Bulgaria expecting up to 5% GDP rise from Schengen zone membership

Bulgaria has come through the first two years of the crisis in nearby Ukraine "extremely well" and says strong relationships with other east European nations will help it navigate future supply chain issues in a troubled world. 

Finance minister Asen Vaskov Vasilev told CGTN at Davos the country is in confident mood as it makes preparations to join both the Schengen zone and eurozone.

Vasilev also said the country's ongoing green transition, growth as a tech hub and burgeoning relationship with China were reasons for optimism.

Speaking to CGTN's Juliet Mann, Vasilev said "Bulgaria managed to get through the Ukrainian crisis extremely well, especially relative to the rest of Europe, partly due to the resilience of the economy and partly due to good planning."

Vasilev declared: "We have full connectivity to Greece, Türkiye, Romania and Serbia and managed to get a lot of gas coming from south up to north, not only for Bulgaria but for the rest of the region."

He added: "Our electricity is domestically generated. So we managed to get that windfall profit from the energy companies, feed it back to the economy, and we guaranteed the lowest cost of energy in the entire European Union for Bulgarian companies."

Vasilev, with the economy in apparent rude health, expected to see "the million Bulgarians that work and the rest of Europe, coming back to Bulgaria."

He boasted: "We had the fastest growth of industrial production in the EU in 2022 and fastest growth in exports in the EU in 2022."

With the world affected by supply chain issues caused by conflicts in both Ukraine and Gaza, Vasilev said Bulgaria was making provisions to reduce future difficulties. "We are working with our neighbors, especially Greece and Romania, to improve connectivity so the northern ports in the Mediterranean - Thessaloniki, Kavala, Alexandroupoli - can be opened up for trade all the way to Bulgaria, Romania, all the way up to Eastern Europe."

Vasilev said once route opens up, it will "completely change the geography of the logistics and supply chain in Eastern Europe."

He revealed that Bulgaria is working on an intergovernmental agreement with Greece on investing €6 billion ($6.5 billion) into road and rail construction.

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The extension of the passport-free Schengen area to Bulgaria was also cause for celebration, helping to aid tourism, he told CGTN. "Once the land borders are actually opened up… our estimate is that (will amount to) about 3 to 5 percent GDP growth because we can set up the just-in-time production in Bulgaria that feeds into one of our main export markets such as Germany or Italy."

Bulgaria's move into the eurozone was delayed until 2025 due to the country's recent political instability when it saw five caretaker governments in less than two years. Nevertheless, Vasilev remains bullish about Bulgaria's ascension. 

"Everything's fast tracked, we fulfilled all the criteria. The inflation is the last outstanding criteria which we expect to fulfil by the time the report comes out in June, so our target date is January 1, 2025."

Vasilev said the $1.2 billion it was receiving from the European Commission's Just Transition Fund would be used to reduce Bulgaria's dependence on coal, which it aims to phase out by 2038.

Thanking China for the "good advice we traditionally receive" from the country, he said much of Bulgaria's rail network upgrade might be undertaken by Chinese companies. Vasilev also explained that a direct flight between China and Bulgaria could be on the cards. 

"I think putting something like that in place will definitely help speed up the traffic and the tourism and the exchange between Bulgaria and China," he explained.

On the subject of Bulgaria's burgeoning tech scene, Vasilev said the country was becoming a serious player in the market. "When the AI Global Alliance was established, Bulgaria was one of the 50 founders. In addition, Bulgaria is known as a tech hub. VMware is the main virtual machine provider in the world and its main R&D center is in Bulgaria,

"If you're a developer or computer scientist you have to be very good in order to survive in the Bulgarian environment."

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