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Competition Will Regulate Prices in Bulgaria after 2007

Date: 19.09.2006

One of the negative myths spread in Bulgaria is that the prices will go up drastically after Bulgaria's accession into the EU on January 1, 2007. The Bulgarians are inclined to think that the prices will become equal to those in the other EU member states, while the salaries will remain the same as they are at present. This is true, but only to some extent. Many of the prices in Bulgaria are regulated by the state; other prices will change because of Bulgaria's commitments to the EU. On the whole, however, prices are mostly regulated by the existing supply and demand.

Of course, prices in Bulgaria will go up the next year, no matter if Bulgaria will accede to the EU in 2007 or not. However, the prices of not all goods and services will go up; and if there is some increase in the prices, it will not be drastic. After Bulgaria joins the EU, the Bulgarian National Bank will launch preparations for the introduction of the Euro as the country's national currency. One of the requirements for this is that the inflation rates should be kept within certain borders for at least two years.

"The prices of food products will go down after Bulgaria's accession into the EU because of the competition on the open market," Krassen Stanchev from the Bulgarian Market Economy Institute told Journey.

Certainly, the prices of fuels will go op by 0.05 or 0.06 levs on the average, because of the higher excise duties.

From 2007 on, excise duties will be levied on the prices of coal, coke and electricity, but they will be very low for the first year and will not influence the prices of these energy-carriers seriously.

The prices of vignettes and the mandatory third party liability insurance will go up, because the insurance will be valid in the whole EU. The prices of some services will also go up after Bulgaria's accession into the EU.

The EC has repeatedly focused the attention of the Bulgarian state institutions on the monopole of the Bulgarian Telecommunications Company, which is among the reasons for the relatively expensive Internet connections in Bulgaria. After Bulgaria joins the EU, the pressure on the company will grow more intense and it will have to decrease the prices of its services.

The import of secondhand cars will be VAT-exempt after Bulgaria's accession into the EU; as a result, the prices of secondhand cars will by 1 000-2 000 levs.

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