site.btaIndustrial Capital Association Head: Bulgarian Business Will Support Government Efforts to Bring Down Food Prices

The Bulgarian business will support the government in its efforts to seek a mechanism to reduce food prices, because the top priority for the Bulgarian business community is for this country to join the eurozone on January 1, 2024, Vasil Velev, the chairman of the Governing Board of the Bulgarian Industrial Capital Association, said in a BTA interview. "The decision on the eurozone will be taken in May and for this reason the country must show the will to take decisive steps, literally in the next two or three months, to curb inflation and make sure prices go down," Velev said.

He was approached by BTA to comment an announcement by Prime Minister Galab Donev Monday that the government intended to focus its efforts on curbing food prices. On his initiative, a working meeting is to be held Tuesday at the Council of Ministers with the participation of ministers and heads of state agencies. 

The plan is first to analyze prices and pricing and, based on the results of the analysis, map out measures to reverse the upward price trend.

According to Velev, in order to achieve the goal of joining the eurozone, enterprises and retail chains should also make some efforts, such as limit their drive for higher profits.

Velev pointed out that the electricity compensations for businesses have lowered production costs but the effect on the end-prices us yet to be seen, most likely after March or maybe later in some sectors.

He pointed out that the State needs to analyze the pricing chain to see where prices have gone unjustifiably high and take appropriate measures. This also means more frequent checks by the control bodies in search of unfair commercial practices. 

Velev admits, though, that Bulgaria has a free market economy and there is not much the State can do to reduce prices. One thing that a number of European countries have done is tax excess profits in all sectors, not just in power generation. While this is not going to reduce prices, it will increase budget revenues.

He took as an example the spike in egg prices and said it was caused by the rising fertilizer prices as a consequence of the expensive natural gas, then of feed – and the increase multiplying at each step of the production chain to reach eggs. 

Among the inflationary factors in Bulgaria is the high price of electricity, Velev explained. Before the inflation was felt going up, in the first half of 2021, the electricity price averaged BGN 112/MWh and now it is BGN 200/MWh after the compensations.

The second factor is what he said was an excessive increase in budget spending, mostly for pensions, as well as for upkeep of the public sector which often generates no output. 

Velev reiterated businesses' complaint that the price of electricity for households is BGN 82/MWh and is heavily subsidized.

He argued that core industries should be further compensated for the high electricity prices in order to have an equal position with the competition in the rest of Europe and worldwide.