site.btaBulgarians Should Get Used to Working More to Maintain Current Living Standards, Vasil Velev Says

There is no way to achieve a 3% deficit in the 2025 state budget from the currently emerging 9%, neither for the year nor in the medium term, if spending is not cut, said Vasil Velev, Chairman of the Board of Directors of the Bulgarian Industrial Capital Association (BICA) Tuesday in a BTA interview. He stressed that if that does not happen, the alternative is a tax increase in Bulgaria. BICA is the current rotating chairman of the Association of Bulgarian Employers' Organizations.

Velev clarified that at the moment, if the acknowledged work done by businesses and municipalities, which roughly amounts to BGN 2-3 billion, and which should be paid in 2025, is invoiced, will cause a deficit of over 3% in 2024. Velev pointed out that it is necessary to increase budget revenues by 28% in 2025 to achieve a 3% deficit, given that Bulgaria's economy is nominally forecast to grow by less than 7%. This nominal GDP growth includes both inflation and real growth, Velev added, saying it was obvious that such revenues could not be raised without raising taxes and "selling off the little remaining state property". The latter is not a solution, because it is a one-off act providing revenues for the particular year and they cannot cover the costs of salaries in the budget sphere, pensions and in the coming years. "Once they are raised, they cannot be reduced unless the International Monetary Fund comes as the last creditor and says it will not lend to the country if budget salaries and pensions are not reduced", Velev said. He elaborated that a similar situation had occurred in both Greece and Bulgaria.

According to Velev, the last 4 years have been ones of significant expenditure, which should be curbed. In his opinion, the increase in salaries in the state system should be smaller and be accompanied by the introduction of the requirement for employees to pay their social security contributions at their own expense. He also pointed out that with a declining population, those employed in the budget sector and administration have been growing over the past four years, while those who bring money into the budget - from the private sector - have seen their incomes stagnate because the economy is slowing down due to wrong European decisions related to the Green Deal and "suicidal sanctions". 

Velev also said that Bulgarians should get accustomed to the notion that they should have to work more in order to maintain their current living standards - a common phenomenon for the whole of Europe. Regarding Bulgaria's accession to the euro area, he stressed that the regular government should request a convergence report by the European Bank by March, otherwise it risks losing the opportunity of joining the euro area in the beginning of 2026.