Bulgarian advertising for Monetary Board

Bulgarian authorities unanimously state that introducing the Monetary Board regime was a successful measure that brought economic stability and solved most economic problems, among which – as expected – inflation and the exchange rate evolution. However, poverty remains the main problem of the country, as the minimum monthly average salary does not exceed DM70 and unemployment is about 19%.

As acknowledged even by central bank officials, there is still hidden inflation, triggered by incomplete market liberalisation. Moreover, although Government officials estimate foreign investments to reach $1bn this year, they did not exceed $100m in the first four months of 2000.

Monetary Board activity will never cease in Bulgaria, Martin Zainov, Bulgarian National Bank governor and head of the Monetary Board, at the end of last week told a meeting with Romanian journalists. “Bulgaria’s option to peg its monetary policy to “hard money” (Deutsche mark) is definitive,” said Zainov, who maintained that its is difficult for a small economy, such as Bulgaria’s, to work under normal conditions if the monetary policy is not pegged to “hard money.” He reviewed the advantages of a Monetary Board, but conceded that there was still hidden inflation, especially because the power market was not yet liberalised and prices in this field were still under control. Martin Zainov also stated that the standard of living in Bulgaria increased by 50% after the economic fall back in 1997, without submitting any concrete data concerning the increase in labour productivity. President Peter Stoianov states that the Monetary Board in Bulgaria is an “entirely successful” experiment. “Even the most pessimistic observers admit today that this system is a success for the Bulgarian economy,” the Bulgarian President told Ziarul Financiar.