25.11.2014

"During the first year in university we all study that one spends not as much as s/he earns today, but as much as s/he expects to earn tomorrow." Minister of Finance Vladislav Goranov said the above during his public lecture on the first day of the tenth Youth Economic Forum organized by the Students Council at the University of National and World Economy. In his statement the Minister added that the stability of the environment and the sense of security influence the behaviour of all economic subjects as well as their inclination to produce. According to his words, the satisfaction, the non-disturbance in the economy and the political stability are among the main factors of growth. "That is why our first task was to start solving the accumulated problems as quickly as possible", he pointed out.

Minister Goranov noted that now, in addition to the domestic problems that Bulgaria has, we are "unfortunately in an unfavourable international environment in which the entire EU does not register the growth rates which we all desire". "Being a small and open economy under a currency board arrangement, Bulgaria hardly finds internal reserves for growth and as a small market could even harder generate it on its own", he reminded. "Unfortunately, I don't know of any universal remedy to increasing consumption. It undoubtedly has influence on macro-level but the situation is on micro-level - each of us decides to consume only when s/he feels undisturbed and has perspectives" commented Vladislav Goranov.

Before his audience the Minister answered the question why our social systems constantly exert very high pressure on the budget and the fiscal position - the reason for this is the low share of GDP distribution by the state. "Even if the model which is now operating in Bulgaria is not the best one, its change in the short run will lead to more negative developments than positive ones", is his position. According to him, the alternative is to strengthen redistribution by means of greater tax burden. The Finance Minister is firm that he will always oppose to any changes of the parameters of the tax and social security system established at the moment. "There are a lot of reserves in the revenue part of the budget which are related to smuggling, tax evasion, unlawful practices. It is only after we exhaust the reserves in this direction and if it is established that the social contract model is not working and that the state needs to take more decisions instead of the people, i.e. to redistribute a larger share of the generated product, that we will be ready to participate in a debate on changing the parameters of the tax system in Bulgaria", he explained.

The Finance Minister emphasized that the greatest challenge to the economic team of the government would be the triggering of some of the main growth factors - consumption, investments or exports. "The main focus in 2015 will not be to subordinate the economy to the fisc - a mistake that we have made, but on the contrary - to subordinate the fisc to the economy and to use all fiscal mechanisms, because a country under a currency board arrangement does not have any monetary mechanisms, to try to encourage domestic investments and hence to contribute to increasing the growth potential - and we do have one", Minister Goranov is confident despite the low estimates of the Ministry of Finance of 0.8 - 1 per cent for the real GDP growth in 2015.