Bulgaria – New Economic Outlook
Following the successful vote for a new government with wide societal support, Bulgaria has taken a new way of development that seems hard and difficult because of the mandatory painful reforms which must be executed. The inevitable changes affect almost all social groups and areas, but the arguably most important are the economy-related ones.
The new Bulgarian government announced some unpopular and not that major tax changes affecting more the fiscal budget than the social area. One of those is the end of the progressive reduction of the so called “interest tax” which is to be returned to 10 % of the bank deposits income of individuals and companies. This tax change cannot be considered major, but its logic is clear – the government will try to reactivate consumption in any possible way thus reducing excessive saving on the one hand, and fulfilling the revenue budget through various innovations, measures and methods on the other.
Changes in the corporate tax, individuals’ income tax as well as social and health security taxes are not on the agenda. This is good news for the business since the new government is expected to promote stability and predictability in tax as well as employment cost.
One of the most discussed matters by political parties is the increase of the pension age. Despite the social tension in that regard, this change will most likely be introduced under the European Commission’s insistence that strongly recommend the pension age increase in both genders as an efficient measure against the major demographic crisis in all member states.
The new Bulgarian government is entirely right-oriented, but counting on left-oriented support in its social policy. This is a sufficient guarantee for the introduction of sufficiently efficient as well as socially reasonable business reforms that should enhance the local business conditions.
Taking into consideration the above stated areas subject to potential well-planned long-term policies, Bulgaria’s new economic outlook seems quite positive. If properly performed the necessary reforms are likely to get the country out of the so called ‘transition period’ and move it forward to economic growth and prosperity.