Bulgaria continues to move along the debt spiral and the way out would be very difficult and painful. In two days only the Bulgarian authorities decided to increase the public debt with new EUR 2.6 billion. We can assess the scale of this operation by reminding that the country’s indebtedness amounted to less then EUR 5 billion before the financial and economic crisis in 2008. Currently the country’s indebtedness reaches the record high amount of EUR 13 billion which stands for nearly 30% of its gross domestic product.

What is actually behind so many new debts?

The National Assembly approved amendments to the 2014 state budget which aim at filling the financial gap in the state treasury. The cabinet was allowed to issue a new public debt to the tune of EUR 2.3 billion. The country urgently needs to find EUR 1.6 billion from foreign banks by end 2014. This money will be used to pay the citizens and companies with guaranteed deposits of up to EUR 100,000 at the Corporate Commercial Bank, which is now heading towards bankruptcy. This is a bright example of how the criminal behavior of the bank owner Tsvetan Vasilev and his participation in a series of doubtful economic and political deals, along with the irresponsible and unprofessional behavior of the Bulgarian National Bank, could shake the public finances of the country.

On the other hand, the country’s National Assembly allowed the new cabinet to hold talks about a new loan from the European Investment Bank to the tune of EUR 500 million. The government is to use this money to help the state budget finance projects under EU programmes. This is another proof that the state finances are sliding on thin ice which may crack after each wrong step.

The fact that the country accumulated mountains of new public debts within one week only is quite worrying. The situation becomes even worse when most of this money is spent on sectors such as healthcare, security, justice, etc, which need to go under a reform. Now these fields are like sand where money sinks without a trace and without any positive result.