The budgetary situation in Bulgaria has been irresponsible for the last two years, which leads to future potential problems that are happening faster than expected. This week’s Treasury report comes as no surprise, and while it is unlikely to need help from the International Monetary Fund, it will take reformist administrations to deliver deficit-free budgets. This was commented by Nikolay Vasilev, managing partner of “Expat Capital”, on the air of the program “Business Start” with host Hristo Nikolov.
“Before the previous early elections, the public debt was about BGN 32 billion – currently it is over BGN 40 billion, there are still early elections that may not produce a government. Let’s sleep a little longer and say that there is no problem, and this This year the debt could be BGN 50 billion, and next year BGN 60 billion. What must happen in the state for someone to understand that there is a big problem?”
The debt-to-GDP ratio is not growing as fast as in other EU countries of concern, but that could happen with the policies of recent governments, Vassilev said.
According to him, since joining the EU, reforms in Bulgaria are almost absent, there may be some small things, but they are by no means sufficient. “There are no cuts in the public sector, no concession construction of infrastructure projects and “suddenly, the money in the state was not enough – it was clear that it would not be enough”, Vassilev added.
Asked about the risk of changing the fixed exchange rate of the leva to the euro, Vasilev said that the logic is budgetary because of the increase in government spending and the accumulation of deficits for the implementation of populist policies. “It’s only a matter of time before we crash,” he believes.
Almost no one in power currently wants Bulgaria to join the Eurozone, and the budget policies since 2020 are moving the country further and further away from this goal, Vassilev said.
Clarifying that he did not know the details of the proposal, Vassilev said that he was against the taxation of the excess profits of businesses mentioned in a MoF report, but he was in favor of the abolition of the differentiated VAT rate for all goods, except for international tourism. It will hardly need help from the International Monetary Fund, but it will require budgets without deficits.
“We got her to destroy the good tax system and call the International Monetary Fund because the country is on the brink of bankruptcy – imagine how badly we’re doing now!… The problem is spending, not revenue – we should not have so much spending” , the guest also said.
Commenting on the banking turmoil of the past two weeks, Vasilev said he does not expect more turmoil as banks are now less aggressive and better capitalized than in 2008. The main cause of the bankruptcies in the US is misjudged risks amid the rising interest rates, and the decision to save the unguaranteed deposits in them was defined by Vassilev as incorrect, as it stimulated banks to take on more risk.
“European banks and Bulgarian banks are very well capitalized and there will be no consequences,” he added.
Vassilev also comments on the main problems facing Bulgaria for this century, which he discusses in his new book “Next.bg – a book about reformers, hawks and storks”.
“First of all, it is the demographic issue. Demographic policies should be the most important and should be more important than all the current issues… Money for demographics is the best money invested for the future of the nation”.
You can see more about the topics in Nikolay Vassilev’s new book at the video of Bloomberg TV Bulgaria
