site.btaEconomic Report Shows Bulgaria in Favourable Fiscal Position but No Immunity Against Severe Shocks

Bulgaria is joining the eurozone in a relatively favourable fiscal position, but with no immunity against severe external and internal shocks. This is the conclusion of a report by Prof. Victor Yotzov from the Economic Research Institute at the Bulgarian Academy of Sciences, which was presented Monday at an international scientific conference titled "Economic Development and Policies: Realities and Prospects. Sustainability in the Conditions of Global Transformations", organized by the Institute.

In the report dedicated to fiscal sustainability and the country's medium-term economic prospects in view of its upcoming eurozone membership, Yotzov emphasized the importance of sustainability, particularly in light of the various concerning events unfolding in the country. He pointed to several successes achieved by the country, including growth GDP growth between 1997 and 2024 as well as low unemployment and inflation within eurozone criteria over the past year. He said that these are successes that should not be forgotten, but that Bulgaria’s position at the bottom of various EU statistics is telling.

Yotzov also pointed to persistent deficits and problems, including weak and inefficient administration and corruption, which he said is not just a moral and ethical problem, as well as low confidence in the judicial system. Other issues include demographic collapse, which reduces the country's economic potential with data showing that around 40,000–50,000 people are "lost" every year. The Bulgarian economy also lags significantly behind the EU average in terms of labour productivity, at around 55%, which limits competitiveness. The country also has a low share of high-tech manufacturing and weak knowledge transfer.

Citing data from a survey on public attitudes towards the euro, which found that 49% support the euro and 42% are against it, Yotzov said that he considers this to be a failure on the part of economists who, according to him, have not done their job properly and have not explained things well enough to the people, resulting in such hesitation. He added that it is necessary to maintain and increase the fiscal reserve as a first line of defence against sudden shocks. His report also notes that a balance is needed between fiscal discipline, flexibility, and strategic investments in sustainability and convergence.