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Challenges of Achieving Sustainable Economic Growth by Neytcho ILTCHEV, Ph.D. Main topics:
Bulgaria back on the growth track External challenges and obstacles Stability Pact and the Renewal of Balkans Role of the European Institutions and Regional Cooperation Conclusions Challenges of Achieving Sustainable Economic Growth Neytcho ILTCHEV, Senior Expert, Ministry of Economy I am very pleased to have the opportunity
to address all visitors and participants gathered together by the desire to
discuss the issues of Regeneration and Integration of Balkans States into the
European and World Economy and Society. Many politicians and ministers from
European countries, various representatives of International Organisations,
Consultants and Financial institutions have been involved in this debate and
brought valuable insights. I will try briefly to present you a genuine
picture of Bulgarian Economy, our conceptions on Balkan Regional Economic
Co-operation, and on the European Institutions’ role in the implementation of
the Stability Pact. Bulgaria back on the
growth track With regard to the current economic
situation in Bulgaria I would like to underline that despite the adverse external
conditions the sound economic policy, vigorous and continuing efforts of the
Government have brought the stability and security: ·
Inflation and interest
rates have continued to be remarkably low, ·
Fiscal performance has
remained strong and an overall surplus of 0.3 percent of GDP was registered
in the first half of the year, ·
Income policy has been
implemented strictly, ·
Privatisation and
restructuring have advanced both in enterprise and financial sectors, ·
Banking supervision
and regulation have improved notably, ·
Land restitution and
titling have progressed further, ·
Confidence in the lev
has remained strong, ·
Gross official
reserves remain comfortable – at level of near US$ 3 billion, equivalent to over
9 months of imports of goods and non-factor services. In less than three years Bulgaria has made
a huge step in time – from chaos to stability. The low level of inflation,
the high currency reserves and the renewed growth of GDP are objective proof
of the huge positive potential of the reforms being carried out. The new
economic conditions in the country are deriving from the constant and
irreversible structural reform, accelerated privatisation, and liberalisation
of trade and attraction of foreign investment. Formulating clear public aims, we have
defined the paths for their realisation as well as the undertakings and the
responsibilities of the government and society in a new public deal, which
was entered into on the basis of national consensus. In accordance with the
new national consensus, the irreversible aspiration and strategic aim for
Bulgaria is harmonisation with and accession into European and Euro-Atlantic
structures. We believe that the invitation to start
negotiations for accession to the European Union, which we expect in
Helsinki, will be recognition of what has been done. This invitation will
bring a powerful impetus to the will and determination of the current
Bulgarian generation to set themselves socially significant aims and to
achieve them. We are convinced that European integration of Bulgaria is
possible thanks to the development of regional co-operation, resolution of
ethnic problems and the accelerated development of democratic institutions. External challenges
and obstacles Over the past three years, the Bulgarian
government has successfully coped with the huge problems of reform not only
domestically but also in the face of constant external challenges and crises.
We have to state that latest adverse external developments have weakened the
near-term growth prospects and external current account: ·
The turmoil in global
markets reduced the demand for Bulgarian exports, ·
Export prices of our
leading exported goods have been falling down, ·
Kosovo crisis has
inflicted further damage to investor’s confidence in the region, ·
Trade and transport
routes with Western Europe passing through Yugoslavia have been cut off. These external shocks have coincided with
the most difficult phase of the transition process – when majority of
state-owned enterprises has been privatising, restructuring or entering into
liquidation process. As a result, the output growth in 1999 has been lower
than expected. However, we may evaluate that Bulgaria is
currently an important example of how the most severe difficulties in the
process of democratisation and economic reforms can be dealt with by
following a firm and non-compromising policy. The achieved levels of direct foreign
investments for the period 1990-1998, although significant, are not adequate.
We can see that the regional risk constantly restricts the possibilities of
any country to carry out a purely individual national model of accelerated
economic development. We have to learn jointly to manage the regional risk.
