Galery

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When we receive our monthly salary, a part of the funds we put into a special retirement account. It also exists to now, but very small part of our contribution actually goes to that account, because most of it goes into the state. In other words, most of these funds are not being saved, but it is spent immediately in order to cover current needs. When we look at what proportion of the budget spending take the pensions we will see that a reform in this sector is essential.

Explain for us in details what do you think are other compelling reforms in the state system?

In the cases of cuts it must be clear that we can not make exceptions. Each administration must contribute its share, which currently doesn’t happen. The government undertook expenditure cuts, but not in all administrations. For example, it has not provided for any cost savings in the Ministry of Defense or the Ministry of Labour and Social Policy. So ministries, which spend almost one billion Euro per year are not affected by the cuts. The call of the Institute for market economy is to correct this and for these ministries also to optimize their budgets, especially the Ministry of Defence. There are still many people in it for who it is not clear what they are doing there. Also it has many real estate properties which the ministry could not operate properly and this absorbs funds.

Other measures that may help the country during a period of crisis is a review of the functions of the state. In other words, not to cut a little bit from each function, but in general to reconsider whether some functions should remain in the state. For example, whether the state should provide employment. It is one thing to provide rules on the labor market, and it is another thing to directly spend money to provide employment, which it actually does extremely unsuccessfully in recent years. A proof of this is the last report of the National Institute of Statistics, which indicates that the active programs for employment provision were ineffective. Many people who have lost their job due to the crisis, and have later returned to the labor market have found themselves the new job opportunities. State policy in this sector has not helped in any way to restore or increase the job positions in the country. Here is an example of a function of the state, for which for years have been spent a lot of money and nothing significant has been achieved so far. Regardless of that it continues to exist.

Such initiatives of the government that cost the country dearly, but have little effect over the years are the programs for encouraging the investments in the economy or encouraging entrepreneurship. Instead the state confining itself to establish a common legislative framework in which these private initiatives to develop (which costs nothing), the state actively spends money without results. It is clear for everyone that entrepreneurship is not happening because of a Programme of the Ministry of Economy, but because of the business environment that exists in the country.

In this line of thought, the state still continues to produce tobacco through Bulgartabac as well as it still transports passengers through BDZ. Both of the activities are presumably not the job of the state. In the tobacco industry things are totally confused. State itself manufactures cigarettes, and then punishes the consumers with the imposition of excise duty. Appart from this it gives subsidies to farmers (additional spending) to produce tobacco. This year 116 million euro of the budget have been allocated to farmers wishing them to make reform themselves and begin to engage in any other occupation. Of course there is always the risk that they collect the money and continue to engage in tobacco because there is no control body.

Do you think that the update of the budget this year will help for the quicker recovery of the Bulgarian economy?

This update actually does not change anything significantly. It was expected that at the moment when established budgetary problems, some measures will be undertaken. These measures will respectively give some result and respectively must be included in new budget. This, however did not happen. By updating today we vote and validate the fact that revenues are anyway going down and costs are going up. These are not new measures, but it is simply legalizing of the reality in the country without taking any actions for a change in a positive direction.

Does this contradict the claims of the representatives of the IMF for Bulgaria that the country this year started to emerge from the crisis?

You could say that to some extent, we are exiting the crisis. Trade began to grow, exports slightly increased, unemployment decreased by around a percentage, perhaps because of seasonal employment, and there is a movement in the economy as a whole. This, however is not sustainable growth. We can not say that we are at the bottom, nor however can we say that we are very high. Our recovery is directly related to the confidence of the foreign markets in the country and in the government policy. The higher is the confidence, the more will be the investments. This currently does not exist in Bulgaria.