[size=75:1qf2l6ab]novinite 24 March 2010

Bulgaria Said to Need Nearly Decade to Recover from Crisis

It would take an extended period for Bulgaria to recover from the crisis, provided that its annual economic growth strengthens, a local expert claims.

“Bulgaria will start to crawl out of the crisis in about seven or eight years and only on the condition that it begins to record a stable economic growth of 3-4% per year,” Boyan Durankev, lecturer at the University of National and World Economy, told BGNES news agency.

Asked about the anti-crisis measures that the government plans to undertake, Durankev said the average taxpayers will have to carry the biggest burden, while the richest people will not be even stinged.

“The planned increase in the value added tax by 2 percentage points to 22 percent will increase the end prices of all products and services by an average of 7-10%,” he said.

“Some 80% of the Bulgarian population will have to carry the burden of the crisis, while those 15% who own yachts, aeroplanes, big cars and expensive properties, will even laugh at the new luxury tax.”

According to the expert the results from the measures are not clear yet.

“Everything is chaotic. We haven not hit the bottom yet and when we do I am afraid that we may not only see a repeat of the Greek crisis in Bulgaria, but even a worse scenario of it.”

According to Durankev the government should focus its efforts on the introduction of a progressive tax, which is to replace the flat tax rate, and fill in the leakages in the state and municipal budgets.

Bulgaria's new center-right government plans to introduce a new tax on luxury goods, increase the value added tax to 22 percent and cut public servants wages in a bid to help fight the economic crisis and keep down the fiscal deficit.

It is part of a package of new measures, which also include floating minority stakes in state-owned companies and a possible bond issue.

The government is expected to agree with the trade unions and the union of employers this week a final package of nearly 50 steps to combat the crisis.

The government focused its austerity measures on the wealthy, after its plans to raise the healthcare tax and cut benefits to civil servants triggered protests.