Bulgaria was among the countries in Central and Eastern Europe (CEE) that had most relaxed their fiscal policies in the past 12 months, UniCredit Bulbank chief economist, Kristofor Pavlov said
 
Presenting the latest analysis on the region by Italy’s UniCredit Group, Pavlov said that the relaxation had been aimed at cushioning the blow of the economic crisis by seeking to perk up domestic consumption.
 
However, with the money not allocated in the most efficient way, this effect had not been fully achieved.
 
Some of the money had been allocated to the Belene nuclear power project, which might not bring benefits to Bulgaria - stimulating the Russian and not the Bulgarian economy as the money is spent on the purchase of goods and services from Russia, Pavlov said.
 
He said that the money could have been channeled to education and health care reforms even though the effect would be visible in seven or eight years.
 
The lavish government spending of the past 12 months was equal to four per cent of Bulgaria’s gross domestic product (GDP), according to the report.
 
This had left the government with no room for maneuver before the national parliamentary elections held on July 5 2009.
 
The public finance deficit in the first five months of the year was less than one per cent of GDP compared with five per cent for the same period of last year.
 
Assuming a one per cent deficit at the end of July, there was little room for a further relaxing of fiscal policy without putting macroeconomic stability at risk, Pavlov said.
 
Source: Dnevnik.bg