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Spending your way out of the crisis? For Bulgaria it may not be an option

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Getting to know Bulgaria’s “Fiscal Reserve”

Recently, Bulgarian commentators and policymakers have been whispering on the status of the “Fiscal Reserve”. This financial instrument is amongst the main indicators of Bulgaria’s economic stability. It is also a source the government draws from to finance extraordinary expenses without recurring to debt. Given the reserves’ importance, it is unsurprising that some wonder whether the government is wasting precious resources now and then.

It is important to notice that Bulgaria’s fiscal reserve is actually an aggregate indicator which includes heterogenous sorts of components. Such a detail is actually essential because the government cannot earmark all of these resources freely for current expenditure. Thus, doubts relating to the fiscal reserve regard not just its level, but also its composition. To get a clearer picture, one may simply say that there are three main categories of assets in the fiscal reserve. First, budgetary institutions’ bank-account balances — which make up the lion share of the total. Second, the ‘Silver Fund’, a reservoir of assets meant to ensure the pension system’s sustainability, which is also quite significant. Finally, accounts receivable from European Union funds for certified expenses and advances, which have been rising steadily. On average, in 2019–2021 these three sources have provided the fiscal reserve with 99% of its value (Figure 1).

Lack of transparency contributes to make the issue even murkier. Publicly available information on the state and composition of Bulgaria’s fiscal reserve are rather incomplete. In fact, the Ministry of Finance only discloses the reserve’s total and a few other data on a monthly basis. Not even the ministry’s quarterly report on the fiscal reserve provides a better breakdown. Meanwhile, the issuance department of the Bulgarian National Bank (BNB) declares only total deposits weekly. Thus, worries on the status of the fiscal reserve appear justified overall.

More extraordinary expenses ahead

Like many other developed countries, Bulgaria has faced widening fiscal deficit due to the pandemic-induced crisis over the past year. The fiscal reserve’s erosion is the unavoidable result of reduced revenues’ and increases spending’s combined effect. Such a downward trend has led many to question public finances’ soundness and the government’s ability to manage the reserve. Moreover, as a caretaker cabinet replaced the previous executive after inconclusive elections scrutiny has intensified in May–June 2021.

In the next few months, the country has to face enormous expenses. This money is going to finance a €25 increase of all pensions as well as employment-support schemes. True, the government has foreseen a 4.9bln-leva deficit (ca. €2.5bln or $3bln) in the current fiscal year. However, is will probably not suffice to cover the cost of these and other measures, estimated at over €4.5bln. Actually, the very fiscal reserve from which the cabinet may want to draw may not be enough.

In fact, according to the latest available data, the Silver Fund sits at just a little over €1.7bln. Meanwhile, budgetary entities’ deposit with the BNB are somewhere in the realm of €3bln. Hence, despite the imminent collection of several taxes, the reserve would have to decrease drastically — something Bulgaria cannot afford. The only other option, is for the caretaker cabinet to finally manage to draft a revision of the budget. Yet, even in this case, there is no guarantee that after the elections in July the new parliament will pass it.

And the Fiscal Reserve keeps eroding

In the meantime, the size of the fiscal reserve keeps shrinking. Usually, its levels follow a sinusoidal trend, with periodical rises and falls. However, in the course of late 2020 and early 2021 revenues have systematically been insufficient to cover for past expenses. As such, each successive withdrawal has reduced the reserves’ total value incrementally. This divergence from established patterns is clearly visible in Figure 2, which disaggregates the fiscal reserve’s three main components.

As of May 2021, the fiscal reserve’s worth was €4.5 billion, as opposed to €5.2bln in May 2020 (Figure 2). In the short term, it had already gone down by €400mln, from €4.9bln in January of that year. Hence, the reserve shrunk twice as fast in January–May 2020 (-8.7%) than in the same period of 2021 (-4.2%).  Simeon Djankov, deputy Prime Minister and Finance Minister in 2009–2013, argued already in mid-March that the government will have to withdrawal several further billion from the fiscal reserve. Similarly, Milen Velchev, finance minister in 2001–2005, argues that a new budget allow more borrowing is a priority.

