Stanislav Popdonchev, Bulgarian Industrial Association, Business Start, 26 January 2022
The budgeted GDP growth of 4.8% is very optimistic, because it relies mainly on the National Plan for Recovery and Sustainability, on capital expenditures, which are quite high compared to last year, and Bulgaria traditionally fails to meet its plan for capital expenditures. This was said by Stanislav Popdonchev, Vice President and Chief Financial Officer of the Bulgarian Industrial Association, in the show "Business Start" on Bloomberg TV Bulgaria hosted by Hristo Nikolov. The guest commented on the meeting of the Committee on Budget Policy at the National Council for Tripartite Cooperation (NCTC) and the budget for 2022.
The forecast of the Ministry of Finance is closest to that of the EC (4.1%). We are quite different. The growth is justified by more government investment, largely relying on the National Plan for Recovery and Sustainability, which is expected to be at least 2.5 percentage points of this 4.8. This is quite a risk, as we missed the opportunity to pay in advance. This means that we must first approve, then prepare projects for us to make payments, and then expect a refund. Another question is to what extent we are ready with projects to start within this year, to invest in them and to contribute to this growth."
Obviously, inflation will also participate in this forecasted growth, and private investment is not visible at all, the guest added. "The government's expectations for foreign direct investment in 2022-2024 are to be delayed."
We support certain measures, including financial support for business, which is within BGN 860 million, the measure 60/40, as well as compensation for increased energy prices, said Popdonchev. "A good measure is to increase the individual amount of food vouchers from BGN 80 to BGN 200, as well as to increase the total annual quota."
"Raising the maximum insurance income was quite surprising, because the preliminary talks were, if that happens, to be after July 1. Because the coalition agreement states that an analysis of the pension system is forthcoming, which will be ready by the end of June. A maximum insurance income of BGN 400 is 13.5% of the existing one. It is not clear on the basis of what analysis this was done, and even so people with higher incomes are punished without being given anything in return," Popdonchev stressed. According to him, there is no clear policy regarding the maximum insurance income. He reminded that the fiscal benefits for the insurance system are negligible.
"The minimum insurance income for farmers has not risen for a long time. At the same time, a 65% increase will certainly generate tension and a gradual rise must be considered. Because in a year of high inflation and high prices of materials, raw materials and electricity may put some of the industry in bankruptcy."
BIA has long insisted on a program budget with clearly set goals and clear indicators for their implementation, the Vice President and CFO of BIA added. "Unfortunately, this is not visible now. Most of the reforms that have been agreed are not visible in the budget, probably because it was planned to carry out analyzes. This implies an update of the budget from July 1, which is also a very bad signal because business has no predictability and no longevity. We will work on at least three budgets in one year."
