The analysis was republished by Free Europe.
During elections, each party must prove that others have ruled or will rule badly. In the end, it turns out that everyone is right.
Caretaker governments do not run in elections and can therefore help political parties – by finding evidence of the wrongdoing of previous governments and even by correcting some harmful practices.
This has happened in all such governments so far.
What is different today
The current government is doing the same, but on a larger scale than all other previous interim governments. With the exception of the caretaker government of Stefan Sofianski in 1997.
The current situation for the governments of Stefan Sofianski and Stefan Yanev is completely different.
The caretaker government in 1997 had to take the first steps towards restoring the basic normalcy of public and economic life in the country. And let the next government do the job.
The caretaker government in 2021 had to change the procedures and restore only normalcy in the management of public spending. And he succeeded.
This success was largely determined by the simplicity of the task, by the obvious harmful practice of the predecessors in the allocation of public procurement, budgetary resources and political privileges.
According to this task, revealing information about the privileges created, the ways in which they were distributed, and naming the beneficiaries not only did most of the work, but also restored dignity and reputation as a factor in public life. A sign of this is the sporadic reports that those who have benefited from previous governments, whether they are only accused or have actually enjoyed privileges, are fulfilling their tax and other obligations.
It remains for the next government to maintain the direction of government set by Yanev’s government.
In 1997, it was known to whom voters would hand over responsibility for running the country. This year, the only sure prediction was that in both parliamentary elections, voters would not give anyone a clear mandate, much less a parliamentary majority.
Election programs and real situation
In pursuance of the above, the parties (with the natural exception of GERB) had to make the situation in the economy worse than it really is. This necessitated an abstract statement and the avoidance of detailed and verifiable statistical arguments.
The short life of the previous parliament and the imminent term of the new elections could not motivate a deeper approach or even a rewriting of what was said about the economy at the beginning of the year.
On top of that, the feeling of a “difficult economic situation” is somewhat supported by the reported by the NSI decline in confidence in industry (23.6% since the beginning of the year), the decline in consumer confidence (30.9% by the end of March), of 50% higher unemployment compared to the end of 2019 (4.1% against 6.3% in the first quarter of this year).
However, it is completely refuted by the data on the annual growth of industrial production (7.2 and 22.8% in March and April) and construction by 26.9% in April, the slight increase in investment, the growth of turnover in trade and individual consumption, from the growing demand for labor – 25% in June (probably due to those leaving for temporary work abroad) and, in summary – from the fourfold reduction in GDP decline on an annual basis of 8, 6% to 1.8% in June 2021.
In this situation, the use of any statistics would interfere with the main tasks of the election race.
But even more important are the implications for the post-election economic debate.
It is obvious that as the economy recovers, the most urgent work – collecting revenue and reducing budget gaps – is being done by the caretaker government.
The parties that will be given a mandate to form a government can hope that “things will get better” on their own, and give free rein to their imagination. Such behavior is required by the high probability of new early elections.
In this situation, it makes sense to see not what is being talked about, but what is not being discussed in the discussion of economic and budgetary policy.
Ten policies not in question:
- So far, it is not a question of abolishing the proportional income tax. But there is short-sighted political approval of global corporate tax proposals and the (possible) introduction of a non-taxable minimum wage equal to the minimum wage. The latter would call into question about 1/3 of the budget revenues from this tax. Therefore, this idea has not been commented on yet.
- No party seems to question Bulgaria’s plan to join the eurozone. At best, it is tacitly assumed that this plan should be implemented, leaving it to the ECB and the European Commission to assess whether progress has been made in establishing the rule of law and curbing organized crime and corruption. Such was the condition for membership in the zone, set for Bulgaria in July last year.
- It is understandable that since progress on this topic is a priority, finally set by the GERB government and supported by the 44th National Assembly, in-depth analysis is avoided. But it is also obvious that but) the system of the currency board gives sufficient stability and mobility to the economy of Bulgaria and b) that the Eurozone and the ECB have been pursuing a rather unconventional and risky monetary policy for at least three years.
- No one is discussing the new version of the Recovery and Sustainability Plan either. His publication was promised for July 12. And he will probably see the light of day soon. But access to EU funds under this plan is risky in many respects, and these risks seem to go unnoticed by the caretaker government and the parties in the new parliament. These are risks associated with the EU’s new own revenue policy and the commission’s becoming a lender of last resort. When the plan for 8% of the Union’s own revenue (probably 2023-2024) is implemented, the Commission and the Council of the EU will have around € 1 trillion a year. It is very likely, it seems to me, that this amount will generate a lot of servility, a desire for gratitude and the effects of pushing planning beyond the initiative of individual countries and the private sector.
- The “green plan” is also very risky, and the problems it raises are also not discussed politically, even at the elementary level of concreteness.
- There was talk of privatization of BDB. This is not a good decision – BDB should be closed. Since the state economy is a key element of what is called corruption, it is extremely strange that those who resent it do not offer privatization of minority government shares in various companies, existing state-owned companies and real estate, and to stop state projects Plumbing, government gas stations and more.
- The inventory of regulatory skeletons in the legacy of the previous government seems to have stopped. For example, employers’ organizations recently called for the repeal of a March ordinance that effectively requires private HPPs to submit documents that were not a condition for starting work and whose demand creates conditions for racketeering and is discrimination. At risk are € 260 million in initial investment and around € 700 million in annual operating costs (the value at risk is 1.4% of GDP). And it was about 50% of the “non-carbon” energy in the country. But this is just one example. Even the “protest parties” do not promise a review of regulatory costs and quasi-taxes.
- The new MPs will update the calculation of pensions, according to the option proposed by the current Deputy Prime Minister Galab Donev. Maybe the recalculation will take effect from the beginning of 2022. But in fact it is better to do it later. The reason is that the expenses of the National Social Security Institute were inflated in the budget for this year with very optimistic expectations for the revenues. Another reason is the lack of reforms in the pension business in general and the growing dependence of social security on the taxes of the declining young population of the country.
- Part of the problem with the lack of funds in the National Social Security Institute and the National Health Insurance Fund is the presence of uninsured citizens and workers, as well as the provision of lower thresholds than the actually received salaries. The reason for this is the over-regulation of temporary and short-term employment contracts. The liberalization of this segment of the labor market benefits everyone. But no one offers it. It is also easy to turn out-of-pocket payments for medical services into health insurance (20% of the population has no health risk covered). But no one seems to think about that either.
- No party has strongly supported the decentralization of the fiscal system with 1/5 of the personal and corporate taxes provided to the municipalities where the taxable income is produced. In fact, this could be a pilot basis for the poorest or, better yet, a sample of municipalities as early as September.
The column “Analyzes” presents different points of view, the opinions expressed do not necessarily coincide with the editorial position of “Dnevnik”.