The Managing Director of the International Monetary Fund Kristalina Georgieva commented Bulgaria’s future in the Eurozone and other topical issues of the world economy in an interview for the Bulgarian National Radio. Now, the accession to the Eurozone is better for Bulgaria than in the past, because the world is more turbulent, Kristalina Georgieva said.

Progressive or flat taxation

In Kristalina Georgieva’s view, wise progressive taxation does not hamper economic growth, but on the contrary-it stimulates growth, because it reduces inequality in society.

Inequality in Bulgaria is relatively higher than in other EU member states. That is why Bulgaria must think how to solve this problem. I do not want to make any statement in either direction, because this assessment must be made very carefully and all benefits and risks are weighed. Bulgaria should see whether it has other instruments to solve inequality problems- for instance the expenditure side of the budget. The education of children aged five or under should be Bulgaria’s priority, because the personality of each person starts to form at a very early age.

Green policies- impetus for investments

The IMF Managing Director warned that Bulgaria should not fall behind on green policies, because low carbon economy will give new impetus for investments and create new jobs. I hope that Bulgaria will find its place in this niche of new competitiveness, Kristalina Georgieva further said.

The fight against climate changes- a personal cause

Climate change is a huge challenge, but it also gives us the opportunity to change our economies. Indeed, the transition to low-carbon economy will be difficult for some EU countries. However, it will bring positive changes in our society, Kristalina Georgieva pointed out.

One year ago, I read the report that all our forecasts of climate changes materialized and that the extent of climate changes even exceeded our expectations. I was thinking in the whole time about my granddaughter and that when she turns twenty, 100 million people will live in poverty due to the consequences of the climate changes. When she turns forty, there will be at least 130 million climate refugees from the Middle East and Africa and when she turns ninety, our planet will be 3-4 degrees warmer and it will be almost impossible to live on it, if we don’t make the necessary changes, Kristalina Georgieva went on to say.

The gradual introduction of a tax on the carbon emissions will lead to predictability and put a price on these emissions. The money must be used to investment in green technologies and reduce the pressure on people who will wear the burden of this tax.

The silver bullet against low growth, interest rates and inflation

We are looking for the “silver bullet” to counter low economic growth, interest rates and inflation that prevent the economy from being dynamic. Perhaps, it is hidden in the transition to low-carbon and environmentally friendly economy, the Managing of the International Monetary Fund says.

Policy of low interest rates to continue in 2020

The IMF has warned that the global economy is in a synchronized slowdown, Kristalina Georgieva explained. We must continue keeping interest rates low in 2020, in order to push economic growth to 3.3% next year, the IMF Managing Director says and adds that this decision will yield two problems in the future:

Low interest rates mean cheap money-appetite to borrow money. The borrowed capital soared to USD 188 trillion globally. This may have negative impact on the economy of 43% of the countries. The second problem is that when interest rates are low, we are looking for profitability somewhere else by assuming a higher risk. The accumulation of risk concerns all economies, especially the Eurozone economy, where interest rates are low and negative.

In Kristalina Georgieva’s view, however, there is no reason to expect a serious economic turbulence.

Edited by: Yoan Kolev

English version: Kostadin Atanasov