Effect of anti-crisis measures estimated at BGN 1.5 billion

published on 3/24/10 12:55 PM

Jelyazko Hristov, Simeon Dyankov, Bojidar Danev and Lukan Lukanov (from right to left)

Photo: Tanya Harizanova

The effect of the anti-crisis measures that the government, employers and trade unions have been discussing to tackle the budget deficit, has been estimated at BGN 1.5 billion (or nearly 750 million euros). This is what Finance Minister Simeon Dyankov told a meeting of MPs, bankers, employers, representatives of associations and economists. He presented the measures put forward by the government for support and sustainable growth of the Bulgarian economy.

“What I would like us to achieve in terms of financial result is either more revenues, or less expenditures estimated at nearly BGN 1.5 billion,” Finance Minister Simeon Dyankov said. “If we succeed, I shall worry less about the Bulgarian budget until the end of the year. It is not necessary to cover each of the measures with savings or higher revenues. We have some ideas that are themselves good for the development of the business, the banking system and the employment.”

During the forum the economy analysts insisted on the continuation of the reforms in the health care and pension system, as well as the rapid absorption of EU funding. They proposed a review of the expenditures of all state institutions looking in the meantime for an opportunity to curb them. The most arbitrary idea is to increase the VAT to 22% instead of the current 20%, so as to ‘put out the fire’. The government estimates reveal that this might lead to a revenue of nearly 270 million euros to the state budget in a single year.

“I am definitely against the idea to raise VAT by 2% both as a tax payer, and as a macroeconomist,” economy expert Georgi Stoychev said at the forum. “This will seriously undermine the confidence in Bulgaria, viewed by international entrepreneurs as a country on the road to lower taxes. The effect on the budget will be insignificant and the shortcomings will outweigh the benefits because of the lowered investment interest.”

The government, the employers and the trade unions reached an agreement on the anti-crisis measures to support the fiscal policy, to tighten financial discipline and curb expenditures. This transpired after the three-hour sitting of the National Council on trilateral cooperation with the Council of Ministers.

“For many years now we have had the prerequisites to reach the desired consensus within the trilateral council,” Lukan Lukanov, deputy chairperson of the Confederation of employers and industrialists in Bulgaria commented. “The business is very much worried by the delay in the proposed measures. The dialogue has to end as quickly as possible, so that the government has the time to start working on their implementation.”

The trade unions are not in favour of ‘abrupt changes’, despite the fact that the proposal to increase VAT was not discussed. The employers on the other hand claim this is much more grounded than the change in direct tax.

“We have never had such an unprecedented dialogue before,” Bozhidar Danev, chairman of the Bulgarian Industrial Association said. “We have however a proposal to make. We suggest that the political parties too decrease the subsidies they receive from the state budget in line with the overall reduction in expenditures in the Bulgarian society.”

The trade union embraced the idea and called on the political parties to share in the burden of the crisis by cutting the state subsidies by 15%.

“We express solidarity in times of crisis. Whenever a society goes through hard times, the state assumes some of the suffering without risk, the business takes another part, and the individuals take their share,” commented Zhelyazko Hristov, president of the Confederation of Independent Trade Unions in Bulgaria. “That is why we appeal to the political elite to share in the crisis, too.”

English version by Radostin Zhelev

По публикацията работи: Tanya Harizanova

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Effect of anti-crisis measures estimated at BGN 1.5 billion

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