Yerevan, April 27, Amen Press/BTA. IMF Managing Director Kristalina Georgieva spoke to BTA in an exclusive interview. This is the first time for a Bulgarian media representative since she was re-elected for her second five-year term.
Speaking to this correspondent at IMF headquarters, Georgieva spoke about her priorities as head of the international financial institution, Bulgaria's flat tax and the country's prospects for joining the eurozone.
IMF priorities
Interviewees said that after price increases peak in 2022, the disinflationary process is well underway and some countries have started lowering interest rates. China is experiencing inflation, Japan is moving from negative to positive interest rates, and there is a good chance that the Bank of England and the European Central Bank will choose to cut rates ahead of the Fed in the coming months.
The latest forecasts show lower growth rates, even though the global economy has turned out to be surprisingly more resilient to shocks than expected. It is important to fight inflation and increase fiscal buffers, but at the same time it is important to find out how to transform the economy to increase labor productivity and expand growth.
The most disappointing fact established by the IMF is that labor productivity is low everywhere. The United States is slightly better in this respect. Because America's innovation is successful and its labor market depends on immigration. Paradoxically, while immigrants help America economically, they are seen as a problem politically.
Although the quality of education is low in Bulgaria, digital infrastructure is improving and obstacles to entrepreneurship should be reduced, the IMF Managing Director noted.
The fund's activities must be stable, she insisted. “Since 2020, we have injected Lev 1 trillion into the global economy and established a new system of long-term financing with a 10-year grace period for countries vulnerable to climate change,” Georgieva recalled. did.
“The 50% increase in the IMF's quota provides reassurance that the Fund can cope. “We would like to establish this,” he said.
us economy
In response to a question, he said the U.S. should be cautious about fiscal support for the economy and should continue to look at the numbers before deciding whether a rate cut is possible. “When people have jobs and savings, they tend to spend more, which is good for growth but bad for inflation,” he said.
“Raising interest rates is a cold shower for entrepreneurs. It is not good for this country's exports due to the strong dollar. Rising interest rates in the United States is also bad for other countries because it leads to the devaluation of their currencies. The rest of the world 's currency and interest rates on government, corporate and private debt,” Georgieva said.
Bulgaria: If and when in the euro area
“Like other countries, Bulgaria has prioritized controlling inflation and has achieved a lot in this regard. Inflation continues to fall and we expect it to be within the range of around 3% by the end of the year. “Sofia is the way to meet the requirements for euro zone membership,” the IMF Managing Director said.
“However, as in the case of the United States, both citizens and businesses should be supported, but this support should not lead to higher inflation. Inflation is taxed on people's income, so this is an It is bad for the membership and for the Bulgarian people themselves. It takes political will and political priority, especially the poorer sections of the population are severely affected,” Georgieva said in the report she received from the country. He spoke with reference to.
“I know that new elections are coming up, but I also know that objectives can be achieved if the major political forces come together on one issue. Personally, I think we should not miss this opportunity. I think we have already postponed it.'' We have said several times that we should have taken this step before Croatia, then we worked with Croatia, and now we are following Croatia, but the politics involved in bringing forward decisions. We hope that this will support future measures,” the IMF Director-General said.
She argues that Bulgaria consumes the European Central Bank's monetary policy because it has a Monetary Board Agreement. “I have not heard that Bulgaria wants to abandon the Currency Board Agreement. So why should we be willing to consume policies that were formed without our participation?” she asks.
“We found that former socialist countries that joined the eurozone did not see price increases, but economic indicators improved. Being in the eurozone also helps in the event of a shock, because… “The eurozone has safety nets and we don't need them. We can only rely on ourselves,” Georgieva said.
Asked whether 2025, when Bulgaria adopts the euro, was a realistic goal, he said yes. There is still time until September to bring inflation down to the required level. To achieve this objective, the government should not inject pro-inflationary impulses into the economy until then. “If the criteria are met, entry into the eurozone will proceed as planned.”
Asked about questions raised during the IMF's latest mission on Bulgaria's tax reform, the interviewee said: “I believe it's time to review the 10% flat tax. There are people who are successful, which is great, but it means they can contribute in a small way to the quality of the workforce, the quality of the infrastructure, and the country as a whole, and that's their own business. and will benefit their own quality of life,” Georgieva commented.
“When Bulgaria adopted a flat tax, it was the right decision. The idea back then was to bring money to light. Now we have a better system, to bring money to light with a flat tax of 10%. There is no need.''If you look around the world, differentiated tax rates are seen as the right option. Differentiated tax rates, in other words, progressive income taxation, allow societies to better share national resources. ” said the IMF Managing Director. he told BTA.
(This information is published pursuant to an agreement between Armenpress and BTA.)
