After consulting the Economic and Financial Committee, the Council of the European Union has issued two opinions that analyze the situation in the Czech Republic and Bulgaria in the European convergence and serving as a revision to the programs that both countries must follow between 2008 and 2011

Czech Republic

In relation to the country that currently holds the rotating presidency of the EU, the opinion stresses slowdown that affected the Czech economy during 2008, and this slowdown in economic growth is even higher in 2009. Therefore, the Council reviewed the 2008-2011 growth plan including measures to encourage the growth that is included in the European Economic Recovery Plan.
The opinion shows concern for the rapidly aging population of the Czech Republic, and thus the long-term fiscal sustainability.
Therefore, it points to the need for fiscal consolidation in the medium term and greater efforts on structural reforms, and invites the Czech Republic to adopt the following measures:

1. Run the project budget for 2009, including the incentives provided under the Plan for European economic recovery and in the framework of the Stability and Growth Pact.
2. Perform a significant structural consolidation in 2010 and thereafter towards the target, and support the budget strategy with specific measures to reduce spending in 2010 and 2011.
3. Pursue the necessary reforms of pensions and healthcare, given the anticipated increase in expenses related to the aging population, to improve the long-term sustainability of public finances.

Bulgaria

As for Bulgaria, the Council is concerned that the expected slowing economy will suffer from the effects of the crisis. Bulgaria has seen strong economic growth, with an average rate above 6% in recent years, accompanied by an increase in macroeconomic imbalances, such as external deficits and high inflation.

Therefore, the country faces the challenge of maintaining their level of growth over a period of severe and prolonged global economic recession, while addressing the current economic imbalances through a strict fiscal policy and income, and long term, the country should improve the quality of public finances while facing rapid population aging and deterioration of its demographic situation.

According to the Council, Bulgaria must firmly implement policies to correct the large external deficit, for example, maintaining a tight fiscal policy and containing the growth of wages in the public sector. Moreover, the country has to improve the quality of public finances by strengthening administrative capacity and accelerating structural reforms.

The opinion calls on Bulgaria to ensure sustainable convergence on the basis of:

1. Pursue a rigorous fiscal policy and maintaining a strong budget limiting expenditure growth in order to contain external imbalances and counteract potential low income.
2. Curb wage increases in the public sector to contribute to wage moderation and improve global competitiveness.
3. Further increase the efficiency of public spending, especially through the full implementation of program budgeting, strengthening of administrative capacity and reforming the labor market and product market, the educational system and the health care system in order increase productivity.