Bulgaria’s central bank governor Dimitar Radev: There are conditions for imbalances in the economy

Bulgaria is facing serious imbalances in the economy because of different fiscal and monetary policies, which could increase inflation in the country, Bulgarian National Bank’s Governor Dimitar Radev said, commenting on the extension of the budget for next year.

"It is a challenge for a central banker to make a comment without numbers. I support the Ministry of Finance," Radev said.

Regarding monetary policy, there is a trend to tighten interest rate conditions. The aim of this policy is to curb demand and therefore reduce inflation. Fiscal policy should move towards consolidation not loosening. However, we see monetary policy which, aims to reduce demand and fiscal policy which works in the opposite direction, there should be synchronization between the two policies. We have macroeconomic imbalances and limiting measures to tackle inflation, Radev explained on November 10. In his words, there are also worrying signals from the financial markets.

Radev warned that the pressure on the MoF will increase towards the end of the year - we should not allow a situation of the ministry choosing between bad and very bad decisions.

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