The recent amendments to Bulgaria’s Euro Introduction Law have sparked significant controversy, with prominent economists and political figures voicing sharp criticism over its unclear provisions and broad regulatory powers. Lachezar Bogdanov, chief economist at the Institute for Market Economics, described the law as “more of a scarecrow law,” warning that while it might be intended as a deterrent, if enforced, it could lead to a revival of the planned economy and undermine the free market.

Bogdanov’s main concern revolves around the law’s vague criteria for what constitutes “justified” price increases during the controlled period from August 8 this year to December 31 next year. The legislation restricts businesses from raising prices unless objective economic reasons are present, yet fails to clearly define these conditions. Furthermore, the law expands the powers of regulatory bodies such as the National Revenue Agency and the Consumer Protection Commission, granting them unrestricted access to business data without regard for trade secrets. Bogdanov questioned how these authorities might use such extensive access, fearing potential misuse.

Highlighting the legal uncertainty businesses will face over the next 17 months, Bogdanov stressed that the law’s application covers all goods and services, potentially giving regulators sweeping control over economic activity. He suggested the legislation could be a PR move aimed more at creating fear than offering practical solutions. Should the law pass the second reading unchanged, he predicts it could cripple business freedom, describing the situation as unprecedented in Bulgaria.

Adding to the debate, Lidiya Shuleva, former Deputy Prime Minister and Minister of Social Affairs, echoed concerns over the law’s lack of clear guidelines. She warned that the absence of precise criteria for distinguishing between speculative and market-driven price increases opens the door to arbitrary enforcement and heavy fines, which could push companies toward bankruptcy. Shuleva emphasized that lawmakers must clarify these criteria in subsequent readings to prevent regulatory overreach and economic harm.

Shuleva also touched on the political climate surrounding the Euro Law, noting that opposition to the euro fuels tensions and influences public discourse. She criticized the government for pushing the law through the National Assembly without mandatory public discussion, contributing to unease among stakeholders.

Despite these critiques, Shuleva views Bulgaria’s entry into the eurozone as a significant achievement, given the country’s long history under a currency board regime and unofficial euro use as a reserve currency. However, she cautioned that joining the eurozone alone won’t automatically raise incomes. Instead, Bulgaria must transition from a low-skilled labor economy to one driven by high-tech and innovative industries, requiring skilled workers and leading to better wages.

According to Shuleva, the potential benefits of eurozone membership hinge on Bulgaria’s ability to leverage EU support mechanisms, such as programs targeting small and medium enterprises with innovative production. She pointed to the second tranche of the Recovery and Resilience Plan as an opportunity for Bulgarian businesses to modernize and grow.

Source: BNR interviews