Associate Professor Grigor Sariyski from the Institute for Economic Research at the Bulgarian Academy of Sciences (BAS) has expressed skepticism about Bulgaria’s ability to achieve the 3% budget deficit target set for 2025.
Speaking in an interview with the Bulgarian National Radio (BNR), Sariyski raised concerns over the country’s fiscal health and its Eurozone aspirations, suggesting that current financial trends make these goals highly challenging.
Sariyski highlighted projections provided by Acting Finance Minister Lyudmila Petkova, which indicate a significant rise in fiscal expenditures of approximately 18 billion leva.
In contrast, the expected revenue growth is forecast at only 6 billion leva, creating a substantial gap in the budget.
This disparity, according to Sariyski, points to a potential budget deficit increase of nearly 12 billion leva.
If these trends persist, the economist warned, the deficit could surge to as high as 8.5% or even 9%, depending on the accuracy of the gross domestic product (GDP) forecasts. He also questioned the reliability of the GDP predictions used in the budget estimates.
The economist cautioned that political instability could further complicate fiscal management.
He explained that if the upcoming parliament is highly fragmented with many parties represented, fiscal policy might be manipulated for political gains, particularly during election campaigns.
Sariyski speculated that such political dynamics could result in a short-lived government, potentially leading to new elections as early as Easter 2025.
Sariyski was notably pessimistic about Bulgaria’s chances of meeting the criteria for Eurozone membership in the near future. He described the goal of adopting the euro as “unrealistic” under the current circumstances.
Using a stark metaphor, he stated that Bulgaria needs Eurozone membership “as much as a brain tumor,” emphasizing his critical stance on the country’s preparedness for the transition to the common currency.
A key issue highlighted by Sariyski was the eroding revenue base, which he argued is undermining sustainable fiscal management.
He pointed to this as a primary factor contributing to Bulgaria’s financial instability, asserting that without addressing the underlying revenue shortfalls, the country’s fiscal position would remain precarious.
The acting finance minister’s budget forecasts are based on a projected economic growth rate, which Sariyski suggested may be overly optimistic.
If the anticipated economic performance does not materialize, the budget deficit could widen further, jeopardizing efforts to adhere to the 3% target.
This raises concerns about Bulgaria’s long-term fiscal sustainability and its ability to comply with the European Union’s convergence criteria for joining the Eurozone.
The government is expected to continue pursuing its fiscal goals amid the economic uncertainty, but Sariyski’s comments signal that achieving the proposed deficit target will likely require significant policy adjustments and careful management of public finances.
As the budget discussions unfold, the debate over Bulgaria’s fiscal policy and its Eurozone ambitions is set to intensify, with the economic and political landscape playing a crucial role in shaping the country’s financial future.