Yet, the ousted prime minister’s party (GERB) is strenuously defending its financial track record and claiming their budget is sufficiently effective. Kiril Ananiev, former Finance Minister, noted that despite the deficit already high deficit, the fiscal reserve is still double its legal minimum. GERB’s leadership are argues that this is the worst state the reserve has ever been in. After all, in 2014 the fiscal reserve was worth only €2.6bln or 10% of GDP “without pandemic or extraordinary expenses”.  Meanwhile, now reserves amount at 4.6% of GDP. Moreover, the reserve is on a deficit in the first quarter of 2021 for the first time.

Causes of a decline

As mentioned above, the official data on the fiscal reserve’s status tend to be rather fuzzy. But the Institute for Market Economy (IPI), one of the oldest Bulgarian think tanks, obtained disaggregated data for 2019-2021. These figures shed an interesting light on the interactions between fiscal policy and a stable fiscal reserve (Figure 3).

By February 28 2021, budgetary entities had about €2.7bln, €409mln of which destined to social security funds and EU-sponsored projects. In addition, the budget for 2021 earmarks €1.6bln for the Silver Fund; the least ‘liquid’ of the fiscal reserve’s three main components. As a result, there are just about €1.1bln available for discretionary spending. To get an idea, the current pension- and salary-support schemes have a combined cost of almost €110mln per month.

At their historical low-point, on August 31 2010, those accounts held €320mln, so the current situation is far from bleak. Yet, changes in the relative weight on the reserve’s total of its the three main components indicate several risks. As regards EU funds, they are rather stable in their absolute amount over the period January 2019–May 2021 (Figure 3). Generally, they fluctuate somewhere in the realm of €1.7–2.2 billion, averaging just under the €2bln mark. Nevertheless, their relative importance is usually quite unpredictable, and in steep rise since September 2020 (Figure 4). The same can be said of the Silver found, the value of which stands around €1bln. But excluding social-security funds, budgetary balances are at their lowest level for the entire period under review. Thus, their relative importance has decreased, making EU financing, pension funds and the Silver Fund significantly more important than before.

The peril ahead: Nationalising social-security funds

The danger could hardly be more evident. Without considerable free resources, the government will need to find new resources to finance any additional expense. Two are the main tools that would allow to replenish the reserve. First, generalised or target tax hikes may be sufficient on their own, or in combination with other tactics. However, they are out of question in this electoral period. Second, debt raised amongst domestic and international investors could be signed at relatively low interest rates. Yet, the current budget allows for no more than €2.3 billion of new-emission debt, which are unlikely to suffice.

Finally, the cabinet may repeat the script played out to save the reserve from its 2010 low. Back then, the government proposed the nationalisation of the National Health Insurance Fundj (NZOK). Since the parliament approved it, the State budget can draw freely on the billions in the NZOK’s balance. This time, nationalisers may eye the nationalisation Silver Fund – which also sustains social security – as the solution.  Thus, they may amend the law destining assets in the Silver Fund to their current purpose to be able to finance urgent expenses. This would put high pressure on Bulgaria’s social security system and, potentially, expose present and future retirees to the risk of losing their hard-earned pensions.

Fabio A. Telarico was born in Naples, Southern Italy. Since 2018 he has been publishing on websites and magazines about the culture, society and politics of South Eastern Europe and the former USSR in Italian, English, Bulgarian and French. As of 2021, he has edited two volumes and is the author of contributions in collective works. He combines his activity as author and researcher with that of regular participant to international conferences on Europe’s periphery, Russia and everything in between. For more information, visit the Author’s website (in English and Bulgarian).

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Brick By Brick, BRICS Now a New Bridge for a New World

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Measuring BRICS in single decades, in 2001, BRIC started as an acronym for Brazil, Russia, India, and China; Goldman Sachs economist Jim O’Neill claimed that by 2050 the four BRIC economies would come to dominate the global economy. So South Africa was added to BRIC in 2010. The following countries are now expressing interest in joining: Afghanistan, Algeria, Argentina, Bahrain, Bangladesh, Belarus, Egypt, Indonesia, Iran, Kazakhstan, Mexico, Nicaragua, Nigeria, Pakistan, Saudi Arabia, Senegal, Sudan, Syria, the United Arab Emirates, Thailand, Tunisia, Turkey, Uruguay, Venezuela, and Zimbabwe. Is this now the awakening of BRICS+ or BRICS power?

