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</ol>”>Budget Crisis Looms: Bulgaria‘s Finance Expert Warns Against Proposed Law"
In the wake of the newly introduced budget bill, a finance expert has expressed concerns about the potential risks associated with its passage. Vasil Velev, chairman of the Association of Industrial Capital in Bulgaria (АИКБ), warned during an interview on "DEN" that the proposed law could exacerbate the country’s financial challenges if not addressed carefully.
Velev emphasized the importance of addressing the haphazard spending that occurred during the previous year, especially given the uncertainty surrounding the formation of a new government. He suggested that it would be wiser to withdraw and replace the current budget bill with an extended version of the existing one to avoid immediate risks.
One of the primary issues Velev highlighted is the proposed significant increase in salaries within certain sectors, ranging from 50% to 75%. He noted that Bulgaria already spends the most on wages in the security sector in the entire EU, as a percentage of its GDP. The proposed increases, he argued, come without any accompanying reforms or reductions in staff, perpetuating an inefficient system.
Moreover, Velev expressed concern about the allocation of funds between preventative care and hospital treatment. Helogin; "The ratio should be 3:3, but currently, we have 1:3. This indicates that we’re overinvesting in treatment while underfunding preventative care," he said.
Velev also addressed longstanding issues in the pension system, criticizing the proposed minimum pension that would affect nearly half of the pensioners. He argued that the minimum pension should be calculated based on insurance contributions, with social assistance provided for those who fall below the poverty line.
The finance expert further warned that certain policies could lead to increased taxation, particularly with a proposed hike in the labor tax to 61% from the current 53%. He described this as "removing resources from the economy and production sector, which is where the money comes from. If everyone is on a state salary, who will produce the goods and services we need?"
Velev also noted Bulgarian’s poor performance in global rankings of economic competitiveness and freedom, further emphasizing the need for urgent reforms. "We’re at the bottom in terms of competitiveness and economic freedom, and at the top in perceived corruption. Public investments are also constantly not being fulfilled," he said.
The warning comes at a critical juncture in Bulgaria’s political and economic landscape, emphasizing the need for cautious and strategic decision-making in crafting the country’s budget.
