The architect of the Currency Board in Bulgaria and renowned US economist Steve Hanke did not hide his disappointment from the way the state budget, the banking system and politics are managed in Bulgaria. Professor Hanke was a special guest to the Bulgaria Economic Forum held in Sofia.

“Poverty in Bulgaria is due to the lack of confidence of the banking sector towards the country’s economy and of the business towards the policy of the Bulgarian cabinets. Your country urgently needs to restore this confidence and make reforms similar to the ones made by former UK Prime Minister Margaret Thatcher back in 1981”, Professor Hanke contends.

Bulgaria’s Minister of Regional Development and Public Works Lilyana Pavlova and Minister of Economy Bojidar Loukarsky showed intentions to restore the confidence of the business through investing the EU funds in the real economy. We are talking about public procurement orders directed to the large business engaged in the construction of Bulgaria’s road infrastructure. Over 70% of the money allotted to these projects comes from EU funds. Minister Pavlova also plans to make reforms in the country’s water sector and start the renovation of old buildings through public-private partnerships.

“Unfortunately, the partnership between the business and the state became a dirty word in the past”, says Minister Lilyana Pavlova. “We must join efforts and make sure this partnership happens in the future.”

Minister Pavlova promised that some of the money from the meager state budget would reach the small and the medium-sized companies which will take part in the renovation of the housing in this country.

In Steve Hanke’s view, the measures planned by the current cabinet would not be able to restore the lost confidence. In the long run the public-private partnerships planned by the Borissov 2 cabinet would be a source of corruption, Mr. Hanke pointed out.

“The public-private partnership is a disaster which later results in corruption. All types of links between the private business and the cabinet are a source of corruption, especially here in Bulgaria. When you hear the term public-private partnership you should know that it is an invitation for large-scale corruption”, Professor Hanke categorically contends.

With regard to the large expectations towards the EU funds, Professor Hanke advised Bulgaria to avoid binding with them too much, because it would bring more bureaucracy and corruption.

Steve Hanke recommended to the authorities a series of short-term measures, in order to restore the confidence in this country. In his view, Bulgaria must curb the state expenditures, solve the issue regarding electricity prices, seal new privatization deals, which would bring fresh money to the economy and promptly solve the issue regarding the bankruptcy of the Corporate Commercial Bank. In his words, the Currency Board which was introduced back in 1997 is the only secure thing in this country, although some people advocate for its abolishment every now and then.

English version: Kostadin Atanasov