BRICS+ by 2030 will add dozen new members and carve new indices, and by 2040, it will lead to new intellectualism on geopolitics and socio-economies for the super complex 2050 age of smart living.  

Historically, BRICS nations pushed on their people-power agenda over super-power titles. They made extreme value-creation economic models over focusing on powerful military-industrial complexes. They focused on nation-building and avoided special mandates to manage global affairs. They have been on a quest to upgrade them. They were feeding hungry mouths, as they were population rich, constantly up-skilling, and improving value creation as they were SME rich. They kept a steady watch to create multilateralism to uplift humankind.

They, too, made mistakes, as did the rest of the world

In the third decade of the third millennium, come 2020, three transformations erupted. First, futurism changed the rules on the ‘physicality of work’ and created a new imbalance with the ‘mentality of performance’; this has divided the workforce of world; the old system of over a billion commuting daily to the center of a complex maze to arrive daily at the sanctum of the company and create climate change. So now, in response, some 50% of the world’s workforce has chosen to stay away and work remotely in the surroundings of wide-open choices. Furthermore, technology uplifted micro-power-nations and exposed Western economies now stripped naked in bubble baths on slippery floors, they tippy-toe practicing conga-lines

Newly magnified economy: Behold, what microscopes exposed the magnified inner workings of the body. Similarly, the integrated networks have exposed the digital connectivity and working of millions of villages, cities, and nations with additional billions of people to interact, trade, improve grassroots prosperity and create a well-informed and opinionated citizenry. Some 100 years ago, if only 1% of the world’s population knew what was happening, today it is a dozen times more, and by 2030 double again. Why would these numbers change the global economic matrix when translated into micro-trading, micro-manufacturing, and micro-exporting? International opinion today is already strong enough to crush any national opinion of any nation still lingering under the illusion of a self-promoted victory.

When the SME sector already exists within each nation, the global markets are always hungry for good quality goods and services, and the rains of almost free digital technologies make such transformation a quick turnaround. Therefore, mindsets are critically essential; the need to define the difference between the job seeker mindset that builds the organizations and the job creator mindset that originates and creates that organization in the first place.

So what are the lessons, key features, and blueprints in sight?

Mistakes and new lessons: Last many decades, as the new world was rising, Western citizens felt like China experts, and their regular visits to local China towns restaurants in each city misguided them that Laundromat trained Chinese could only produce some chicken fried rice. Ever since the advent of the camera, the East was always projected as poor and dysfunctional; mesmerized by the media coverage during the last many decades, the West was equally convinced that India, a land of only snake charmers and fakirs, finally someday speak better English. The general perceptions about Asia, besides eating rice, if they could ever make cheaper products for the West. The rest is history, mistakes, and lessons.

After the big ding-dong nights of 2000 New Year’s Eve, today’s new story starts from the 20th chapter. Now China and India alone have created some 500 million new entrepreneurs, not by a magic pill or meta-crypto-wand but by National Mobilization of Entrepreneurialism, a slow, painful deployment of SMEs across the nation, and by creating mobilization protocols to identify, classify, and digitizing based on multiple factors from type and size to the evaluation of their “respectable” role in future communities and economic factors. This methodology was far more advanced in strategy and stern management over the globalization frenzy from the West, where sudden exporting of manufacturing of the industrial plants to kill manufacturing and destroying the middle class out of the West already declared globalization a great success.

The other mistake is to assume this is an economic or an academic study, at best, like an Oscar Slap on sleepy rotundas occupied with endless printing of money across the Western economies. Instead, this is an entrepreneurial response for the entrepreneurial nations to awaken hidden entrepreneurial talents in up-skilling SMEs and re-skilling manufacturers at national levels.

