site.btaProgressive Bulgaria to Propose One-Year Extension of Euro Adoption Act

Progressive Bulgaria will submit a bill to extend the Euro Adoption Act by one year beyond August 8, MP Konstantin Prodanov told a news briefing on Monday. Under the proposal, retail chains with annual turnover of more than EUR 10 million will have to continue displaying prices in both leva and euro in their stores.

“We will extend the requirement to justify price increases, which is included in the current Euro Adoption Act. It is very important that these requirements remain in force because the effects of euro adoption have not yet fully played out, while the potential obstacles and problems related to price adjustment are still ongoing and will most likely continue for several more months,” he said.

Prodanov said pricing in Bulgaria has two components, one concerning relations between producers, suppliers and retail chains. This is mainly regulated by the Commission for Protection of Competition (CPC). The second concerns relations between retail chains and final consumers, where the Commission for Consumer Protection (CCP) has jurisdiction.

“We are doubling the fines the CCP can impose so they have a real deterrent effect on retail chains that violate the rules,” Prodanov said, adding that the CPC already has such powers, including the right to impose fines of up to 10% of turnover.

Prodanov said the causes of inflation can be divided into three groups. The first comprises external shocks, such as the war in the Middle East, over which there is no control.

The second involves macroeconomic trends linked both to the delayed adoption of the euro and to pro-cyclical fiscal policy.

The third is speculation, he said. “We do not want to strong-arm retail chains, and we want them not to strong-arm consumers and producers,” Prodanov added.

“We are also introducing the fair price concept,” he said, explaining that the price would be calculated under a methodology approved by the Economy Ministry. “It is neither a fixed price ceiling nor a fixed mark-up cap, but rather our view of what a product’s price should be in a normally functioning market economy,” he added.

According to him, the experience of other European countries, as well as our own calculations, shows this is the right approach in such a situation. “We expect it to lead to a significant curb on speculative practices in the economy, especially in the prices of basic consumer goods, which affect people the most,” Prodanov added.

“We will consider the bills under a fast-track procedure tomorrow [Tuesday] morning and hold the first reading in the Budget Committee, because we understand this is a key issue for all Bulgarians, who are feeling pricing problems directly in their pockets. We expect this to curb speculative price hikes fairly quickly and in the short term,” Prodanov said.