Program Director and Chief Economist at the Center for the Study of Democracy Ruslan Stefanov warned on the air of the program "Metronome" on FOCUS radio that high prices, the budget deficit and the lack of a budget are "symptoms, not the disease itself".
According to him, the main problem facing Bulgaria is the "institutional deficit" and the inability of the state to counteract the concentration of economic power and the "conquest of the state".
"The main problem is actually not just a budget deficit or inflation, but the institutional deficit in the country", said Stefanov. In his words, Bulgaria needs to "restore and continue building sustainable institutions" that would limit oligarchic dependencies.
He emphasized that Bulgaria is already a member of the eurozone and has "one of the lowest debts as a share of GDP", which creates stability and an opportunity for long-term planning. According to him, however, the elimination of external mechanisms for monitoring corruption means that "the entire responsibility falls on the government".
Stefanov positively assessed the cabinet's intentions to direct efforts towards institutions such as the Competition Protection Commission and the Consumer Protection Commission, instead of "populist measures" and direct price control.
"There was a retreat from these firm ideas about price control. Rather, what the prime minister said is that there will be an effort to improve consumer rights without breaking market mechanisms, he said.
According to him, inflation is due to several main factors - international pressure on fuel prices, structural increases in costs and wage growth without a corresponding increase in productivity.
"Entering the eurozone has led to convergence or approximation of prices, including services", Stefanov explained, adding that Bulgaria is among the countries with the fastest income growth in the EU in recent years.
The economist warned that limiting inflation is impossible without "a clear and predictable budget framework" and realistic revenues. He criticized both the practice before 2020 of understating revenues and their subsequent overstating under coalition governments.
"The first thing we need to see is whether realistic revenues will be set and, accordingly, a moderate reduction in the deficit", he pointed out.
According to Stefanov, reform in the administration does not mean mechanical layoffs, but building quality institutions with prepared personnel and a clear political mandate.
He also emphasized the need for better management of social spending and limiting abuses of social payments, TELK decisions and early retirement.
Among the main risks facing the country, Stefanov pointed to the accumulation of debt. In his words, "the most direct path to loss of sovereignty" is precisely the rapid increase in indebtedness, as shown by the examples of Greece, Romania and other countries.
As opportunities for growth, he highlighted the faster absorption of European funds, investments in offshore wind energy and the inclusion of Bulgaria in global processes surrounding the development of artificial intelligence, with which we are lagging behind.
In conclusion, he stressed that the key test for the government will be whether the budget and reforms will lead to "improving the quality of institutions" and limiting "the capture of the state".