Recommendations and warnings: No airline can survive with only Flight Engineers and Frequent Flyers stuffed inside the cockpits; that space is only reserved for highly trained pilots. Henceforth, across the world, any economic development of any size, shape, or authority may find other more suitable alternate paths of occupation if they still cannot demonstrate any levels of understanding, applicable skills, or mobilization mastery on the National Mobilization of Entrepreneurialism to up-skill exporters and re-skill manufactures and uplift national SME sector as the most prominent economic contributor of the nation. Study the biggest error of economic thinking  

Underestimating the hidden powers of early thinking and starting a tiny unknown SME is a mistake of mindsets; here, entrepreneurialism like a saga unfolds, like a voluminous piece of literature but demanding literacy, understanding the job seeker mindsets and the ability to differentiate with entrepreneurial job creator mindset is already winning half the battle. Study the Mindset Hypotheses

Nations failing to realize the power of the billion SME rising in Asia and still unable to declare a national agenda of national mobilization of SMEs now must acquire an understanding of the 4B Factor: a billion displaced due to the pandemic, a billion replaced due to technology, a billion misplaced in wrong jobs now a billion on starvation watch. Furthermore, this 4 billion ever digitally connected mass of people ever in the history of humankind is now the most significant force of global opinion. Notice nations are already intoxicated with joy over the popularity of their national public opinion while having just an opposite international opinion on the world stage.

Recommendation; everyone is born an entrepreneur; our system chips away at this talent. Nevertheless, 10% to 50% high potential SMEs of any nation once are identified, classified, and digitized within 100 days. The uplifting digital platforms of up-skilling exporters and re-skilling manufacturers will result in 10% to 50% quadrupling their performance, productivity, and profitability. Imagine how much-regimented efforts will activate a positive national economic revolution based on real value creation, uplifting grassroots prosperity. How soon is a nation ready for a significant change? The rest is easy.

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Promoting Economic Security: Enhancing Stability and Well-being

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The stability and well-being of people, communities, and countries are critically dependent on economic security. It covers a range of topics, such as access to necessities, work opportunities, stable incomes, and defense against economic shocks. The need of guaranteeing economic security has increased significantly in the modern world, which is characterized by technical developments, geopolitical shifts, and unexpected disasters. The importance of economic security is examined in this article, along with important tactics for promoting adaptability and preserving people’s quality of life.

The value of economic security to individuals, communities, and countries cannot be overstated. By fostering an atmosphere where people and families can achieve their basic needs without suffering undue stress, it promotes stability. Because of this stability, people can recuperate and start over after severe shocks like economic downturns, natural disasters, or health crises.

Furthermore, economic security contributes to social cohesion by reducing inequality and fostering inclusivity. When individuals feel economically secure, they are more likely to actively participate in society, contribute to their communities, and engage in productive endeavors. This sense of security leads to greater social harmony and a collective feeling of prosperity.

Moreover, economic security is vital for long-term sustainable development. It enables individuals and societies to invest in education, healthcare, infrastructure, and innovation. These investments drive economic growth, improve overall well-being, and create the foundation for a prosperous future. By ensuring economic security, countries can build resilient and sustainable economies that benefit their citizens and contribute to global progress.

To enhance economic security, several key strategies can be implemented. Firstly, governments and businesses should prioritize diversifying their economies by promoting sectors with growth potential and resilience. By reducing reliance on a single industry or market, countries can mitigate the impact of economic downturns and build a more robust and diversified economy.

Investing in education and skills development is another crucial strategy. Governments and organizations must focus on providing quality education, vocational training, and lifelong learning opportunities. Equipping individuals with the necessary tools and knowledge enables them to adapt to changing economic landscapes and remain competitive in the job market.

Strong social safety nets are necessary to protect people during times of economic upheaval. The most disadvantaged populations should be given priority in the design and implementation of comprehensive social welfare systems by the government. Creating a safety net for all citizens entails implementing programs for income support, healthcare coverage, and unemployment benefits.

