The difficult period of recession now should be used to provide the best possible basis for growth when the recession is over, according to leading economists from NGOs. They were asked to comment what steps the new government should take in the economic sphere.

Bulgaria should compare not to the medium values in the rankings for business climate, competitiveness or economic freedom, but with the leading countries in these rankings and should try to approach them, experts believe. According to them, the fact that the government has not declared bankruptcy will give the country and the private sector a chance to overcome the period of decline faster.

The incumbents should decide what measures and steps to take to stabilize the economy - that is why we voted and elected them, advice should not be offered from the outside, said Georgi Ganev, Programme Director of the Centre for Liberal Strategies.

Whether the budget should be updated depends on how much it is problematic. One thing is certain: the reporting of the budget should become more transparent, Ganev said.

There are no magical means to push the economy forward. The difficult period of recession should be used to provide the best possible basis for growth when the recession is over, he commented.

According to Ganev, it is possible that the social and health security burden will be reduced. The philosophy of the GERB party obviously includes an approach in which a larger disposable income is left to the people as a means to take the impact of the recession, the economist commented. One of the priorities which GERB set forward in election debates and programs is that they would prefer to reduce the social and health security burden rather than VAT or any other direct taxes.

Asked about the duration of the economic crisis, Ganev was positive that it depends entirely on the external markets. We should follow the forecasts about the Eurozone, the UK, the US, about Bulgaria's major trading partners such as Turkey. When they start going up, this will be instantly felt in Bulgaria, the economist said.

Luchezar Bogdanov, Managing Associate at Industry Watch, said a number of state-owned enterprises should face far more rigorous restrictions and should be pressured either to improve their efficiency or to go bankrupt. The beginning should be set in the most problematic sectors: heat utilities, the Bulgarian State Railways, the Kremikovtsi iron and steel works, he said. The administration can be pressured to limit the expenses for wages and allowances. The capital expenses for some infrastructure projects may be frozen and postponed for next year, according to Bogdanov.

It is important to send a clear signal that the new government will make every effort to preserve macroeconomic stability, which depends on the stability of the budget, the Industry Watch economist said.

The policy of stabilization and assistance to some sectors comes only second. The more so because there are sectors which do not need any assistance.

Public expenses should be reduced, on the one hand, because there is a crisis, and on the other hand, because some activities are not conducted well by the government, he said.

When this begins to happen, there will be grounds to reduce the tax burden, and this will make Bulgaria a better place for making business and will facilitate the restoration of economic activity and growth, Bogdanov said.

Bulgaria should be compared not to the average values in the rankings for business climate, competitiveness or economic climate, but with the leading countries in these rankings and should try to come closer to their level. This is the most simple approach to reforms, nothing more can be done in the following three or six months, Bogdanov said.

Incomes in the public-financed sector will probably not be increased in the following 12 months, he said.

The main focus should be improvement of efficiency and change of the model of functioning of the social security system, which should be linked to a reform in the manner of management of the state administration, the expert believes. Those employed in the public-financed sector who work well should be encouraged with better incomes, and those who are ineffective should be laid off, Bogdanov said.

The Bulgarian economy will hardly overcome the recession in the second and third quarter of 2009, at least for the fact that growth as at the end of 2008 was very high and will be difficult to reach, Bogdanov further commented. If a good state policy is pursued, in the last quarter of 2009 and the first quarter of 2010 there is a chance that the economic decline will be stopped and even slight growth will be achieved, but it is more important that the Bulgarian economy adapts to the new global economic landscape, Bogdanov said. The new government should allow for this adaptation to happen as quickly as possible.

It is important that Bulgarian enterprises see the niches in world consumer demand and begin to channel resources into these areas, Bogdanov said.

Source: BTA