In the context of rising inflation and the tension surrounding the state budget, the MP from „Progressive Bulgaria“ Konstantin Prodanov outlined key problems and possible solutions in the country's economic policy. In a conversation with the host Zheni Marcheva, he commented on the state of public finances, inflationary processes and necessary reforms.
„I have worked in the financial sector for more than 25 years - both in Bulgaria and abroad. I have dealt with asset management, investments, global markets, so I think I have a good view of things.“
Regarding a possible participation in the executive branch, he denied a ministerial post:
„Let's not assume one thing or another. There is time, it will become clear very soon, but rather I feel my efficiency coefficient in the legislative body.“
Prodanov was categorical that there is a lack of complete clarity about the state of public finances: “The truth is that we do not know, we do not yet have complete clarity about what is happening in the state's finances.“ He stressed the need to hear the Minister of Finance in order to clarify key issues. “The fragmentary picture that we have at the moment shows some rather worrying trends related to the size of the deficit, which is a record for the last 10 years.“ According to him, there is uncertainty about what payments under investment programs have been made, what the fiscal reserve is.
The imbalance between revenues and expenditures is particularly worrying. “We are concerned that there is an outpacing growth in expenditures compared to revenues, although revenues are growing at double-digit rates“ and added that we have more revenue and yet we have a record deficit.
"It is very important - in order to make a clear diagnosis and it is good to get a complete picture of the financial situation in the country", said Prodanov.
Prodanov clearly stated the position of his political force: “We have made a commitment – we will not touch the tax and social security burden.“
According to him, the main problem is not the lack of resources, but the way they are spent: “The state has enough resources if they are spent correctly, effectively and are used primarily for investments to increase the competitiveness of the economy.“
Prodanov admitted that the topic of administrative reform is chronically neglected:
“I completely agree – everyone talks, but no one does it.“
He outlined the main problem - “It is much easier to continue in the same way, which buys people's love by giving away money, without this being associated with increased productivity.“ The solution, according to him, includes digitalization. “The electronicization of public services and the introduction of digital technologies will make the administration both cheaper and more effective.“
Prodanov confirmed that work is being done in the direction of merging departments in order to optimize work and the budget. “There will be a certain optimization in terms of merging departments, but which ones exactly and in what way, you will find out very soon”, said the MP from "Progressive Bulgaria".
Prodanov made a detailed analysis of inflation, dividing it into different stages and causes. For the last few months, he noted that inflation is entirely due to the conflict in the Middle East. These are reasons outside of us – a supply shock that we have no way of influencing.“
"The only thing that can be done is to guarantee the supply of oil and gas in our country and there is no administrative sand on the wheels of market mechanisms that would block their functioning - all traders and suppliers have access to tax warehouses, they have no shortage of working capital", Prodanov said.
For the earlier period, he emphasized the psychological factor. “When too many people believe in something, they begin to behave in such a way that it becomes reality – a self-fulfilling prophecy.“
1. Social measures - they are aimed at the most vulnerable groups.
„They should be larger in size, much more targeted and temporary.“
2. Business support - the measures should be temporary
„To help the most energy-intensive enterprises that are losing competitiveness.“
"In the long term - we will look for like-minded people within the European Union to review and derogate from carbon emission trading quotas, because they are literally killing our energy sector," the MP said.
3. Macroeconomic measures
“This extremely unbridled fiscal policy must stop. Through a reform in the expenditure side, as well as optimization and higher efficiency in the public investments that are being made. This is a long-term project - to move to program budgeting.
He criticized the practice of financing through debt. “In recent years, loans have been taken out for current consumption, not for investments,”, Prodanov said. He drew attention to a serious structural imbalance - Productivity cannot grow by 1-2%, and wages – at double-digit rates.
He also described the vicious cycle of the minimum wage: “We are like a dog chasing its tail.“
Regarding possible state interventions in prices, he was clear: “We will not put price ceilings.“
Instead, a transparency mechanism is envisaged. “We will collect price information daily from large retail chains and calculate a fair price,“ Prodanov said. In summary - We will look at the wholesale price, plus a fair markup.
The goal is not control, but a disciplinary effect. “This will be a tool that will raise a red flag in case of too large differences.“
At the end of the conversation, Prodanov also commented on the topic of energy contracts:
“This contract could be beneficial for Bulgaria”, Prodanov believes.
He pointed out missed opportunities. “There were memoranda with the Hungarian gas company and with Serbia, but they were not implemented.“ And he stressed the importance of active diplomacy: “Everything is a matter of negotiations and diplomacy, which unfortunately was not done before.“