WE HAVE A DEFORMED ECONOMY AND SOCIAL POLICY
Bozhidar Danev, Chairman of the Bulgarian Industrial Chamber, to the BANKER weeklyMr. Danev, Bulgaria was estimated by the European Union (EU) as an operating market economy. In that sense 2002 should had been a better year than 2001...- Last year was a good one for the Bulgarian economy on the background of the overall stagnation processes. Bulgaria registered a fair 4.5% growth, the inflation rate remained low, the deficit in the balance of payments' current account decreased..., i.e. all macro indicators were good. A positive tendency of reducing the deficit in the foreign trade balance was observed as well. Does all this give us grounds to believe that there are already conditions for a sustainable economic growth in our country?- The above-mentioned indicators are not sufficient. If we analyse the structure of the economy's growth we'll establish that it is primarily due to the sphere of services. The prerequisite for a stable economic growth is the development of industry. Regretfully, no industrial growth can be seen. According to our estimates, for a sixth year now Bulgaria's economy is neutral with respect to one and the same indicators: on one side there is an increase of the GDP and a financial stabilization, but on the other side there is a serious deficit in the trade balance and a considerable rise of companies' liabilities. There is still no revolutionary change, despite the positive changes in some indirect indicators as the reduction of unemployment.Which is the reason for the insuffiecent utilization of money from the EU - the administrative mechanism, the bureaucratic hindrances, or the lack of good projects?- The state administration is to blame in the first place. This has been written in the EU's reports. The administration does not allow to utilize the funds under the ISPA, PHARE and SAPARD programmes. Construction of not a single facility has practically begun under the ISPA programme and less than 1% of the money has been utilized. The funds for approved projects under SAPARD are 34% of the agreed under memoranda for 2000 and 2001, and only 8.69% have been really utilized. But I haven't heard of anyone punished for that. While administration is to blame for the failures under the PHARE programme, the lack of coordination between our bank system and the business sector in agriculture and food industry are to blame for the unrealized projects under SAPARD. Entrepreneurs are not yet ready for such a marketing thinking. In 2002 we have a zero growth in the agricultural sector. In other words, the branch has not contributed anything for GDP's growth. Agriculture needs overall restructuring, because by the present technologies we cannot count on growth and competitive accession to the EU. Of course, there are quite ticklish problems as well, connected with the certification of production from the accredited laboratories. Is there a balance between the positive and negative effects of legislative amendments on the economy?- The pressure of the recently introduced insurances on business is quite tangible. The law-makers and the executive have frozen the legislatively introduced changes. The insurance installments had to be paid by the employer and the employed in economy in a ratio of 70:30, but the 75:25 ratio remained effective. The business succeeded to suspend the payment of insurance installments on compensations, and yet they were introduced without any economic logics. Business loses from that BGN 184MN annually. According to me, the executive should pay more attention to business, and then to the social problems of the electorate. For instance, the cross subsidizing of monopolies' services continues, which is a fundamentally wrong social instrument. It is not normal that citizens and firms should pay different prices for the water, telephone services, electricity and heat power. Practically, we have a deformed economy and social policy. The Government's policy is not orientated to the business, but to the electorate. And this is not an operating market economy.