Promoting entrepreneurship and innovation can create new opportunities for economic growth and job creation. Governments can support aspiring entrepreneurs by providing access to capital, mentorship programs, and favorable regulatory environments. Embracing technological advancements and fostering a culture of innovation further enhances economic security, particularly in an increasingly digital world.

International cooperation is essential since economic security is a global issue. Cooperation between nations is necessary to advance ethical business practices, lessen economic inequality, and improve financial stability. Initiating discourse, coordinating policy, and assisting nations in economic crises are all important functions of multilateral organizations.

Societies can improve their economic security and create a more secure and prosperous future by putting these strategies into practice: diversifying the economy, investing in education and skills, creating social safety nets, encouraging entrepreneurship and innovation, and fostering international cooperation.

Having economic security is crucial in a world that is uncertain and changing quickly. Governments, corporations, and individuals may all work together to create an environment that promotes economic security by putting a priority on stability, resilience, and inclusivity. We can create a more resilient and prosperous future for everybody through diversity, education, social safety nets, entrepreneurship, and international cooperation. By making investments in financial stability, we build a more just and sustainable world.

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The Impact of Globalization on the South Asian Economy



Globalization refers to the process by which economies, societies, and cultures from different countries become integrated with one another. The economies of the countries that make up South-East Asia, which include India, Pakistan, Bangladesh, Nepal, and Sri Lanka, have been significantly impacted by the spread of globalization in recent decades. The effects of globalization on the economies of South Asian countries have been mixed, with some positive and some negative results.

Positive Impacts of Globalization on the South Asian Economy

The expansion of South-East Asia’s trade and investment opportunities is one of the aspects of globalization that has had the most positive impact on the region’s economy. Because of its large consumer base, low labor costs, and strategic location, the region has become an attractive destination for foreign investors. As a consequence of this, the level of foreign direct investment (FDI) in South Asia has significantly increased, which has led to the development of new industries and the production of new jobs.

The expansion of the service industry in Sout-East Asia can also be attributed to the effects of globalization. South Asian countries have emerged as a hub for the outsourcing of services such as information technology (IT) and business process outsourcing as a result of the emergence of new technologies and the increased availability of skilled labor (BPO). As a direct consequence of this, the area has benefited from an increase in both the number of available jobs and the amount of money it brings.

Last but not least, globalization has facilitated greater cultural interaction and integration throughout South-East Asia. The region possesses a significant cultural legacy, and the advent of globalization has made it possible for South Asian music, films, and cuisine to become popular all over the world. This has not only contributed to a greater awareness of the region’s cultural heritage, but it has also opened up new doors for the travel and hospitality industry.

Negative Impacts of Globalization on the South-East Asian Economy

Even though there have been some positive effects, there have also been some negative effects that globalization has had on the South Asian economy. The widening gap between rich and poor is one of the most pressing problems that we face today. The advantages brought about by globalization have accrued almost entirely to a relatively small number of people, which has contributed to a widening income gap. As a consequence of this, social unrest and a wider gap in incomes have emerged.

Another significant obstacle that has been presented is the displacement of workers and traditional industries. Due to the effects of globalization, many smaller businesses have been forced to shut down, and their employees have been relocated to larger companies that are more productive. As a consequence of this, there has been an increase in unemployment as well as social unrest, particularly in rural areas.

Globalization has contributed to the deterioration of the environment in South Asia. The region has seen a growth in industries such as the textile industry, both of which have had a significant impact on the environment as a result of their expansion. The population’s health and well-being have suffered as a direct result of environmental degradation, which can be traced back to the increased consumption of natural resources and the improper disposal of waste produced by industrial processes.


The economy of the South-East Asian region has been affected in both positive and negative ways by the phenomenon of globalization. While it has resulted in the growth of industries and increased cultural exchange, it has also resulted in the displacement of workers and the widening of income inequality. While it has contributed to the growth of industries and increased cultural exchange, it has also resulted in the displacement of workers. In order to address these challenges, policy interventions that foster inclusive growth, protect the environment, and create new opportunities for the population will be required. By acting in this manner, countries in South Asia will be able to take advantage of globalization’s positive aspects while mitigating some of its more damaging effects.

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