We should unite our efforts to create a regional system for the early
diagnosis of crises and a system for the design, proposal and implementation
of infrastructure projects and in particular the construction of cross-border
infrastructure. We have to encourage companies and in
particular the large scale private entrepreneurs to develop strategies for
regional development. Their interest and their initiative will be the best
and the most rapid way to define the specific advantages, possibilities and
regions for economic development and profitable business both in the
individual countries and the region as a whole. Today we are faced with huge challenges of
economic globalisation and interdependence. If we delay the opening-up of our
economies and markets to each other, we will have less investment, slower
rates of growth and payment deficits. The achievement of the criteria for
economic and social development at the individual stages of Euro-integration
is determined to a large extent by the parameters within the corporate sector
and the presence of global participants in it. The entire integration in the
region within European and Euro-Atlantic structures is a function of the
ability of the countries to open up to each other. Stability Pact and the
Renewal of Balkans Bulgaria considers that the process started
with the adoption of the Stability Pact creates an unique opportunity not
only for overcoming the immediate consequences of the Kosovo crisis but also
for finding a solution of the problem of the economic development of the
region - an issue that has been postponed for decades. A key matter here is
the achievement of synchronisation both of the individual governments and the
international structures and institutions. The governments of the countries in the
region have to be prepared to complement each other mutually and to
synchronise their actions and undertakings in relation to individual
projects, including through the provision of direct and indirect guarantees
outside the national segment of the project. It is no secret that the
projects in the region are to such an extent linked that, for example, the
financing of a section of the trans-European highway through the Bulgarian –
Turkish border is defined to a large extent on the condition of the
infrastructure in the trans-border regions with Serbia and Rumania. The International Financial Institutions
have to be asked to design regionally oriented packages of services which
will include specific instruments for influencing economic agents. Given the
high levels of indebtedness of the countries of the region, the international
financial institution – The World Bank, The European Investment Bank, The
International Financial Corporation, the European Bank for Reconstruction and
Development can undertake the risk connected with the development, marketing
and implementation of the projects. They can assume a direct commitment
either as participants or financial partners in projects or as mediators and
guarantors to engage commercial companies and operators. The governments of the countries in the
region need also to orient their policies to the requirements, criteria and
priorities of European and Euro-Atlantic integration. The individual national
policies need to be complemented with more and more European determining
factors. A particularly important factor is the attention which the
governments of the industrially developed countries with stable democracies
in the West pay to the resolution of problems of economic freedom, ethnic
conflicts, the removal of customs barriers in the region and in general the
removal of obstacles to the free movement of goods, services and capitals.
The invitation to Bulgaria to begin negotiations for accession to the European
Union will catalyse the processes in this direction, since it will define the
relevant institutional framework and the time scales. Role of the European
Institutions and the Regional Cooperation With regard to the role of the European
Institutions in reconstruction of Southeast Europe I would like to express my
confidence that they could make a significant contribution to improving economic
situation, security and peace. The main vector of our joint efforts should be
constituted by policies and measures that encouraged strong trade and
economic links and investor confidence, which can lay the foundations for
durable economic growth throughout the region. Economic progress encourages
interdependence and the shared respect for the rule of law, which is the
basis of stability and prosperity. The reason why freer trade and economic
cooperation have such a vital role to play in building the economic progress
and prosperity in Southeast Europe is because it means lowering barriers.
Lowering barriers not only to goods and services but also among our nations
and peoples. The elimination of barriers creates interdependence and
interdependence creates solidarity. The history of last 50 years has shown us
all the undeniable benefits of lowering barriers, furthering economic
cooperation, and opening economies. The most striking example has been in the
process of European Construction, where historic enemies have been
transformed into inseparable partners. The integration of Southeast European
countries as equal partners into the process of European Construction and the
global trade system is one of the most important challenges in shaping the
economic order in 21st century. This is a shared responsibility of
the EU, Central European and Southeast European countries alike. There is no
rational alternative to this objective. The evolution of the global and
European economy makes it clear. We need to take advantages of Regional and
European Cooperation and to work together as equal partners to ensure the
full integration of our countries into the EU, as well as into the global
economy and the rule based multilateral system. In conjunction with this we need
to encourage, notably in Southeast Europe, the growth of regional economic
cooperation. The road to a lasting peace, security and prosperity in our
region begins with furthering economic integration and interdependence.
Taking this message to the heart will help us to build a future where goods,
services, investments, people, and ideas cross without restraint the borders. ***** Throughout this century the Southeast
Europe region has been a fault-line at the heart of our continent. Ethnic
hatreds have flourished and politics of division and exclusion have
prospered. Now, we have to declare resolutely that people of this region
deserve better. At the turning point of the next century,
the Peace in Kosovo and the resolution of International community to rebuild
the region, gives us a chance to change rapidly the Balkans, to defeat
definitely the politics of ethnic antagonism and violence, to bring the
region moving irrevocably to democracy and co-operation. The success of this
vast undertaking will be the consequence only of an immense combined efforts
from the International community and Balkan countries. But the success of the
Reconstruction plan for Balkans will build up the best possible future for
the region – gradually integrated into the European Single market and into
the global economy. To conclude I would like to assure you that
we are ready to work for the cause of the furthering economic cooperation and
elaborating common economic strategy based on the model of European
Construction. We are prepared to join our efforts in
constructing the integration model for business, economic prosperity, and the
contacts between people in the region. Ladies and Gentlemen, Thank you for your
attention. |
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Number of visits on this site since 2
December 1999: |
For further
information, please contact Mr. Neytcho
Iltchev, to whom you can send your remarks and recommendations. Telephone:
+359 2 9842 7579; Fax: +359 2 981 1719; E-mail: neylegrand@ifrance.com; nbulgaria@yahoo.com;
Contents of Challenges of Achieving Sustainable Economic
Growth, by Neytcho ILTCHEV :
· Bulgaria back on the growth
track
· External challenges and
obstacles
· Stability Pact and the
Renewal of Balkans
· Role of the European
Institutions and Regional Cooperation
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