Банкеръ Weekly

Briefs

DO NOT UNDERESTIMATE THE PREPARATIONS FOR EU-MEMBERSHIP

Christa Randzio-Plath, Chairperson of the European Parliament's Committee on Economic and Monetary Affairs, to the BANKER weeklyMs. Randzio-Plath, you held a numebr of meetings in Bulgaria. How far has our country managed to fulfill the requirements for joining the Eurozone and the European Monetary Union?- As a delegation of the European Parliament's Committee on Economic and Monetary Affairs we focused our attention on the economic issues, included in the programme for preparations to join the EU. According to me, Bulgaria has made progress as compared to the previous report on the development, accepted by the EU. It's obvious that clearly outlined ideas and plans exist and there is also readiness to implement the recommendations. As far as I can get, all problems regarding competition, subsidies, and the terms for your central banks to introduce the euro, have been settled.Regarding investments how pertinent is the introduction of a transition period for liberalizing the movement of capitals in the candidate caoutries for EU-membership?- I don't believe a transition period is necessary, and its not recommendable for your country beacuse Bulgaria has to attract investments and the more open the market is, the more investments you'll get.You have quite an experience in the sphere of taxes. How would you estimate the tax reform in Bulgaria?- We did not discuss the tax reform in detail as issues of that kind should be decided by the country itself. Bulgaria will simply have to introduce the European VAT standards. VAT in your country is 20%, i.e. within the rates, effective in the EU - between 15% and 25 per cent. The Bulgarian Government cut down the tax on the incomes of natural persons and the profit tax for companies, which is one more step in the development of taxation policies, because enterprises were relieved of a portion of the tax burden.Which are the most serious hindrances, that could delay the process of Bulgaria's accession to the EU?- Bulgaria achieved monetary stability through the introduction of the currency board arrangement and the fixed exchange rate. This protects both the citizens and the investors. However, the country should also achieve stability in the social sphere and employment. Solving the problems of unemployement and shadow economy are of great significance to the country.A number of discussions on the currency board and its efficiency have been recently held in Bulgaria. Some experts have expressed an opinion that the currency board arrangement should be revoked or changed. Do you think such measures are necessary?- Our delegation is interested in how the currency board functions here. It is Bulgaria and not the EU to decide if there should be such an arrangement. A country has to make huge efforts in order to have a currency board arrangement because it cannot devaluate the local currency without risking the market's security. Therefore, Bulgaria still has to follow quite a strict discipline.Would you recommend what policy the Government should follow?- Preparation for EU-membership is not an end in itself. The entire country will benefit from it. You have problems with poverty and unemployment, and many problems, additionally caused by the disappointment with the changes - big state-run enterprises where thousands of people used to work had to be closed down. You should very carefully prepare for EU-membership and carry out the reform yourselves, notwithstanding the competitors' pressure from abroad.My message is that the reform should be a continuous process and changes should be always made with a full knowledge that monetary and fiscal stability is not sufficient, as employment and social stability are very important factots as well. I believe that Bulgaria is walking along the right road.

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