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28.11.2007 16:35 - ALEXANDER BOSHKOV: Bulgaria needs more dynamic reforms
Автор: albosh Категория: Новини   
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NEW EUROPE

16-24 NOV 2007


ALEXANDER BOSHKOV:

Bulgaria needs more dynamic reforms

From now on there should not be activities which are connected with painful reforms, said Alexander Boshkov

Alexander Boshkov is co-chairman

of the Executive board of

the Centre for Economic Development.

His professional realisation

passed through the Ministry of Territorial

Development, Housing Policy and

Construction. He is founder and first

executive director of the Privatization

Agency, as well as an MP in the 37th

People’s assembly – deputy chairman of

the Economic commission, chairman of

the Sub-commission for Privatization.

He has been elected deputy prime minister

and Minister of Industry, a chief

negotiator with the European Union,

and deputy chairman of SDS. He is

founder of the Unified Christian

Democratic Centre.

 

by INA NIKOLOVA

 

Mr. Boshkov, the economists from

the International Monetary Fund (IMF)

drafted a pessimistic scenario for Southeast

Europe, including Bulgaria and predicted

an economic breakdown, similar

to the one in Asia 10 years ago. What is

your analysis of the situation?

 

One always has to be careful when

IMF warns about something, because

the experience of their experts is big

and comprises the whole world. At the

same time, however, we cannot regard

Southeast Europe as a unified economic

subject. Southeast Europe includes

also Greece, Bulgaria, Romania and

the West Balkans. What has been happening

in these regions is so diverse,

that anyone can get away from such a

prediction, if they carefully monitor and

try to direct the processes in the economy

and politics.

 

What will happen in Bulgaria if such

a scenario comes about?

 

It will be relatively unpleasant for

Bulgaria. For the EU as a whole, almost

nothing will change. That is the reason

why very bad things won’t happen in

Bulgaria. What could happen in case of

an unsuccessful move of the economic

reforms is to delay the convergence, to

delay the process of Bulgaria approaching

the average levels of incomes, productivity,

and living standard in the EU

that is to end up being the last in line.

However, Bulgaria will not drop out of

the EU, in any case, as the mechanisms

that will pull the country forward within

the bounds of the Union, are just too

strong and reliable. So there isn’t any

danger of a tragedy. The real danger is

for the incomes to go up slowly, rather

than quickly, as we all want it.

 

How bad is that?

 

It is very bad because these parameters

go up quickly, including also the

newly-accepted members – the Baltic

Republics, Slovenia, Slovakia, the

Czech Republic, and Poland. And if

Bulgaria or Romania, or only we, Bulgarians,

remain at the end of the line,

the distance in-between will be too big,

and the process of catching up with the

rest will be hard and painful in terms of

measures. From now on there should

not be activities which are connected

with painful reforms. The reforms must

be conscious, which above all, means

that they should not be slow. Whatever

has to be done must be done before it

starts hurting.

 

During their last visit to Bulgaria,

IMF officials advised the government to

keep up a strict fiscal policy in the budget

for next year, as well as the accumulation

of a huge budget surplus. What happens

to such a surplus that has been kept up in

the state budget for several years?

 

The budget surplus is a guarantee

against the probability for our economic

growth not to be sustainable. The

Bulgarian economy and state must

have money, should a crisis hit the

country, because of the stupid things

that have been done. If some trouble

hits Bulgaria and the state goes bankrupt,

this surplus is necessary so that the

country could survive for a few months

with this money. This is a reserve for

rainy days. This is the surplus – a guarantee

that, thanks to our stupidity, the

state will not go bankrupt.

Let us imagine what could have

happened during the teachers’ strike, if

Plamen Oresharski had not been

finance minister. Somebody else would

have immediately raised the salaries of

the teachers, after that pay rises would

have been claimed from other sectors,

the state would have been hit by hyperinflation,

which would have aggravated

the economic indicators, which would

have made investors run away. Then

the surplus comes only to say: I am here

to guard you from stupid ministers.

 

The European Bank for Reconstruction

and Development (EBRD) has

warned Bulgaria of a danger of a mortgage

crisis which is mainly associated

with credits. Is there any danger for the

people who have already been granted

credits?

 

Yes, there is. These are fluctuations

of the education of people in

market economy. It is totally possible

for some people, who think that they

don’t have to return the credits, to

have to do it. But the remarks of

EBRD are to a large extent theoretical

and based on foreign experience. If we

look at the data, provided by the Bulgarian

National Bank and the bank

supervision, we will see that there is no

increase of bad credits. That means

that Bulgarian people , who are

strongly attached to the notion of

property by tradition, unlike people

from the other East European countries,

where there is no history of such

a great property ownership, find it very

hard to put their property at risk in

order to borrow money , if they do not

intend to return it. Bulgaria most

probably occupies the first place in the

world in number of house owners. It is

in our traditions that the house is the

most important thing and when a person

puts his house at stake in order to

get a loan, he thinks a lot more of how

he will return this loan.

 

Is it normal for people to borrow

money even when they want to purchase

mobile phones?

 

This is the normal course of things.

The whole world is living on credit.

Things are in accordance with the

respective economic conditions in the

country. That is the reason why in Bulgaria

people rarely take loans to build a

three-storey house, but would rather

take loans to buy a mobile phone. They

act according to their financial possibilities.

