The government measures have finally been finished – there are whole 60 measured proposed which are supposed to “support” the employment, households, businesses and the fiscal position. The government paper is far more comprehensive than expected. In addition to covering-the-budget-hole measures there are other non-direct budget related measures proposed.
"Economic Policy Review" Bulletin ISSN 1313 - 0544
Exactly one month ago IME came out with the position, that the proposed “anti-crisis” plan (the one with the 60 measures) will not work and will not cover the hole in the budget. Now it is recognized by the government too, which at once spoke about an increase of the VAT with more than 2 percentage points. With promises like “now we will raise it, and later we will take it down even more” it is expected the idea to be sold to the society as something that is not pleasant, but simply necessary.
As expected the current account deficit continued to shrink during January following the stable reduction trend since the end of 2008, i.e. since the crisis was felt in Bulgaria. The deficit shrunk to 248.9 mln. Euro compared to 401.4 mln. Euro for January 2009. Compared to GDP the deficit shrunk from 1.2% in January 2009 to 0.7% from the official BNB (Bulgarian National Bank) GDP forecast for 2010.
The government anti-crisis measures came out last month. They have been presented as anti-crisis ones, but in fact they are budget ones – measures to reduce the deficit and to fulfill the budget. It is important to talk about the crisis too but nowadays the problems and goals are much more immediate – What to do to fulfill the budget? Proceeding from this we will comment the draft governmental measures.
The biggest macro-economic problem in recent years - the current account deficit - now stuck in the past, but why does no one is up to joy? In February the National Bank announced a monthly current account surplus, which happens for the first time since February 1998
On March 18th & 19th 2010 Tom Palmer visited Bulgaria invited by IME and in partnership with the Friedrich Naumann Foundation