Economic Policy Review ISSN 1313 - 0544


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In February 2006 the World Bank repeated a recommendation that we made to the Prime Minister a year ago. Namely, it was specified “in order to improve the governance and the financial responsibilities in the public sector, the government must simplify overcomplicated legislative and regulation frame and completely to enforce the new frames of fiscal accounting…”

The government won’t take any advice.

Bulgaria seemed to be the worst in the legal, judicial and regulations fields in comparison with all other countries from New Europe if we include the Balkans, too.

This means that the legal and regulations environment are the most complicated and inefficient, i.e. there is lack of institutional ability in applying legal politics and norms. The World Bank came to this conclusion not through the poll but exploring objective measurement. The most important indicator is the use of measure called “contract-intensive money”, the correlation between the clearing operations and broad money well known by the economists as M2. The reason of measurements is that when the fulfilment of the agreement is effective and cheap then people feel self-reliant and easy go to the clearing settles. But when it doesn’t work people use “cash” and barter. Referring this indicator Bulgaria is worse not only in comparison to EU new member-states but also with Romania, Macedonia, Russia, Ukraine, Uzbekistan, Armenia, Belarus, Albania and Georgia. Only regarding some indicators – the adjudication in bankruptcy/insolvency proceedings – particular countries (Poland, Slovakia, Romania and Slovenia) are a little bit worse than Bulgaria. Nevertheless the overall level of the institutional reforms in Bulgaria is equal to the quality of the reforms in the EU new member-states but at the period of 1996. If this observation is true, the average period of a single reform is estimated at nine or ten years.

From a human being point of view the only reason the Prime Minister ought to feel awkward about taxing people is that they live in the worst settled country in East Europe.