Headline:
Bulgaria’s 2025 Budget: A Fiscal Time Bomb or a Political Hot Potato?
Article:
Bulgaria’s 2025 state budget, still pending approval, has sparked concerns among economists, with prominent figures like Kuzman Iliev, chairman of the "Bulgaria Can" party and economic analyst, warning of looming fiscal challenges.
Energy Crisis Clouds Revenue Projections
Iliev pointed out several serious issues regarding the budget’s revenue projections. The ongoing energy crisis in Europe, he noted, could lead to increased production costs, driving small and medium-sized businesses, industries, and trade unions to demand higher energy prices. This, in turn, could strain the budget as energy enterprises struggle to cover costs. Moreover, funds earmarked for the Recovery and Resilience Plan may not materialize, further impacting revenue.
Populism and Lack of Responsibility in Expenditures
On the expenditure side, Iliev criticized the "populist" approach, stating that the acting finance minister is shirking responsibility. "When you sit at that desk, it doesn’t matter if you’re an interim minister with a short-term horizon. You become the face of irresponsibility, the one who’s mortgaging the middle class," he said.
Dubious Proposals and Burden on Citizens
Iliev also raised concerns about rushed proposals, citing a potential 20-25% increase in property prices due to the introduction of VAT on real estate transactions. He warned that "legislative fog" could lead to policies that disproportionately affect ordinary Bulgarians.
Fiscal Gaps and Political Will
Iliev argued that the budget was designed without considering potential mid-year liquidity crises, raising the specter of Bulgaria facing a cash crunch. He believes that if the current budget proposal is adopted, it will be even more generous than initially planned, as political forces may find it tempting to spend public funds.
Long-term Challenges: Pension System and Bank Funding
Looking ahead, Iliev identified two major challenges: the pension system and bank funding. He predicted that when the National Social Security Institute’s funds run out, politicians may turn to private pension funds, potentially leading to nationalization. He also expressed concern about the long-term impact of financing the budget deficit through banks, which he said would ultimately burden the middle class.
Eurzona: Not a Panacea
Iliev stressed that Bulgaria should prioritize its own interests over those of the Eurozone, as EU membership is not a cure-all solution. He concluded that while the future looks grim, it can be averted through responsible thinking and action.
Sources:
- Pekanov: Bulgaria to Lose 9 Bln EUR via PNR and Other Projects
- Expert: Pensions May Be Paid Late, Close to the Law