Bulgaria to Enshrine 'Debt Alert Mechanism' in Constitution
EU newcomer Bulgaria became the first country to try to adopt internally a series of measures emulating the EU 'Competitiveness Pact' proposed by France and Germany, including adding to the country's constitution a 'debt alert mechanism'.
Bulgarian Finance Minister Simeon Djankov presented on plans for a 'Pact for Financial Stability'.
Djankov said he expected the measures to help the country's bid to join ERM II, the euro zone's 'waiting room', but added that the country would not make its application official until the changes to the constitution had been passed.
Bulgaria had planned to join ERM II in 2010 and to become a member of the euro zone in 2013. But as the country recorded a larger-than-expected deficit in 2009, those plans were shelved.
The minister expressed hope that the proposed plan could be approved before the end of the year. He said, however, that the pact would become effective only after changes had been made to other legislation, such as a law on the state budget. Those changes are expected to take place by 1 January 2013.
Djankov explained that the "three pillars" of his country's financial stability were limiting government expenditure to 37% of GDP, capping the public deficit at less than 3% of GDP, and requiring any corporate and income tax changes to be approved by a two-thirds majority in parliament.
Another requirement foreseen is that the country's external debt should not exceed 40% of GDP.
The plan also proposes that direct taxation should be modified only with the approval of 160 of the 240 members of parliament.
The government's current budget expenditure is around 35.5-36% of GDP, Djankov said. /Source Sofia News Agency/