Galery

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Bulgaria has a very good macroeconomic picture - low government debt and public deficit, flat taxes, etc.. Why would the markets not trust us?

Maybe the picture was good up to a point in time, but has already started to deteriorate quite quickly and it happens from a government perspective. At the beginning of this year it turned out that the 2009 budget was not balanced and there was a sizable deficit. This was somehow seen as something accidental and here we are standing in the middle of 2010 and again talking about updates and changes. There appeared also some doubts about the reliability of the data which is not in our favor. Just one after another we started to give bad signals to our European partners and the international markets.

Do you think will win or lose by our involvement in the energy projects Burgas-Alexandroupolis, South Stream and the Belene nuclear power plant?

It is difficult to say what we gain and what we lose, because this issue also has a geopolitical side of it. Obviously, decisions tend to be in favor of Europe rather than Russia. Purely from economic prospective, we are giving up a lot of outlay. For the construction of the Belene project for example we need to invest an amount equal to our total government expenditure for one year. This is an investment that no one else can make but the public sector, so now we will save costs. Bourgas-Alexandroupolis oil pipeline and South Stream are projects that will not load so much the budget, but there is still the question to what extend do we need them and do we have the money and the will to implement them.

What are your alternatives to reduce the deficit?

Immediate cut of the costs of each ministry and government department as well as the waiver of certain state functions and government programs that are clearly ineffective. That would be a precedent, because Bulgaria has not waived any of its programs so far. Such inefficient projects have been restructured, reformed, renamed, but no Bulgarian government has ever renounced any of its programs. Only new programs are opened, and no old ones are closed. Either way EU funds are crucial for rehabilitation and development of the Bulgarian economy, and if there is a market niche, the entrepreneurs will wait for EU funds to offer them programs and will develop themselves the opened opportunity.

The eurozone currently passes through a difficult period. When and under what conditions you think Bulgaria will be ready to adopt the single European currency? How will this help us?

Lev is directly tied to the euro-currency at the moment so any shock that the eurozone lives through will inevitably impact on us. The difference that any currency outside the pact has its hidden risks. They may be both political, and monetary. Whenever we have problems with the budget there is always someone to say that the currency board is threatened and may fall. This scares the people and gives a bad signal to the international markets. The only way to end such speculation is by entering into the eurozone, because besides the financial one there is also a political risk. The board is a decision of the state and there lies also a political risk. The state may say one day that if we keep the international currency board we would have to reduce pensions (for example) in order not to reduce pensions we will waive the board and start to print money. So the entry into the eurozone will solve the problem with these fears.