Currency Peg Father 'Not Impressed' by Bulgarian Socialist Govt
The Bulgarian government forecast of 1.9% economic growth in 2014 is unrealistic, according to US John Hopkins economist Steve Hanke.
In an interview for the Bulgarian National Radio, the professor, called in Bulgaria the "Father of the Currency Board, said the current government will not be able to successfully deal with budgetary goals and its intention to borrow, even a small loan, destroys the "Bulgarian trade mark" - the discipline of the Currency Board.
According to him, the government has a problem with discipline and experiences considerable difficulties related to the general political environment that allows corruption and misuse of EU funds.
"The political class in Bulgaria is not only dysfunctional, but almost criminal. We are talking about corruption here," said the professor and concluded: "Sofia is one of the leading capitals of corruption in the world and that's written all over the international press," he pointed out.
Hanke recalled data from the index of poverty after the economic collapse in 1997, according to which it worsens every time socialist governments come to power in Bulgaria.
"The Government of Prime Minister Ivan Kostov had good results due to the introduction of the currency board. Then the Cabinet of Simeon Saxe-Coburg also performed very well. The poverty index worsened every time when socialist governments ruled the country. And now I'm not impressed by this rule either, in every aspect, even for small technical things like the outlook for economic growth. No one has confirmed this forecast," said the economist.
According to him, the idea of the Cabinet to borrow to invest in the economy and this way push its growth is inadequate. In his words, technically this was not a problem because government debt is extremely low relative to the gross domestic product, GDP, but in this case the issue was credibility.
"This means breaking the discipline of the Currency Board. This is why I think it is bad in terms of credibility, as it does not fit the disciplinary policy Bulgaria has been implementing since 1997. For me something is changing because the subject of discipline is being removed from the system," stressed Hanke.
Asked what must be done, he replied: "The only positive that Bulgaria has is the Currency Board and the flat tax, everything else is negative."
According to him, taking the loan would not endanger the Currency Board, but it might be included in the assessment of the country's credit rating.
"I sincerely hope the Bulgarian economy 1.9% growth forecast will materialize, but I'm not convinced that this will happen," the professor concluded.
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Haha Sofianitsi, good points. Notice however that this dude Henke was aiming at saying, that whenever in the past socialists crawled into power (taken from BG history that is), there was always a bad economical situation to result after such an event. With other words he was just confirming your resume.
"the index of poverty worsens every time socialist governments come to power in Bulgaria"
Ridiculous! Just who does Hanke think he is? The achievements of each of the previous socialist governments are many and are well documented:
1. Lukanov - huge debt, food coupons, money leaving the country by the truckload, massive street demonstrations (in favor of the BSP), Oligarchs getting fat etc
2. Videnov - bank failures, financial pyramids where ordinary Bulgarians lost their money, inflation running at 123%, pension fund theft, foreign investment leaving in droves, the Oligarchs got fatter
3. Stanishev - accession funds stolen, EU funding stopped, massive daily corruption scandals, Dogan hydrology fees, all infrastructure projects stopped, Oligarchs become positively obese
4. Oresharsky - repeat points 1-3 yet with more impunity