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Interests Will Go Down if Bulgaria Adopts the Euro

Wednesday, Mar 04, 2009

Lower social insurance premiums will give the Bulgarian business some fresh air in the conditions of a global financial crisis, says Vassil Velev

The chairman of the Bulgarian Industrial Capital Association, Vassil Velev told the Standart about the benefits the introduction of the euro may bring to Bulgaria and the anti-crisis measures the business should take to curb the world crisis' effects. He is one of the participants in the initiative Debates 2009 that aims at informing the society about the problems the Bulgarian economy faces and the options the politicians, the business and the economists have to solve them.

- Mr. Velev, what will be the effect of a quick entry of Bulgaria in the pre-euro Exchange Rate Mechanism (ERM-2) and a possible adoption of the common European currency, Euro, on the country's economy?
- We have met all criteria for an Eurozone entry, except the one regarding the inflation rate. This is why some observers proposed unilateral and parallel introduction of the Euro. An idea has been voiced about an early entry of Bulgaria in the ERM 2 mechanism, a two-year currency stability test for euro hopefuls. At all events, this will be a positive signal to the international finance institutions and to the business as a whole.
- Can Bulgaria hope for ERM entry despite the fact that we have not curbed the inflation, yet.
- It's highly possible that this year's inflation rate will be lower than expected. In the conditions of a global economic downturn, Bulgaria's ERM entry will be regarded as a positive sign.
- In what way will the Bulgarian business benefit from such a move?
- As regards the business, an introduction of the Euro will simply lead to considerably lower expenses, and the interests on bank loans will go down, too.
- What are your expectations about this financial year?
- This financial year will be a difficult one, but we have to go though it. Many small and faltering businesses will be swept away.
- The Industrial Capital Association proposes reforms in the taxation policy as a cushion against the global financial turmoil. What exactly do you mean by these reforms?
- In a nutshell, we think that he social insurance premiums should be lowered by five or ten percent.
- Labor and Social Policy Minister Emiliya Maslarova said the social insurance premiums should not be lowered.
- Her arguments lack solid grounding - she said that such a move would put the implementation of some of the social ministry's programs at risk. What we propose, however, is lowering the public investments, but not cutting down funds meant for programs of the social ministry.

Katerina Ivanova

Source: Standart newspaper