site.bta Medium-term Risks in Economy Are Underestimated, Fiscal Council Says

Medium-term Risks in Economy Are Underestimated, Fiscal Council Says

Sofia, July 19 (BTA) - The spring macroeconomic forecast of the government about the main nominal indicators is generally realistic, but there is no information about the different scenarios or risk assessment used by the Ministry of Finance when it drew up the forecast, an opinion of the Fiscal Council presented at a news conference Tuesday said. The council is an independent consultative body with the National Assembly.

The risks in the economy are underestimated in the medium term, the experts said. The particularly low level of national private investments places the capacity of potential general GDP growth and the total factoral productivity under doubt. According to the council, the medium-term forecast of the government does not sufficiently take into account the risks before the world economy and the slowing down of world economic growth. In the opinion of the council, growth in 2016 will vary between 1.8 and 2.5 per cent. Analyses show that the level of investments (aggregate investments in GDP) in Bulgaria is below the level of 1996, council member Lyubomir Datsov said.

The experts say that the efforts to improve the situation with the weight on SMEs are not enough, not because of the tax legislation but because of the procedures and the associated costs, Datsov explained.

According to the Fiscal Council, the process of strategic planning at ministerial level is formal. There is no regulation or strategic approach to capital budgeting. The planned reduction of expenses for defence, health care and education are considered unrealistic against the backdrop of declared political intentions and the actual level of these systems, the council said.