One of the first major tasks facing the new regular cabinet will be the adoption of a state budget. The topic was commented on in the bTV studio by former Minister of Finance Milen Velchev.
He stressed that preparing a new budget is always difficult, especially during political change. “It is always difficult for a finance minister when the political situation changes radically and new rulers come in. Because, usually, such is the reality in Bulgaria that the legacy is either really difficult, or is perceived as difficult even by the general public“, he pointed out.
According to him, the difficulties are also exacerbated by the external environment. “In this particular case, we are witnessing a difficult global economic environment. I am not only talking about high fuel prices, but also about the uncertainty of how far the current crisis in the Persian Gulf will go“, explained Velchev and added that if the crisis continues “the world, Europe and Bulgaria will be on the brink of an economic crisis“.
The financier also commented on the state of the budget. “I think that it is completely correct to say that the deficit was over 3% last year, this is already being reported by government sources. But for this year, it is not clear what the deficit will be“, he said, adding that the year started “with a record high deficit“, while “the accounts in April were at zero“, according to information from the finance ministry.
Regarding spending policy, he was categorical that changes were needed. “First, the automatism in the increase in wages must be eliminated“, explained Velchev. In his words, this leads to additional consumption and, accordingly, to pressure on prices: “When we tie wages to a factor that is above inflation, this provides additional income that is spent. If there are no more goods and services against them, this means higher prices.“
Regarding the pension system, he said that a more cautious approach is needed. “I think we cannot afford such a dose of subjectivity when it comes to pensions. "Pensioners deserve to know that their pensions will be protected," he said, adding: "It would be better if the Swiss rule, or some variation of it, remained."