site.btaMedia Review: November 24

INTERVIEW

Capital interviews former French finance minister Michel Sapin who is behind the introduction of a comprehensive anti-corruption legislation in France. 
 
In the interview, Sapin says that the French anti-corruption system introduced through the Sapin II law aligns French practices with the 1997 Organisation for Economic Co-operation and Development convention for combating bribery of foreign public officials in international business transaction. The convention has been signed by 40 countries, which are very different in terms of functioning and social customs. 

Sapin says that it is not just Bulgaria but all countries which have problems with corruption. No country has the right to preach but countries can cooperate in terms of anti-corruption policies and instruments. Sapin says that currently there is a debate in Bulgaria and a will. There are instruments which can work, uncover and prosecute more efficiently the cases of corruption and instruments which can prevent it. 

The Sapin II law introduces a prevention mechanism against corruption practices. The law requires companies and groups of companies whose parent company has its registered office in France, and public bodies of an industrial and commercial nature with at least 500 employees and turnover of more than EUR 100 million to take measures designed to prevent and detect acts of corruption or influence peddling in France or abroad. Sapin says other countries are responsible for the conduct of their companies abroad and gives as an example the American concept of extraterritoriality under which US companies are prosecuted for their actions in other countries. 
 
Of Bulgaria’s bid to join Schengen, Sapin says that the adoption of the euro won’t increase inflation. The inflation is a criterion for joining the eurozone but it is not fixed and priority is given to convergence. Sapin notes that in recent years the Bulgarian economy has made considerable progress and has caught up with European economies. There are still things to do but this applies to France and Germany as well, argues Sapin.

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Interviewed by 24 Chasa about the 2024 state budget, financial expert Emil Hursev says that there is no solution to the main financial problems of the state. According to him, raising new debt to repay old obligations is not a problem, but what is concerning is the significant increase in debt which is dangerous to the financial stability, particularly in a country where part of the economic system is based on the idea of a currency board.

The 2024 budget envisages a 3% GDP growth, inflation rate below 5%, an income growth of 10% and BGN 12 billion in capital investments. Hursev raised doubts that some of the parameters will be implemented. He says that traditionally the investment programme is not implemented and that it rather acts as a buffer. 

Hursev says that social expenditures should be balanced through raising the retirement age as the average life expectancy increases. He says that all European countries will be forced to do it because it is impossible for one worker to pay for three non-working people.

Of the plans of the Finance Ministry to increase taxes, Hursev says that this does not mean automatically larger revenues and that this idea will likely have the opposite effect.  He says that it is much better If there is a clear and simple tax payments scheme, expenditure predictability and encouraging tax compliance. Hursev says that the Bulgarian business is among the most conscientious taxpayers and the voluntary tax compliance is better compared with Italy, Portugal and Spain. 
 
Of plans to lower the cash payment ceiling to BGN 5,000 from the current BGN 10,000, Hursev says that the idea to switch to non0cash payments has already failed and such measures do not curb the grey sector. The payments in cash are important because a large part of the world population is excluded from the banking system because of the tighter criteria for opening of bank accounts and cards. 
 
AFTERMATH OF LOCAL ELECTIONS

Sega.bg writes that newly elected mayors are walking a minefield. Some of the problems are deliberately created by associates of the previous administration. Others concern chaos left by the previous mayor to fix after the elections.  
  
The situation is worst in Pazardzhik. On Thursday at a special press conference mayor Petar Kulensky confirmed the huge financial problems of the municipality - a gap of at least BGN 10 million, due to the difference between artificially inflated (uncollectible) revenues from local taxes and fees and incurred spending. The accounts of local administration have been seized by the National Revenue Agency. In addition, millions of state funds have been diverted for various activities and transferred to other areas. And large debts have accumulated. Kulensky did not say the exact amount but revealed that the municipality owes BGN 27 million to local suppliers, more than BGN 1.5 million in loans to banks and the FLAG fund, about BGN 600, 000 for employee insurance. 

In Plovdiv there is a deficit of about BGN 20 million again due to uncollectable revenues. At the end of the year, only 67% of local taxes and fees have been received. In Blagoevgrad, mayor Metodi Baikushev complained that the municipal debts to the banks amount to BGN 17.5 million and there are BGN 480, 000 in the town hall’s accounts.   
   
In the southern town of Stamboliyski the new mayor, Peter Nedelev, found an empty town hall. Some 36 municipal employees and 18 workers from the municipal utility company were laid off and will be paid severance compensation. 

