Bulgaria is first in the EU in terms of its low tax burden rate. We have paid levies amounting to 27% of the GDP

Bulgaria has stable public finances and banking system, with a tax burden rate, which is lowest in the EU, commented our Finance Minister, Simeon Djankov during the presentation of the World Bank report on the European economic model. Last year, our state generated less than 27% of GDP as a result of the collection of public taxes and fees as well as excise duties and other levies, while the EU tax burden reached 40% of GDP. According to the top financier, the data clearly shows that the state does not intervene in the progress of the economic life, which is a very positive feature.

Some of the main problems facing Bulgaria concern the infrastructure sector, which should turn to a real advantage for economic growth, predicted the Finance Minister. Besides, the e-government project is due to be implemented, while the agriculture sector is developing at a rapid pace and after several years it will reach its success levels of the socialist era. According to him, the actual external threat to the Bulgarian economy comes from Greece, which in the next years will remain one of the least developed regions in Europe and will affect us negatively. As an example of a still unformed sector, Djankov mentioned our energy sector. Therefore, he recommend that at least 20% of the management Bulgarian Energy Holding (BEH) be transferred into private companies in order to make these more transparent and to allow for conducting a more meaningful debate on the actual type of energy to be generated.

One of the main weak points, typical for all of Europe refers to the demographic picture, while the specific danger for our country refers to the deteriorating state of our higher education. If the Bulgarian economy starts to develop at faster paces, we can overcome our negative demographic growth by attracting labor-force from abroad, reckoned Djankov. He gave an example with the US, where 30-40% of the economic growth is due to the contributions of the foreign workforce. In his words, both in Europe and in Bulgaria, even less employees are subsidising the pension and health system via the deposition of their social security contributions because of the aging of the population.


Bulgarians live longer and retire earlier

The WB report presented yesterday confirms the statement of the Bulgarian Minister of Finance. In fact, the World Bank Chief Economist, responsible for the European and Central Asian region, Indermit Gill commented that nearly 54% of the Bulgarian population will be of working age in 2050, while currently they constitute 68.3 %. At the same time the Bulgarian population having reached a retirement age, currently exceeds a bit over 17 %, but in 2050 it is expected to comprise over 33 percent of all people.
"We will lose approximately 1 million employees per year. Besides, countries such as Bulgaria and Romania will lose an even higher percentage of workers as a ratio related to the work force rate. This alarming fact must be paid a special attention," indicated the expert. In addition, life expectancy of Bulgarians is higher than it was in the 60s, while people spend less time on the labor market.
As a result, the expert recommended that the economic freedoms be increased and that labor markets in Northern European countries open completely. Besides, Europe needs to find a market niche for its production, while the EU governments must become more cost-effective by spending less state funds, reckoned the WB Analyst. In his words, the southern European countries must by all means deal with their accumulated debt in order to manage to generate positive economic growth and activity. 

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