Cause and Effect in European Politics and Law

The European Commission and the IMF are to be blamed for the budget deficit of Bulgaria

Adelina Marini, August 13, 2009

Bulgarian journalists had a strange event today in the Ministry of Finance. In a very small hall, called "Collegium" in the building, a large number of journalists, cameramen, photographers and many other people were trying to find an empty space so as to hear what explanations the former minister of finance Plamen Oresharski will give about the budget deficit the previous government left and which is 372 mn lv by the end of July (190.76 mn euro).

Although it was expected that the prime minister Boyko Borisov will also attend the meeting, as well as the ex-prime minister Sergey Stanishev, Mr. Borisov's appearance in the hall very much resembled that of a Hollywood star.

But what has euinside understood while trying to survive in the melee and ask some questions?
- the deficit is 372 mn lv (190.76 mn euro) by the end of July;
- the fiscal reserve has been decreased by half a billion lv an has reached 7.7 bn lv (3.94 bn euro);
- Plamen Oresharski behaved like a man because he attended the this peculiar interrogation, organised by the prime minister and his deputy;
- the most guilty person is the former prime minister Sergey Stanishev because, according to Mr. Borisov, whatever the prime minister says, this is supposed to happen and there was no way that Mr. Oresharski could have acted on his own and conceal the truth about the budget.

And here are the details. Obviously, we would not exaggerate if we say that the deputy prime minister and minister of finance Simeon Dyankov ran over the first of 3 letters which Plamen Oresharski gave him when he left office almost a month ago and in which it is written: "When too many questions start arising, blame everything on your predecessor!" Apparently, wondering what to do after realizing that the new government will start its term with minus 372 mn levs and forecasts of 2.5 bn levs deficit by the end of the year, Mr. Dyankov has chosen to open the first letter but not only blame his predecessor for everything but also to hold him accountable for the troubles.

Thus, the ex-financier No. 1 appeared on stage by explaining that when he reported the realisation of the budget for the first 6 months of the year in the very end of his term as minister, a very small mistake has been made. On the 20th of July Mr. Oresharski said that by June the budget surplus was 173 mn levs (88.7 mn euro) and it proved to be 178 mn levs (91.28 mn euro). Mr. Oresharski continued to claim that the report was, by then, true. "For July the previous government could have not, in any form, make a report, except if it could base its data on some expectations", the former finance minister explained.

From these explanations it also became clear that the crisis is a fundamental factor in the lack of money in the budget and he pointed as a starting point the bankruptcy of the Lehman Brothers. "This year the import has dropped by 40%. I very much wish to take measures but I cannot return this import because there is no way that I could get Lehman brothers back". According to Oresharski, all measures that have been undertaken so far are adequate by the time of their undertaking. He also quoted the estimations the European Commission and the IMF made because they were the basis for the forecasts the Bulgarian government did in December last year. Mr. Oresharski added that if they were wrong, "then we went wrong after them".

Asked by euinside whether he still thinks that the budget was not supposed to be reviewed because of the dynamic international situation and the quickly changing and often contradicting forecasts about the growth of the Bulgarian economy, Mr. Oresharski responded: "I still think that the budget has been planned in such a way that it might not be reviewed because in the transitional articles of the Law about the budget there are enough texts that give the government the right, no matter which government, to start restrictions and limitations of the expenses. Possible review of the budget is an issue which can be discussed if policies are to be changed and is also a matter of decision of the new government whether it would prefer to make restrictions on its own or after discussions in Parliament".

A little after this response the prime minister joined the conversations, apparently insulted by the fact that he was not given the chance to speak right after his appearance. He thanked Plamen Oresharski for his manhood and courage to come to the meeting to give explanations about the situation of the state finances and explained that he called this gathering so that the society could see what the new government has inherited and to avoid speculations about who's to blame for the lack of money. With a tone that is hard to contradict Mr. Borisov also said that no one should play with the wallet of the state and agreed with Mr. Oresharski that no one should make politics out of this issue. In the end of his participation, the prime minister also thanked for the possibility to clarify in front of the media what the real situation in the country is and spoke in first person to Oresharski because of his manhood and courage. He also asked not to be escorted on his way out.

However, an interesting fact is that some time before he took office as a minister of finance and a deputy prime minister, Simeon Dyankov had worked for more than 2 weeks with Mr. Oresharski so as to see what the situations was. This was the question euinside tried to ask at the press conference but had no chance - whether it was possible that Mr. Dyankov could have seen what deficit is to expect in July. Instead we asked the former minister Oresharski: "I think I have told you that by the end of June there was no deficit. In July the revenues are weak and, probably, more expenses are coming as I am informed without knowing the exact structure, come not only from the central government but from the local authorities and it is well known that the municipalities are not being controlled by the central government".

So, in the end of the day we couldn't understand who is to be blamed for the bad but quite helpful forecasts, about whether there were or weren't excessive expenditures, made by the previous government and, if there were, what will happen to those who authorized them. Instead, there was a meeting today between the prime minister and the Commissioner for consumer protection Ms. Meglena Kuneva at which she has offered in the current situation Bulgaria to ask for help the European solidarity fund.