Bulgaria's entry into the Eurozone would bring many benefits, said the head of the regular mission of the International Monetary Fund (IMF), Jean-Francois Dauphin, presenting the results of the review of the Bulgarian economy and financial system, a BGNES reporter reported.
The fund's mission in Sofia began on March 6 and ended today with Doffen's summary.
He reiterated the fund's recommendations for the introduction of a progressive income tax scale and the restoration of the 20% VAT rate for all sectors, expressed before the deputies in the parliamentary budget committee.
Even then, the expert expressed the opinion that the budget deficit should be reduced by one per cent of GDP. The IMF forecasts that this year inflation will be 3.5% with economic growth of 2.7%.
Pensions are very low in Bulgaria. And poverty among seniors in general is high, Doffen said, recommending that the loophole be eliminated.
You have to continue reforms to increase productivity, competitiveness and the like, he added.
The Ministry of the Interior is critical of the collection of 100% dividends from state-owned enterprises. According to them, this undermines their ability to invest.
"The profitability of state-owned enterprises is expected to be lower than that of the private sector. But here, in Bulgaria, the difference is particularly big and bigger than what we expected. And this means that there is an opportunity to improve the efficiency and effectiveness of state-owned enterprises, which would not only have a positive impact on the budget but would have a positive impact on the entire economy," Doffen said today.
As recommendations for higher productivity of the economy, higher competitiveness and faster convergence of incomes to the average level for the EU, the IMF draws priorities in three directions:
“Strengthening governance, strengthening the rule of law and tackling corruption. This is the cornerstone of many of the reforms and improvements that can be achieved in Bulgaria, and several very important reforms were recently passed at the end of last year," commented Doffen.
Bulgaria is ready to join the Eurozone and most of the quantitative criteria, related in particular to the fiscal area, have been met. Inflation is also converging. So if policies are maintained, and in particular fiscal policies are maintained to ensure that they do not generate inflationary pressures, then 2025 is a realistic date, the head of the IMF's regular mission said.
Regarding the euro, Jean-Francois Dauphin also said:
"Joining the Eurozone has many benefits. It would not only reduce transaction costs and the cost of financial flows but also increase confidence that prompts more investment. It also reduces the risk associated with the volatility of capital flows. It provides a stronger institutional framework for the banking and financial system. And in the end, this is also very important with the currency board. Over the past 25 years, Bulgaria has largely relinquished control over its monetary policy. Because with the currency board, the monetary policy you implement is the monetary policy of the currency you are tied to, which in this case is the European Central Bank. But Bulgaria does not have the table when all these monetary policy decisions that affect its economy are made. By joining the euro, Bulgaria will have a seat at the table and be part of the monetary policy decisions that affect its economy. So from all these aspects joining the Eurozone would bring a lot of benefits." /BGNES
