The Government's Economic Forecasts - Tales of the Arabian Nights
Another leading international institution has made us understand that the authorities in our country are strolling around with pink-tinted glasses and that the economic outlooks of the Ministry of Finance represent good wishes than a connection to reality.
On May 6, the European Commission presented its expectations for the Bulgarian economy, claiming a 7.2% drop in real GDP, 7% unemployment and an 18% decrease in investments. In general, they overlap with those of one of the leading banks in Bulgaria – “Unicredit Bulbank”. In April, its economic experts predicted a 7.8% decline in the economy in 2020, with the slowdown in the second quarter, compared to the first, will be of 16 percent. The substantial difference between the two forecasts is that the European Commission expects the recovery in our country to start next year, while "UniCredit" - from 2022.
Previously, the International Monetary Fund predicted a downturn of 4% in GDP this year and Fitch – a decrease of 5.1 percent. Even economists from the Bulgarian Academy of Sciences, whose funding depends on the government and its good will, allow a downfall of up to 5.7% of GDP in the most negative scenario.
There are, of course, even more profound pessimists, such as the Belgian banking and insurance group KBC, which expects the most serious collapse of the Bulgarian economy in 2020. According to the baseline scenario developed by Belgian economists, our economic downturn could reach 10%, and according to their most optimistic forecast, it could stop at 4%. The most negative estimates of KBC, which owns UBB and DZI, show an economic decline of 12 percent.
Although quite different, all these outlooks have their arguments behind. They are predictions and that does not mean they will necessarily come true. However, what makes an invasive impression is that all of the forecasts quite disagree with the only one, announced so far by the BG Ministry of Finance. During the budget update, Finance Minister Vladislav Goranov declared that in the worst case scenario, BG economy would shrink by only 3%, while in the other scenarios – by 0 or even a positive growth may be expected.
Based on this forecast and a bunch of promises, voiced on the floor of Parliament, the cabinet received the National Assembly's approval to increase the government debt ceiling to BGN 10 billion this year and realize a 3.5% budget deficit at the end of it.
It does not do credit to the MPs and especially to the relevant Committee on budget and finance that they did not demand a more adequate forecast from the executive power and their role was reduced to pressing the voting buttons almost obediently. But this is the situation with the current parliament - the government wants, the legislator gives it. Otherwise there is a lot of talk, but not in essence.