/View.info/ Business has learned to survive severe political and economic phenomena. This was stated in an interview with BGNES by the executive chairman of BSK Bozhidar Danev.
The passing year of 2014 is very difficult for the Bulgarian economy, due to a coincidence of a number of negative impacts on it. The whole year passed through political uncertainty. 2014 is a year of three governments, and each new government brings disruption to the business environment. There was also a lack of predictability of what will happen, what is the future action of the respective government. Moreover, time is required for each successive government to be able to take over from the previous one, to be able to get into motion and support the Bulgarian economy. This cannot but stress the business environment, Danev said.
He pointed out that the second stress to which the Bulgarian economy was subjected was the economic one, which was quite serious. “It has external and internal manifestations. The external manifestations are the crisis in Ukraine, the problem with the prices of a number of raw materials, the closure of certain markets. The internal manifestations are the suspension of European funds, the release of European funds and the additional financial stress, which was the problem with KTB. Adding to this the serious natural phenomena that had a negative effect on the entire business environment and on the development of the business in general, it can be seen that the business withstood all the severe tests, despite the fact that it was a very difficult year for the Bulgarian business”, added Danev .
I do not dwell on the judicial problems that we have witnessed in recent years, but they also exist throughout 2014 – from the random selection of magistrates, to the decision on properties of Bulgarian businesses. However, all these cumulative accumulations and negativity were overcome by Bulgarian business. It withstands stress tests and will probably reach 1.4% of GDP. Regardless of these uncertainties, from this political-economic entropy, Bulgarian business came to life. We showed that the Bulgarian lives in the most difficult and strange conditions, stressed Bozhidar Danev.
He assured that there is a lot of optimism in the business regarding 2015.
“Part of the geopolitical influences are extremely beneficial to the Bulgarian economy and I expect them to be even more pronounced. This is the collapse of the price of oil, which will lead to a collapse of the price of gas, will lead to a collapse of the price of hard coal. Bulgaria is a major importer of energy resources. It spends about 6 billion annually – if we imagine a drop in energy resources to 50 percent, what a huge income we will have for the country. If we look at the palette of our exports, it is constant and somewhat strong energy-intensive. That is, the palette of our exports will be significantly reduced. This is a huge positive effect. For me, the views of some people that the income will be reduced to the budget, due to the reduction of the VAT. We must not forget that the turnover will increase. The excise tax is not on the value, but on the quantities,” said Danev. He added that the more quantities are used, the bigger the revenue part of the budget will be.
“The fiscal will win. There is also a break-even point where these things can be specified, but it is a matter of precise management and counting how this impact will be reflected on the business. The business believes that the impact will be positive and if we preserve legal stability and do not write laws for 5 days, and adopt them for these 5 days, I expect that 2015 can be a serious year of growth for the Bulgarian economy”, Danev is convinced.
The business survives, despite the political turbulence and despite the political pressure that goes through various channels – whether it will be along the line of public procurement, the line of European funds, the line of introducing regulatory regimes, for the pressure of the administration. We have created a gigantic administration that is over 700,000 people and if it is not minimized on the basis of e-government as written in the program of the coalition government, we do not have many bright moments in our development. In order for us to reach the other countries in the EU, we need economic growth of 5%, 6%, 7% and 9 per 100. These are the normal possibilities of an economy that starts from very low levels. 80 billion is a highly marginalized gross domestic product,” said Danev.
He emphasized that investments are an accurate indicator of how the Bulgarian economy is affected and how it has taken these stress tests. “Unfortunately, there is a collapse of foreign investments, there is also a decrease in local investments. But, it seems, politicians are also hypnotized only by European funds. If you look carefully at the structure of investments, you will see that they are about 17 – 18 billion, from of which only 3 billion are European funds. What politicians should do is to pay more attention to the business environment so that we can increase local, Bulgarian investments that can guarantee a permanent progress of the economy and prosperity, including improving the standard of the Bulgarian population.
If you look carefully at the main part of public procurement, what supports the state in the development of business goes to the large corporate structures. Back in Dyankov’s time, small business was placed in very difficult conditions. When there is both a crisis and stress tests, the first business to go is small and medium-sized businesses. He hardly comes to life. Only the family business comes to life, where the family resources are used. That is, enterprises or companies in which there are only up to 10 employed people. Rather, I expect that the corporate business will pull, which will create an environment so that small and medium-sized businesses can also develop”, Bozhidar Danev is categorical.
He added that small and medium-sized businesses cannot be pulling the economy forward, they can be pulling in very rare cases when there are some innovative solutions that have international recognition. “So far, such solutions have not appeared on the Bulgarian market. In 2014, many of the big energy projects were stopped. The huge mistakes we have in the energy sector are political mistakes. The politicians made huge mistakes with the uneven development of renewable energy sources and with the legal prerequisites for these sources. Not to mention the ambiguity in the suspension of large energy projects. Bulgaria is a small country and in any case the only thing that can contribute to it is its geostrategic position, that is, it can transit and redistribute flows” .
He commented that the prime minister’s idea of building a gas hub on the coast of the Black Sea is one of the ideas that in any case has a geostrategic significance.
“Otherwise, Bulgaria will be surrounded, as attempts are constantly being made, surrounded by all transport corridors. I heard recently about a proposal to have a high-speed railway Budapest – Skopje – Thessaloniki. Again Bulgaria is surrounded with this proposal. That is why I am surprised by the projects that Bulgaria provides according to the Junker plan. We see a serious scarcity of Bulgarian projects, in which there is a lack of the slightest feeling that we are in the 21st century. Again, we are dealing with everyday, ridiculous projects and skills are too scarce in our country. These projects are not discussed by the EC. You will see that the Bulgarian proposals under the Junker plan are comparable to over 100 billion of Poland, over 170 billion are for England, over 5 billion are for Croatia,” Danev specified.
The fact that Bulgarian business has survived these stress tests means that it has learned to rely on itself. He is currently building defensive walls so that he can be untouchable by such political and economic phenomena, Danev also said.
On the subject of the pension model, Bozhidar Danev stated that the nationalization of private pensions is too hasty a decision. “You cannot in 4 days make a major change in philosophy in a system that has received the positive evaluations of a number of international institutes, and which has been applied in our country for 15 years. If some of these funds are maintained on the principle of the so-called right of choice, small accumulations will be transferred, which will burden the NOI budget. But I am sure that the large lots will remain in the universal pension funds. The other thing is that the universal pension funds are not well managed should also be carefully analysed, as we already have the lessons of KTB and should derive considerable benefit from them.
The economy is too inertial. In order for it to affect the standard of people there must be at least 6, 8-10-12 months of growth in the economy to begin to slightly affect the standard of people and their income. If we do not have long-term development, predictability of the business environment, we cannot expect the standard of people to be improved soon. Currently, the standard of people is improving at the expense of immigrants, who also contribute well to the balance of payments of our country by transferring funds to their relatives. We cannot expect the standard of living of the population to improve in 6 months,” Bozhidar Danev also stated.
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