site.btaCITUB Head Dimitrov: Introduction of Euro Not Expected to Influence Inflation Pressure in Bulgaria

Sofia, January 24 (BTA) - Confederation of Independent Trade Unions in Bulgaria (CITUB) head Plamen Dimitrov told a BTA-hosted news conference here Wednesday that the introduction of the euro is not expected to influence the inflation pressure in Bulgaria. It is true that the lowest prices go up at the moment of the euro's introduction in a country, but this does not lead to unseen or alarming levels of inflation pressure, said Dimitrov, who is also member of Bulgaria's Economic and Social Council (ESC).

The average inflation level in the newest members of the Eurozone in the corresponding years of entry ranged from 0.3 to 1.4 per cent, Dimitrov told the news conference, where the ESC members expressed their unanimous support for the process of Bulgaria's accelerated preparation for entry in the Exchange Rate Mechanism (ERM II) and then the Eurozone.

According to Dimitrov, the entry in the ERM II and the Eurozone will not be an obstacle to the ongoing accelerated development and increase of wages and labour incomes in Bulgaria. He described as a positive factor the speed of growth of the incomes' level, and gave as example the 50 euro increase a year of the minimum wage in the Baltic countries following their entry in the Eurozone.

ESC member and Bulgarian Industrial Association Vice President Dimiter Brankov put an emphasis on the long-term effects on the economy and social environment as benefits of the accession process, and noted that the subsequent entry in the Eurozone will speed up the structural reforms, the changes in incomes, productivity and competitiveness, as well as the achievement of a possible turn of the unfavourable demographic trends.

According to Brankov, Bulgaria is now best prepared for the accession process because of its 20 years with a currency board. "We have been overpaying for our entry in the Eurozone for ten years and we continue to pay this bill," he added.

Brankov went on to say that the entry in the euro area will: facilitate the access to loans for the State, business and citizens; provide additional guarantees on the deposit base and another level of supervision of Bulgarian banks on the part of not just the Bulgarian National Bank but also the European Central Bank; opportunities for reasonable policies in the public spheres and for early payment of the government debt thanks to the freeing of the foreign exchange reserve, including the fiscal reserve. In addition, Bulgaria could become an effective bridge between the Middle East, Europe and the Balkan countries, and a model for the Western Balkan countries striving for entry in the EU to follow, Brankov added. He mentioned as challenges to the entry in the Eurozone the provision of external political support and the achievement of better informed citizens and business community.

ESC President Lalko Dulevski noted the polarization in Bulgarian society on the topic of the Eurozone, and said that now is the time to inform the society of the benefits and challenges involved. According to him, the steps towards the ERM II should be based on the principle of silent financial diplomacy. In his words, now is the time to act because Bulgaria has met all technical requirements and is in the focus of the EU's governance, with the goal being to solve the matter of Bulgaria's entry in the ERM II by the end of the Bulgarian EU Council Presidency.