Radev: The Stability of the State in Conditions of Political Crisis - The Key Question

In conditions of prolonged political instability, the stability of the state depends on the stable functioning of the main public institutions, the Governor of the Bulgarian National Bank Dimitar Radev said in an interview with BTA. According to him, the central bank has a key role in maintaining economic and financial stability, including in periods of severe political crises. Radev emphasized that he would not accept to be a caretaker prime minister, as this would call into question the independence of the BNB. He also noted that the prospect of joining the Eurozone creates a stricter and more predictable framework for economic management and is positively assessed by financial markets.

In the interview, Radev also commented on the issue of extending the budget, pointing out that under the current conditions this is “the most adequate possible option”, as it allows maintaining fiscal discipline and preserving relative economic stability.

The full text of the interview follows.

- Mr. Radev, for the umpteenth time in recent years we are in a state of a government in resignation. This time this is happening days before our country enters the Eurozone. What is your comment?

The state is not exhausted by the frameworks of specific management mandates. Its sustainability is based on the functioning of the main public institutions. When they act stably and predictably, even significant political crises can be overcome without significant economic shocks. The current situation is a test for the institutional framework, which continues to have certain deficits, but I am convinced that the BNB is a key institution with the capacity to withstand it.

- People often associate political instability with economic risk. Is this justified?

Not automatically. The real risk arises when political instability is combined with a lack of responsible and consistent decisions. In our case, the problem is not in the rules, but in their inconsistent application. This again underlines the importance of institutions and the ability of the political class to build a sustainable and predictable institutional framework.

- What is the role of the central bank in such a situation?

The role of the central bank is to ensure stability and predictability, even when the political environment is unstable. We do not interfere in the political process, but we ensure that the fundamentals - the monetary system, the banking sector and the trust of citizens and businesses in them - remain stable. This is our way of maintaining relative calm in periods of increased uncertainty.

- Does entering the Eurozone change things?

Definitely. The Eurozone limits the space for political and economic improvisations and requires a higher degree of discipline. This reduces the effect of domestic political fluctuations and global uncertainty, while at the same time creating a clearer and more predictable institutional framework for economic management.

- The extension of the budget is often perceived as a weakness. How do you view this?

The absence of a regular budget is not desirable, but in the specific situation this is the most adequate possible option. It allows the preservation of relative fiscal discipline in conditions of political turbulence. The budget should serve the stability and sustainability of the state, and not short-term political goals.

- Can institutions compensate for the lack of political stability?

To a certain extent - yes. They can provide time and relative peace, but they cannot replace political responsibility. Ultimately, strategic decisions must be made by those to whom society has entrusted this role.

- According to the Constitution, you are among the possible caretaker prime ministers. Would you accept?

Definitely not. The independence of the central bank is a fundamental principle. Putting it in question would undermine trust not only in the BNB, but also in the entire institutional system, especially at a time of historic change in the monetary regime.

- How do financial markets view Bulgaria in the current situation?

Financial markets are pragmatic. They assess whether there are clear rules, whether institutions are functioning effectively and whether the strategic direction is convincing. The prospect of Eurozone membership has a clearly positive effect in this regard, regardless of the current domestic political challenges.

- What is the wider conclusion from what is happening today?

Stability is not a given. It is maintained through discipline, strong institutions and long-term thinking. When these elements are absent, the price is ultimately paid by the whole society.

- What is your message before the holidays?

The state has a support, even when politics is in crisis. This does not solve all the problems, but gives reason for relative peace and moderate optimism. 

On the eve of Christmas and New Year, I wish health, peaceful holidays and time for loved ones. May the new year bring confidence, reason and stability.