Georgi Ganev: Not what, but how to spend

Long from a macroeconomic perspective is an important way of spending money from the budget, rather than what they are going. Said in an interview for FOCUS News Agency economist at the Center for Liberal Strategies, Georgi Ganev.

In his words – every single expense in the budget justification should be expected with a general result, which can then be monitored – how effective are these costs and therefore inefficient be removed, regardless of what area. Pledge to decline by 2 percent in the budget for 2010, when it is expected to „hit bottom“ and goes up from the general economic activity, I mean that is perceived a relatively conservative approach – a conservative plan would be revenue attempt to ensure that the budget will be balanced.

I do not think 2% is impossible, it is possible that the decline is even greater, „said the economist. According to him, a good first step to cut costs in times of crisis is the reduction of administration by 15%. Even 5 percent to happen, it is anything but real cuts, not just some shtatove. This means real wage costs and social security that do not decrease at the same job done by the administration, if not better, he said.

According to Georgi Ganev main thing is to take place in the administration, is to change the way it is being spent and oversee the spending of money, namely to monitor the effectiveness of public resulting from her work every duty he was on cigarettes or alcohol fuel, is trying to eliminate harmful social consequences of individual decisions when these individual decisions can not be penalized by the market environment completely. In this sense, the adjustment would have – more money collected from excise duty to go directly to remedy created by the use of these goods problem – for example, from cigarettes to go directly to diseases related to smoking, says Georgi Ganev. According to him, surely there will be consumer reaction to smoke less for more expensive cigarettes, respectively buy less. Moreover, smuggling will increase, which did not pay duty.

Now, perhaps for the first see some more systematic action – ie by raising the excise side, while the other will take care to pozategnem „loops“ where the funds ran so far. Those who engage in smuggling, receiving incentive – anyone able to spend more, of course, will win more. But even if we remain the effect of the elasticity of demand. Such elasticity is in cigarettes, so most likely consumption will decrease slightly, he said.

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Vesselina YORDANOVA