"Maintaining a stable microeconomic environment and carrying on with structural reforms remain among Bulgaria foremost priorities after its accession to the EU," Finance Minister Plamen Oresharski said on Tuesday, BTA reports. He was speaking at a conference in Sofia, entitled: "Ten Years of the Currency Board Arrangement and the Challenges of Adopting the Euro".

Oresharski noted that the government intends to maintain fiscal balances at such levels that would not generate higher growth in domestic demand while allowing the economy and productivity to grow.

The Finance Minister sees some "disconcerting signals" despite the sustainable economic development of the country. "Discontent has been expressed even about double-digit increases in income levels. There are people who dream of European levels of pay for work which falls short of European productivity standards," he said.

"An initiative to introduce proportional income tax at an unprecedentedly low rate for an EU member state has come under criticism, with some voices calling for even lower levels," he said.

"Loss-making state-owned enterprises are ignoring fundamental wage control rules. They seem unperturbed even by rising inflation - which is due to poor farm crops, but primarily due to growing domestic demand," he said.

"There have been contrasting reactions to the current fiscal policy, which is based on relatively modest fiscal surplus rates against the backdrop of a dangerously growing current account deficit," he said.

"These circumstances will determine the country's development choices, whether it will develop in a sustained and steady manner or by fits and starts," Oresharski said.

Addressing the conference, Bulgarian National Bank Governor Ivan Iskrov said the currency board arrangement is by far the most effective instrument for encouraging any national government to pursue reasonable and responsible fiscal policies and structural
reforms, as prescribed by the Stability Pact for South Eastern Europe and by the Lisbon Strategy for growth and jobs.

Iskrov believes that the currency board arrangement will be the most appropriate monetary policy system when Bulgaria adopts the euro.

Employers and Industrialists Confederation Chairman Ivo Prokopiev said that, from the perspective of the present day, it seems realistic for Bulgaria to adopt the single European
currency within the next five years. "The main problem is how to overcome the internal and external shocks which are already beginning to affect the country's economy," Prokopiev said. He identified tax and social security policies and labour market measures as the principal instruments which can be used to offset the rigors of the currency board arrangement and make the national economy flexible enough.

Prokopiev called for a further decrease in social security contribution rates. "The policy of decreasing taxes and social security payments is not a favor granted to the business
community, it is a necessity," he said.

Inflation and the trade deficit are the greatest problems domestically, he said."Internationally, a new type of crisis is looming, which is so far only a financial crisis. The crisis can affect the real estate business in Bulgaria, which is a key sector for the country, and the related sectors of construction, tourism and finance. This would cause a serious slowdown of national economic growth," he said. The right solution, according to him, is to increase production and make it cheaper, and to invest more wisely, not just in one sector.

Prokopiev called for a "restart" of unfinished reforms in education, public health, social security and public administration.