site.btaEurozone Economic Stability Will Depend on Fiscal Discipline and Institutional Efficiency, National Bank Governor Says

In the eurozone, the common monetary framework acts as a stabilizing anchor that limits part of the external uncertainty, but this also places greater responsibility on domestic policies, meaning economic stability will increasingly depend on fiscal discipline, structural competitiveness and the efficiency of institutions, Bulgarian National Bank (BNB) Governor Dimitar Radev said at the opening of the "Money Growth: Bulgaria in the Eurozone" conference organized by Capital in Sofia on Wednesday.

According to remarks distributed by the BNB, Radev said inflation in Bulgaria results from the interaction between external shocks and domestic structural factors. External factors create the initial impulse, while internal factors determine its strength and persistence.

He noted that while the eurozone can provide a stable monetary framework, sustainable economic success cannot be imported from abroad.

"Ultimately, sustainable real convergence is not a matter of external environment, but of internal resilience, consistency and trust," Radev said.

The BNB governor stressed that inflation is not an abstract statistical indicator, as it directly affects incomes, savings, borrowing costs and confidence among households and businesses.

According to Radev, three factors are particularly important: the structure of the economy, the competitive environment, and the fiscal position combined with domestic demand.

He said the Bulgarian economy is currently characterized by a mismatch between a strong financial sector and a weakening fiscal position, reflecting policies in those two areas.

Radev outlined several priorities in the current economic environment, including a stabilizing rather than pro-cyclical fiscal policy, as well as investment in infrastructure, energy connectivity, digitalization, human capital and technological modernization.

"Automatic indexation mechanisms should be discontinued because they permanently embed inflation into the economy's cost structure," he said.

Radev also stressed that competition is the main mechanism for price discipline and sustainable economic growth. When competition weakens, inflationary processes become more persistent and difficult to contain.

According to him, the quality of institutions has direct macroeconomic significance, including the effective functioning of competition protection and consumer protection authorities.