Lily Mircheva
lili_hris@abv.bg

- Mr. Glavchev, what are the problems related to the Euro Plus Pact? Prime Minister Boyko Borissov announced that Bulgaria will ratify it, while the Minister of Finance and  the BNB (Bulgarian National Bank) stated that we would abstain from endorsing it. Where is the truth?
- I only know the official standpoint of the Prime Miniser. I am not aware why the BNB and the Finance Ministry oppose the Pact. However, the Euro Plus Pact has both financial and political aspects. It provides for competitiveness of the EU member states which is implied by its original name Competitiveness Pact. The proposed ideas refer to the imposition of uniform rules that should introduce discipline, if I my say so, to the undisciplined EU member states, Bulgaria being one of them. I think that we should not have apprehensions about our involvement in the Euro Plus Pact. Currently, a number of decisions aimed at enhancing competitiveness are under discussion. Ultimately, this will result in a positive economic growth and rise of employment on the basis of financial stability.

- However, according to the economist Georgi Angelov, in this way the poor countries will finance the wealthy ones. He gives an example with the Bulgarian share of the EU Fund's capital that will constitute 16.9 % of GDP, while Luxembourg sets aside only 3%. Is it true that the ratification of the Pact will oblige Bulgaria to transfer € 6.1 bn and that these liabilities may increase in case of bankruptcy of any Euro area member state?
- On the contrary, it is currently being discussed that the less developed EU countries should pay a lower fee. It has been proposed EU member states with less than 75% of the Euro area's GDP to pay their contributions under another scheme. This Pact is a political mechanism representing the philosophy for the development of the EU. The idea is uniform rules to be imposed in all EU countries. Even if we ratify the Euro Plus Pact, we will start paying our contributions after accession in the Euro zone.

The European Stabilisation Mechanism amounts to €700 bn -  €80 bn are collected from entrance fees, while the other €620 bn are accumulated from guarantees on request. Upon Bulgaria's accession into the Eurozone, the country will have to deposit overall €345 mln, while the guarantee contribution amounts to €2.5 bn being calculated at current values. As a country with less than 75% of Euro area's average GDP, the contribution will be deferred for a 12-year period. Other EU countries can use discounts only for a 5-year period.

- How would you comment on the statement of Executive Chairman of BIA (Bulgarian Industrial Association) Bozhidar Danev during the discussion of the National Reform Programme in the implementation of the Strategy Europe 2020. He said that the Bulgarian indirect taxes were 8 times higher than the average for the EU. Businesses argued that the tax base in our country was calculated based on a completely different principle and gave the garbage fee as an example.
- The garbage fee is a local tax and is, therefore, a completely different thing. However, I absolutely agree that the garbage fee is taxable under unrealistically distorted tax base and  this discussion has been going on for quite a long time.

- Then why don't you introduce changes in it?
- We expect proposals to be delivered both by the business sector and the municipalities. We are eady to make the necessary changes. Adopting some other mechanism, different from the Euro Plus Pact, does not mean that the taxable garbage fee should be calculated  in a different way than in the other EU  countries. Regarding the Financial Stability Pact, I believe that tax bases in terms of indirect taxes have already been harmonised. Besides, I cannot think of any EU directive which our country is not complying with. You also see that the excise rates have almost reached EU levels, i.e. harmonisation should be sought with EU direct taxes. There has been many discussions on whether so many tax incentives should be granted given the low rate of direct taxes. I personally believe that a large number of these incentives are a way of draining the State Treasury.

- Minister Djankov proposed the Financial Stability Pact twhich was openly criticised by  the Opposition.
- Actually, this Pact is more political than economic since it provides for the future commitment of politicians for maintaining the financial stability and discipline. I would like to emphasise that  Bulgaria's economy has been growing, parallel to the general positive growth of the entire global economy. As a result, positive surpluses have been accumulated and the  current economic parameters have been observed. It is difficult to realise this in a time of economic crisis and downturn. However, we continue to maintain the fiscal discipline.

- What are the the similarities and the differences between the Euro Plus and the Financial Stability Pact?
- Besides the harmonisation of tax bases, I cannot think of any difference between them. Constitutional amendments have been provided for in both Pacts. The difference lies in the actions in case of failure of paying financial liabilities incurred prior to the adoption of the Pact -  we do not comment this in the "local" financial stability pact. According to me, these two ideas are parallel to one another. That is, the Euro Plus Pact overlaps the National Financial Stability Pact in its main points. Ultimately, they are focused on job creation and increase of incomes. These priorities are also supported by the Opposition, but they could only be realised on the basis of financial stability which will ensure economic growth through investment and absorption of EU funds. Thus, economic growth will be achieved and hence an increase in employment and consumption.