SUPREME JUDICIAL COUNCIL ELECTIONS 

A piece in Dnevnik.bg says that doubts about the voting system for Supreme Judicial Council members still remain. 
  
The answer to the question of what happened to the election of members from the judicial quota for the new Supreme Judicial Council (SJC) in 2022 is still pending. The vote was called into question at the beginning of the year and there is still no clear explanation as to what exactly happened.  
   
While it is certain that the newly elected members will not take office because of changes in the Judicial System Act, the issue has continued to be on the agenda for nearly a year, and in recent months the election has also come under scrutiny from the prosecution. On November 30, the SJC is also due to discuss whether a new remote voting system is needed because the current one is outdated and there are doubts about whether it effectively guarantees the secrecy of the vote.  
  
There are indications that there were "various anomalies" with the remote voting system that call into question the security of the vote and whether it was manipulated in favour of elected members.  
Meanwhile, the Justice Ministry responded to Dnevnik's question by saying that it would appoint a probe into the matter. Experts said there were doubts about the security of the system as early as 2017.  

ECONOMY

  
TrudNews writes that mortgage loans are growing at a record pace. Loans granted by banks for the purchase of apartments and houses at the end of October amounted to more than BGN 19 billion, according to central bank data. Mortgage loans increased by over BGN 3 billion, or by a record 19.2%.  
  
The reason for this is the desire of people to acquire their own home, as well as to invest their money in property to avoid depreciation from high inflation. Bank interest rates on mortgage loans are extremely low, which further encourages lending.  
  
There has also been a large increase in consumer loans to households. At the end of October, the total amount of these loans was BGN 16.658 billion, according to central bank data. In a year, consumer loans grew by BGN 1.6 billion, or 10.7%, and a large part of these loans are also related to property. After buying a home, some people also take out a consumer loan to furnish it. Others take out a loan to renovate their old home. It turns out that a huge part of bank lending is driven to people's desire to live in a nicer home. 

The total amount of loans to households for the year increased by nearly BGN 4.7 billion and by the end of October exceeded BGN 37.4 billion. Households take more loans than companies. In a year, business loans increased by less than BGN 3 billion, or by 7.3%, to BGN 43.5 billion.  
  
Households also outpace companies in deposit growth. In a year, household savings in banks grew by BGN 7.183 billion, or by 10.3%, surpassing BGN 76.9 billion at the end of October. But the biggest growth was in large deposits with amounts over BGN 500,000, while people with the smallest deposits were forced to withdraw from their savings. In a year, company deposits increased by BGN 3.28 billion to BGN 42.5 billion. 
 
POLITICS

In a Bulgarian National Radio interview analyst Dimitar Ganev of the Trend agency said that a revolutionary change in electoral attitudes cannot be expected, because the active voters have already remained extremely low. "The electoral picture at the moment rather speaks about the ratio between the hard cores of party supporters. A large part of the electoral periphery has withdrawn and refuses to exercise their right to vote. That is why we do not see any shifts in the last few months."  

Ganev, however, sees in the polls the potential to support a new formation that could change this picture.   The rise in negative assessments of the cabinet should not be surprising, according to him. In his words, "a rotation in the cabinet will undoubtedly give some impetus and will recharge, more or less this majority". Each of the formations in the ruling majority is seeking to achieve a stronger position before the rotation, Ganev pointed out. According to him, a period has begun of seeking new balances, different from the ones when the legislature was formed.  
  
At the moment, none of the formations in the ruling majority is interested in breaking it up, the political analyst summed up. "The battle is more about balances inside the assembly rather than playing outside it."  
 
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Cross.bg quotes Vazrazhdane leader Kostadin Kostadinov as saying in a televised interview on Thursday that paying in cash is an inalienable right of every free person.  Vazrazhdane wants to enter the right to pay in cash in the Constitution. "This was done in the constitution of Austria and is appreciated as a very good step. This is a human freedom to dispose of your own money." 
 
Commenting on the proposed changes to the Constitution, Kostadinov said that they are either a desire of the Movements for Rights and Freedoms to control the judiciary or outright sabotages of the Bulgarian state, citing the idea to abolish March 3 as the country’s national holiday. "Naturally, we want change and judicial reform. And whatever changes are made, if they are made by the people who currently run the country, it is doomed to failure," said Kostadinov. 

Kostadinov further said that his party has representation now in 87 municipalities, but the election results fell short of their expectations.