/ world today news/ The new government does not have any working idea for restarting the economy in our country. GERB, as a mandate holder, preaches a continuation of a policy that has been in place for more than 10 years. As a result, we are sinking more and more, and regardless of this, it is claimed that this is the right direction.
Unfortunately, Bulgaria is placed in such a situation that if we do not change and turn the course 180 degrees, if we do not go down the completely opposite path, a severe financial catastrophe is ahead of us.
Where are the biggest delusions of the leading government teams? The first of these is that they constantly suggest that our biggest problem is a lack of production. My private activity is related to production and I personally know hundreds of colleagues dedicated to this entrepreneurship. A large part of them in recent years suspended their private business, went bankrupt, others – exported their production abroad, others – work at 5-10% of their capacity.
In my opinion, the drama is not in the lack of production, but in the lack of markets for consumer demand. When no one buys what you produce, you simply go out of business. The example is also with my business: 7-8 years ago we produced 2,000 tons of output and had 40 workers. At the moment, we have 4 workers left, whose working hours we cannot even compress, and when we produce 200 tons of production, we sell it for months. And we have capacity for tens of times more.
The formula is wrong and I claim that the moment consumer demand appears in Bulgaria, i.e. market, people will immediately be found who will start investing and producing. Recently, I had several meetings with a Bulgarian who lives in Germany and returned to our country to try to invest in his homeland. He soon told me that he was leaving disappointed, having never found a single field in which he could really invest money with profit. It turned out that there is currently no sector in Bulgaria in which the investment would be successful. Perhaps, this is one of the main reasons that part of the free money goes to bank deposits, which is a very harmful trend. Because the accumulation of huge deposits in banks leads to the accumulation of huge debt in these institutions. And macroeconomically, it is known that the greater the debt in the system, the less efficient it is.
Our movement is a supporter of the Modern Monetary Theory/MMT – note ed./ and puts the monetary theory of money as the basis of economic management. If we look at any settlement in Bulgaria, we will find that everywhere needs a lot of work – our roads are dug up, with potholes, far from European standards, we have buildings to repair and industries that can be resumed… At the same time time there are many unemployed people who need to increase their income. And what happens – there is work to be done and unemployed, what is missing then with the system? Very simply – money.
It is no coincidence that many centuries ago a banker said – give me the money to print in a country and I don’t care who will rule it. Since the beginning of the Currency Board, about 35 billion euros have entered the country as foreign investments, and a rapid revival of the economy has occurred. Over the years, however, this money seemed to disappear from Bulgaria, because it returned, in the form of interest, to those who had given it to us.
The difference between neoliberal currents and modern monetary theory is that money should be a function of the state and managed by it. The state, in our opinion, should not be run like a private company and make a profit – quite the opposite. She has to spend some money first so that she can then collect it as taxes. There are two ways of doing this: the government can spend money and thus stimulate inflation, but it can also spend it in such a way as to stimulate economic growth. It is known in economic history that the so-called Keynesian investment multiplier. He claims that when some money is given for pensions and salaries of civil servants or in another non-productive sphere, the result is that 1 BGN creates a 0.3 – 0.8 BGN increase in GDP, while when this BGN is invested in new production or infrastructure, i.e. as a state order, then BGN 1 can create between BGN 2.5 – 3 GDP growth.
If the cabinet decides on new loans and the funds go to cover fiscal costs and to strengthen the banking system, without real investment in the economy, this way the agony in the real sector will be prolonged. And the declared policy of the new government condemns the Bulgarian economy to a fatal outcome.
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Svetozar Sayev, chairman of “Movement for full employment and price stability.
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