Bulgarian Finance Minister: There is Increased Interest from Foreign Investors
During the debates in the parliament at the first reading on the draft budget yesterday, the Minister of Finance Asen Vassilev announced that at the moment there is increased interest from foreign investors and they only asked if the government will racketeer them and impute any subcontractors.
They were also interested in whether they would be determined which law firm to work with, which architect to hire in order for the project to pass. “They are very happy when we tell them that we will not do any of this and they say that this is the first time in Bulgaria that this has happened to them and they will start working and see that no one is really telling them anything,” the minister said, met with applause by MPs from the ruling coalition.
It will not be easy, because we inherit a terrible reputation, but we give a clear signal to all investors that they will not be extorted, no one will interfere and they are welcome to develop business in Bulgaria, concluded Vassilev.
His comment came amid accusations from the opposition that the higher spending on investment in the economy would not be met. Vassilev once again stressed that the investments set in the discussed draft budget are BGN 8.2 billion, which is twice as much as in 2021. He added that they are based on lists of all ministries with projects that are at least authorized for construction. He admitted that for some public procurements will be carried out in a timely manner, and for some, there will probably be a delay, but the situation will be different from what was found by the Cabinet - that sections of the Hemus highway are done without permits, and where there are advances given, there is no construction or progress.
The reproach that the pledged investments will not be implemented, as it has been in recent years, this time was expressed by Yordan Tsonev, from the Movement for Rights and Freedoms (DPS), there were similar reproaches during the consideration of the budget in the relevant commission. The minister then said he was in charge of planning, and implementation was a matter of joint effort by all ministers.
Vassilev added that if you look at the macroeconomic forecast, it includes much higher investment growth - from 11.7% compared to 2021, while in consumption it will be 4.3%. Thus, he defended his thesis that the projected GDP growth of 4.8% does not come mainly from growth in consumption, which would further fuel inflation.
He added that if capital investments were completely removed, the budget would have a surplus of 1.7% of GDP, which could be invested in more social spending. Therefore, he agreed with the reproach of the Movement that this is not the most social budget for which the government presents it, but pointed out that it is more important to be sustainable over time. “We do not spend as much as we actually receive as a tax base, but the deficit is formed by the desire for capital investment,” the minister said.
Commenting on the tendency for debt to continue to have a high share of GDP, albeit lower than in a number of European countries, the minister explained that if the debt is borne in order to make expenditures, from which “along the way were stolen 40%”, is a problem, but in this case, half of the investment will come from it and the rest from taxes, and he assured that the investment will be without “losses along the way”.
Debt as a share of GDP is lower than last year when it was 27.2% of GDP, and we forecast it to be 24.8%. “So this budget, despite significant additional investment, is being executed with less debt,” Vassilev concluded. Debt up to BGN 7.3 billion is planned for 2022, with over BGN 3 billion going to repay old loans maturing in March.
He added that all ministries were asked to say what results are expected against the money given to them. He announced that the whole budget should be done in this way and expressed hope that this will be fully implemented with the planned update in July.
Georgi Ganev from Democratic Bulgaria commented that the draft budget offers an adequate answer to a number of problems. He does not believe that the projected higher spending will lead to higher inflation because it is aimed at investment rather than boosting consumption.
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