Sat, Feb 11 2012

SAFEGUARD CLAUSE LIKELY AFFECTS BULGARIA'S ECONOMY

Mon, Apr 10 2006 10:33 CET

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Representatives of the business sector so far have restrained from commenting, but analysts believe the introduction of a safeguard clause will have direct effect on the Bulgarian economy.

One negative effect of the safeguard clause is postponing the implementation of measures that would have otherwise stimulated the economy. Bulgaria will receive fewer subsidies from the EU and foreign companies will most likely refrain from investing in the country, Capital newspaper reported.

The IMF resident representative to Bulgaria James Roaf said refusal to acknowledge certain Bulgarian verdicts in EU courts will make foreign investors doubt the quality of Bulgarian justice. This, however, will not affect companies currently investing in the country as they have experience in working with Bulgarian courts.

The economic growth rate is also expected to slow down as property and contract rights are not protected. Bulgarians spend more money protecting these rights than the citizens of any country with a developed judicial system.

If a safeguard clause, concerning the common EU market is introduced, car insurances from Bulgarian companies may not be recognised in Europe. As a result, a green card certificate will be required. Bulgaria will be sanctioned if less than 90 per cent of the cars are not insured.

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