The Parliament adopted on second reading the Law on the Introduction of the Euro, which also includes a number of mechanisms for controlling the prices of essential goods and services. Among them are bread, milk, eggs, electricity, water, heating and medicines. The Council of Ministers will now be able to take temporary measures against sudden and unjustified increases in the prices of these products, without requiring approval from the National Assembly. The new provisions will enter into force on August 8 and will be in effect until August 8, 2026. What to expect… Dimitar Margaritov, former Deputy Minister of Economy and former Chairman of the Consumer Protection Commission, spoke to FACTI.
- Mr. Margaritov, the deputies adopted the changes to the Law on the Introduction of the Euro on the second reading, but shortened the period in which they will be effective. It will no longer be a year and a half, but will be valid for only one year. Is this a good step?
- These are some extraordinary amendments that were made to the already effective Law on the Introduction of the Euro. I think that in the form in which the changes were adopted by the National Assembly, they are a positive signal to society, which is tense and expected some measures from the state. Regarding the period, it is difficult for me to assess whether it is good, because we also had a longer version - a year and a half, and in the initial version of the law it was one month. It is difficult for me to see the economic logic in deriving exactly such a period, because we were not familiar with the arguments of the importers. But for me this is a secondary issue, because the main thing, the main message is that the state is giving a signal to the people and is ready to take measures, if necessary, that would lead to calming down prices, respectively society. This, in fact, is the most important thing, because we are currently observing a tension in society.
- How do you interpret the term “unjustified price increase“, which will give rise to a sanction?
- With the latest changes, an attempt was made to introduce the clearest possible explanation, because certain sectors are already covered that will be subject to monitoring. If in the initial version of the law this concept was absolutely unclear and poorly defined, we now have specific listed objective economic factors, in which any increase that is not justified by objective economic factors will be considered a violation. Of course, this large range of reasons cannot be exhaustively listed in the law. And here is the delicate moment about the capabilities and capacity of the control bodies.
- That's what I was going to ask. Do the control bodies have the necessary capacity and people to check all traders what and how they do, what prices they set in this one-year period?
- It is obvious that this will not be possible. It is impossible to check absolutely all traders, but that is not the goal either. If I go back in time, because I was the head of the Consumer Protection Commission for seven years, I can tell you that we have always had a chronic shortage of people. About 20,000 complaints were received per year, and each complaint had to be checked. And then there were several hundred thousand retail outlets. So, a control body cannot catch absolutely everything, but rather it should be considered that by assigning additional functions and powers, it is good to increase the capacity of the control body so that the rest of its work, which also needs to be done, does not suffer.
- The changes to the Law on the Introduction of the Euro enter into force on August 8, 2025 and will be in effect until August 8, 2026. What will the prices be on August 9, 2026...
- The question is very interesting, but there is no exact answer. Lately, we have focused on these changes to the law, but they were adopted very quickly and there was almost no time left to discuss some other topics that are running in parallel. In this vein, let's not forget that there is another bill that is due to be considered after the parliamentary recess. This is a bill by the Ministry of Agriculture and Food, concerning supply chains, which also provides for some restrictions on pricing. And the changes in this law are planned to be implemented over a longer period of time. I think that in the last version that came out for public discussion, it was about the time until mid-2027. So there will be some overlap of regulations, which means that even if this period now in the Euro Law remains one year, is not extended, there will be other mechanisms through which the government can react to price increases.
- According to many analysts, prices will be suppressed for a year, and then what will happen? They predict an increase in inflation…
- I would share it if the law stated that prices cannot grow. And this is not the case. The changes to the Law on the Introduction of the Euro provide an option for prices to grow, to be increased, but under certain conditions, which, in my opinion, do not contradict the previous mechanisms of pricing. The presumption that the control authorities will act towards companies as if they were guilty, as if they were some kind of violators, should certainly be softened a little. On the other hand, business should also realize that it will apply the law in good faith when forming a price. The very fact that the legislator gave a two-month grace period during which fines will not be imposed…
- Yes, there will only be warnings, prescriptions will be given…
- Exactly. This means that the logic is rather to look for ways in which the implementation of the changes in the law will benefit business, and hence, of course, consumers. But in no case does this mean that prices cannot be increased when there is a reason for this.
- Since the beginning of the year, we have taken out 16 billion leva in loans to cover various budget increases. Taking out loans is a convenient means, but can it also reflect on the prices from August 9, 2026?
- I do not think that this issue has anything to do with price conditions for the consumer. When it comes to the budget and debt, we are talking about macroeconomic indicators, and they have their own explanation. After it became clear that we would join the eurozone, Bulgaria became attractive from the point of view of investments, respectively, for issuing debt on very favorable terms. There are certainly macro experts who are better than me and can explain it better. I don't think that issuing debt will directly affect price levels. Rather, what matters in this case is to restore calm to the market, because there has been a lot of talk in the past months, and the narrative was more in the direction that something terrible, bad will happen. Psychologically, this created the prerequisites for inflationary pressure. If we calm down, if we apply the laws as they are, if each control body does its job, as written in these laws, we will very soon understand how everything will happen. So it is better to look at things positively rather than live in fear and tension.