemic on a global level. And locally, to political instability, lack of strategy, internal struggles, populist slogans and external influences in both directions. Lack of proper communication. And a wide field for the manifestation of populist nonsense to divide people. We clearly had to wait, we clearly had to learn from our mistakes, we clearly had to change the structure of things and our understandings - I'm not sure we succeeded. The economic arguments from regulations, good practices, free but regulated markets are clear, visible in that part of Europe that we strive for. We have our lessons and we have our path.
- And against the backdrop of this news in the country, we see protests against the euro. Is this a political move, or are people really worried?
- The lack of messages and communication has had an impact. The protests are not based on arguments, but on fears fueled by nonsense. When they are worried - let them check, read, ask. Neither will identity be lost - there are still Germans, French and Italians .... Nor will we lose our leva - in reality, the banknotes will have Bulgarian symbols, which will be accepted all over the world. At the moment, how will you show the Madara Horseman or another Bulgarian shrine in a village in Belgium or Spain and have it accepted as a means of payment? Nor will we pay foreign loans - at the same time, we wait for European funds like manna every year. Nor will prices jump - speculation is a fact even now. Nor will anything change when the paper changes - the time was not so far away when we replaced all the banknotes on the network with the removal of two zeros. However, it is fashionable to speak loudly and baselessly. I am worried about the stupidity of the people who speak and try to lead us. Economists without a single lev in their pocket or a job, theorists without a single day of work experience, as well as “paid” speakers in morning blocks. Especially from political “leaders”, with obviously non-Bulgarian interests.
- What changes in the structure and way of running the economy in the country with the adoption of the euro?
- Nothing. Running the economy in our country has long been with the euro as a measurable unit. Processes, recalculations and payments will change. Processes and policies will have to adapt, which is the most important and significant. Control, in addition to internal - as it is now, will also be external - which is necessary for our political-economic mix. The way it is run will have to become more transparent and far more comparable.
- The currency board is going down in history. What did it give us?
- The currency board does not make us smarter or dumber. What has existed for so many years is a given and over. It is time to adapt to a new economic environment from which we are lagging behind, new needs for business and for people, it is time to come out of our shell and enter a bigger game with far greater opportunities. Bulgaria is not small, it is not poor, and it does not need to be limited by such an instrument anymore. We ourselves must manage our economy, systems and governance - wisely, long-term and sustainably. If mistakes are made - this will not be due to the lack of a BOARD.
- What changes in our country with the introduction of the euro, if we look at the process from the perspective of the European Union?
- The changes are small. Business has been working in foreign markets for a long time and operates with the euro. I sincerely hope that we will become more competitive, participate more in larger markets, and that Bulgarian companies will have a European influence. We will be a little more recognizable for business and for the European workforce if we increase our competitiveness, productivity, and purely commercial turnover/remuneration. The big, scary problems, fears, desperate scenarios, apocalypse and the closure of Bulgaria are only due to the protests. Business is actually working.
- Will business become freer after there will be no fixed exchange rate for the euro?
- It will not be freer than now. Those who work well will continue to work well. The difference will be in transparency, easy traceability of capital, access to markets and financing, access to more partnerships, there will be no currency conversion and currency risk. I would be worried about increased bureaucratic burden, while complying with European regulations and reporting. The Bulgarian civil service community will certainly benefit and increase, citing increased needs and obligations, which business will pay for. There is a risk of conflict between the civil service and business, which is smoldering with a delay.
- Bulgaria adopted the euro – what a signal this is to investors…
- The signal to investors will arrive much later. With the euro, in principle, it is good, but have we changed, are we more reliable, is there an environment for growth, are salaries growing smoothly or do we change the burden three times a year, are we competitive with neighbors who have had the euro for years, do we have a regulatory burden, do we have tax breaks for the change, is the infrastructure and energy system developing, do we have adequate legislation and justice. The problem with the outflow of investments is not in the euro. The decline is a double-digit percentage, even Bulgarian capital is looking for realization abroad - Poland, Greece, Albania, Slovakia, the Baltics, even Great Britain are far more attractive than Bulgaria now. We have a lot of work to do in this, but it has been neglected for years.
- Will the euro shed light on the traceability of cash flows in our country…
- I personally believe it. My arguments are that it will be monitored not only by Bulgarian financial regulators and authorities. The euro is a precisely defined money supply, which is monitored by European authorities on a European basis down to the client account level. That is, strange large transfers, large purchases, retention of large cash, disproportionate expenses of state officials (or their sons), will not be in a folder sunk in some expensively paid drawer. Transactions between unclear owners, tax crimes, import and export of capital, or complicated state administration will also be checked in a different way from the outside. Corruption cash will become more difficult, because of clear transfers and deposits, because of their mandatory reporting. Banks and money transfers will be subject to completely different control, reporting and monitoring. The questions that are about to be asked to the inspection bodies in Bulgaria by the European institutions will be far more interesting and mandatory. They will no longer be so helpful or obstructive according to “my man”. I am sure that a way will be found to circumvent and bypass this, but it will take time. Healthy and healing time, which we must use correctly.