The rise in indebtedness should be a signal that Bulgaria has entered a new phase of its economic development.
From 1997 to 2021, all governments respected financial discipline. 2021 became a turning point during which Bulgaria went the way of Greece and Italy, which spend without thinking.
This is what financial journalist and analyst Stefan Antonov said in an interview with BGNES.
For several years in a row we have had a budget deficit. "This is a very dangerous direction we are heading. If urgent measures are not taken, we may not be able to stop it," the analyst warned.
He stressed that when a deficit is formed as a result of some prudent programme, it is not so scary. "However, when it is formed by payments for eating and drinking, because in our case 50% of the expenditure structure is formed by current payments for salaries and pensions, it is punished by international markets," Antonov said.
The analyst also noted the worrying trend of increasing debt to cover the budget deficit, not to pay off old debts.
"If loans are taken out to finance budget deficits, indebtedness increases. It was only in 2022 that debt rose nominally, but not as a percentage of GDP, because we had high inflation then, which we were able to offset. In all other years, debt has been rising both in nominal terms and relative to GDP. Eventually we get to the point where interest costs become so high that they eat into the payments for everything else," the financial journalist said. I BGNES
