Investments are the only means to attain economic growth, to boost incomes and the standard of living. This is an axiom that is fundamental to the economic policy of any country, anywhere in the world. It is any government’s endeavor to attract foreign investors any way it can, to stimulate local capital investments by offering different kinds of preferences, additional perks or tax relief.

Information was released a few days ago that foreign investments are up by no less than 40 percent compared to the previous year. A percentage that may seem dramatic, yet in absolute numbers the amounts involved are more than modest – no more than 1 bn euro. Figures that cannot possibly have any real effect on the economy; at best, a few hundred people will be gainfully employed. This is probably not the place for an in-depth analysis as to why foreign investors have not been displaying much of an interest in Bulgaria.

But other numbers, also released a few days ago, raise the question of local investments and domestic demand. All the more so that some economists have been saying that it is precisely domestic investments and domestic consumption that could boost economic growth in Bulgaria. That may well be true, but Bulgarians are not disposed to spending money and certainly have no investment plans. At least that is the conclusion that springs to mind if one takes a look at the latest Bulgarian National Bank statistical data which show that the savings of citizens and of the private sector are on the rise and have reached 74 percent of the GDP or the staggering 32 bn euro. In the space of just one month these savings have gone up by 190 million euro! And this colossal, by Bulgarian standards, sum is tucked away in bank deposits without even accruing interest, as interest rates are now close to zero. Advanced financial markets offer hundreds of different ways to invest cash, with bank deposits being just one of them. Additional health insurance, supplementary pension schemes, life insurance, investments in realty, investments in government securities and corporate bonds, investments in gold or in works of art and so on and so forth. A myriad of enticing investment opportunities.

Not that these opportunities do not exist here, in Bulgaria, they do but… only on paper – a stunted, feeble Bulgarian version of the financial instruments, well known and used in the world. And, what is perhaps most important of all, Bulgarians do not have the financial culture, knowledge or capital that would help them choose the best investment option. In truth, the sums saved are in most cases so meagre that the only thing that could be done with them is… to put them in a bank. Investments, bonds, securities – does one really have a choice with no more than 1,000 euro in cash?

And so turns the vicious circle – Bulgarians save up because they do not have enough money for investments, investments in growth are few and far between, because huge sums are tied up in bank deposits. It is self-evident – the vicious circle must be broken and the easiest way this can be done is by way of innovation and digital technologies which have a colossal productivity and investment performance yet the initial capital investments are low. But to do this will take sound education and professional skills, the lack of which has been more and more conspicuous in the country.

English version: Milena Daynova