But the main thing is that the presence

of a credit system allows people to

buy things that they want here and now,

rather than live well in the sunset of

their life, because they have saved a lot

during their active life. The idea is to

take a credit and live normally – to have

a flat, car, mobile phone, and all other

goodies, by working for them. This provides

discipline, because when you have

money to return, you must not idle your

time away, but work hard. This is the socalled

“sweat-sucking” system of capitalism,

as Karl Marx called it, and it is

wonderful, because first, you don’t need

to wait your whole life in order to buy

the things that you want. And secondly

– when you live well, you know why you

have to work – not in the name of a

hypothetical bright future, but rather

you live in the present. For instance,

when you buy a new car on a leasing

plan, you pay your monthly installments,

you drive it everyday and you

are afraid of being without work

because that means that you will be

without a car as well.

 

Yes, but it happens that sometimes

you end up without work and income, in

spite of everything….

 

This happens when you don’t work

well, or you have bad luck, or you have

landed in a company about to go bankrupt.

But it is not worse than the system

of being able to buy the desired things

at the end of your life.

 

Analysts of social processes and trends

have been claiming for quite a number of

years that the social layers have already

been formed in Bulgaria. What they most

talk about is the so-called middle class

which is the backbone of the western

economies. Do you agree with them?

 

Every attempt to draw such distinctions

is outdated. What is the social

layer of a long-haired, untidy, software

specialist, working in his flat, who happens

to have a few million dollars or

Euros in a Swiss bank? Where do we

put the lawyer who makes a lot more

money than a factory owner? Where do

we put the shareholder, the stock market

dealer, who doesn’t have anything

apart from the shares that he buys and

sells all the time? These are concepts of

the past. The globalisation, the free

movement of people, commodities and

capital, obliterate these distinctions and

I don’t think that we can talk about

whatever division there may be among

people, except on the basis of incomes.

The incomes, on the other hand,

are something quite relative, because

do we call rich or poor the old-age pensioner

with a monthly pension of 50

Euros, who lives in a four-room apartment

in the centre of Sofia? He is poor;

he is even starving, because he doesn’t

know what to do with this apartment,

because the real estate market is not

well developed, so that he can sell it or

stake it, and then buy a smaller one.

This is only a detail, but it shows

that Bulgaria is a country on the move.

Everyone who says that he is poor

would have to answer two questions:

how much money does he make, outside

the incomes on which he pays

taxes, and what is the market value of

his property.

Only then can it be said whether he

is rich or poor and whether he manages

his finances well.

A big part of the people who call

themselves poor, are actually incapable

of managing well what they have. This is

something that is learned with time –

their children will most probably be

able to manage their money. It will be

very bad if Bulgaria is still stabilising at

this moment.

Why would it be bad? Many people

at present want stability, because they

have been tired of 18 years of changes.

To be stabilising actually means not

to grow fast. What has to be stable,

what has to be really sustainable is the

growth. And we have to change as

much as we can. As a result of this stable

growth, everything must change as

fast as possible. The danger comes

when the growth is unstable, when the

economy, or as economists like to say,

starts to overheat. Then all of a sudden

a lot of money starts pouring into the

country because it is a modern destination

for investments and it turns out

that these investments don’t bring profits

and can’t be used well. Then whoever

has made them, begins to look for a

new place for investments, takes them

back and disappears. The country,

while making progress, ends up with no

money and the economy starts to slide

down. This is dangerous.

 

The world economic institutions

have been criticising Bulgaria for years

about the great share of twilight economy

in the country, and they are quoting data

that it is a lot smaller in percentages elsewhere

in the world. Is a twilight economy

really such a bad thing? Some of your

colleagues say that it is a way of survival

for people in transitional economies.

 

There are two opinions in this

respect. The first one is that if it can be

measured then it is not twilight. All

attempts to measure it are made on the

basis of some pseudo-economic calculations

and conclusions that try to find

out how little people spend compared

to how much they make. These are

things that only mark within certain

boundaries, but actually no one can say

how much the twilight economy is.

On the other hand, the other fact is

important and it is that the twilight

economy is a kind of economy, anyway.

Thanks to it some part of the Bulgarian

people makes money, spends, eats,

drinks, lives, and has a car and a place

to live.

If we accept the calls for the introduction

of a very strict legislation, a very

strict application of all measures of the

judicial power, and terminate the existence

of the twilight economy within

the framework of a dictatorship even

for one or two years, many people will

remain without work.

Here is a simple example of a really

existing twilight economy. For

instance in the food industry the white

economy starts from the dairy, where

cheese and yellow cheese, or from the

salami workshop and keeps moving

along the chain – goes into the retail

network, has labels, receipts, invoices, -

the personnel receives respective

salaries, and so on. If we start backwards,

however, we will see that it is not

clear who issues the invoice for the produced

milk, who knows where the

slaughtered pig comes from, what part

of the meat and milk in Bulgaria comes

from large farms with a normal

accounting system.

Some people are touring villages,

and collect the milk from the people in

a big milk container that they put in the

centre of the village. The villagers on

their part don’t pay any taxes, nor do

they register the money that they get,

anywhere.

This is twilight economy which is a

basis for a whole export-oriented economy

of Bulgaria. And if we want to

export our food products we will have

to make the whole process brighter, at

least for the sake of the sanitary and

hygienic requirements and standards.

If the name of the cow that gave the

milk for the cheese production, is

known – because this cheese will go into

the sandwich that the child will eat at

school – then the economic processes

will be channeled as well.

There is nothing bad about the twilight

economy, apart from taxes not

being paid. The state must create incentives

– more of a carrot than of a stick –

concerning people, so that they start

declaring their profits.



Тагове:   Bulgaria,   more,   Dynamic,


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