Businesses in Bulgaria remain on high alert, described as "code yellow," due to persistently high electricity prices. Vasil Velev, Chairman of the Board of the Association of Industrial Capital (AIKB), stated that protests have been postponed following assurances from parliamentary groups. They have pledged support for legislative provisions that would empower the Ministry of Energy and the Council of Ministers to create a program to compensate for excessive energy costs.

Velev emphasized that the provisions under discussion should extend throughout 2025, not just the first three months of the year, during which the temporary revenue and expenditure law will be in effect until the adoption of a full budget. According to him, such measures would provide stability for investors and avoid reactive responses when prices spike.

Comparing electricity prices across Europe, Velev pointed out that in Sweden, the price per megawatt-hour is 30 leva, while in Bulgaria, it is nearly 300 leva, despite being part of a common market. He urged the Bulgarian government to seek European-level compensation to address issues affecting Southeast Europe. Velev also clarified that the regulated price of 138 leva per megawatt-hour applies to kindergartens, schools, community centers, and prayer houses under a self-financed program that does not rely on state budget funds.

The chairman noted that the high electricity prices impact over 600,000 non-household consumers, including manufacturing enterprises, social services, healthcare, cultural institutions, and public administration. He stressed that the current compensation measures are not subsidies but partial recovery of costs incurred due to inflated energy prices. Velev called for swift adoption of legislation covering the entire year to prevent increased expenditures without corresponding revenue adjustments, noting that retroactive measures are not feasible.

Addressing concerns about potential economic instability, Velev warned that Bulgaria could face significant deficits if current fiscal policies remain unchanged. He drew a parallel with Romania, where unsustainable social spending and inflated deficits have led to income freezes, describing it as a "milder Greek scenario." He advocated for more prudent budget policies to avoid a similar situation.

Velev also highlighted that incomes in Bulgaria have risen faster than inflation, with the minimum wage increasing by 38% over two years and by 15% in the current year alone. Regarding eurozone entry, he expressed optimism that inflation rates would meet the December criteria, emphasizing the importance of compensatory programs to manage excessively high prices and ensure economic stability.

Source: BNR interview