Bulgaria threatened by macroeconomic disbalances

Bulgaria is among EU countries facing the risk of macroeconomic disbalances, concluded Ecofin ministers at their last meeting, echoing the assessment of the European Commission on the matter, BNR reported. The procedure is part of an early warning system introduced last year. Bulgaria's Finance Minister Simeon Djankov, who also attended the meeting, questioned the commission's methods of evaluation, saying "there is no cause for concern". According to Djankov, the EC analysis relies on an ill-developed and somewhat flawed methodology. Djankov called "preposterous" the prevailing risk according to the EU's executive body – a too rapid pace of  a wage increase, compared to labour productivity. "It's a ridiculous comment really. After all, that's exactly what the process of convergence means – income growth," he said.

"The Commission's other concern – attracting private capital as share of the gross domestic product (GDP) – doesn't account for the fact that Bulgaria is one of the countries that need higher than the average EU economic growth," the Finance Minister said. "And textbooks on macroeconomy teach us from the very beginning that attracting additional capital is the way to achieve faster growth. This would normally boost the GDP ratio for the first at least 20 years."

The early warning system doesn't include the six European countries that have already received financial help. Bulgaria is in a group of 14 nations with macroeconomic disbalances, including the Netherlands and the UK,which is the better category to be in, Djankov said.

In March, EC experts will be sent to each of the countries monitored by the early warning system. After personally checking relevant data and methods, the experts will make a fresh assessment of the macroeconomic risks threatening Bulgaria.

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