Bulgaria will Set up a Mechanism to Protect the Poor when the Euro is Adopted
Bulgaria has less than a year to comply with the guidance of the European Central Bank and the European Union for entry into the Eurozone waiting room. This in effect means tightening the banking system and preparing the economy and the price levels.
This was the opinion of experts at a conference on Bulgaria’s membership in the exchange rate mechanism, which is considered the last step before the adoption of the euro.
Which groups of people will be most affected by the introduction of the common currency and what measures will the state take to protect them?
The poorest people are the ones who first feel the introduction of the euro because of the rounding of prices, BNB Deputy Governor Kalin Hristov predicts.
Kalin Hristov: Not the price growth itself, but the feeling of price growth, what that is what happened in the first member states. This is usually felt because poorer people buy cheap goods very often, but they are goods where the rounding effect of introducing the euro is greatest.
Kalin Hristov has recommended the establishment of a control mechanism in order to ensure that the most vulnerable, in terms of income, will not be the most affected. Bulgaria continues to lag behind other Member States in terms of income.
Kalin Hristov: Data came out two weeks ago for 2017, according to which are on average 50% of the European prices level and 50% of the per capita income.
The rise in the prices of fuel, heating and gas, and hence goods and services, has also given rise to the formation of so-called bad inflation. This means that the increase in prices outstrips the increase in income. One option to tackle this problem is an increase in the budget, said GERB Parliamentary Group Chairman Tsvetan Tsvetanov.
Tsvetan Tsvetanov: For me, it is important that the economic growth of 4% allows for 10% increase of remunerations in the budget sphere and of course it will also allow for the provision of the necessary financial resources for the social package, which is needed in the situation. When income grows, it is quite normal to be interrelated with rising prices, more importantly, income has to grow more than the inflation that could be formed.
Tsvetanov explained that today, 2nd of October, the majority partner in the ruling coalition, GERB is discussing the state budget for next year, which should be adopted by the Parliament by the end of November. According to him, most likely changes to the original texts to increase both budget wages and social spending will be made between the two readings in the plenary hall.