Those reduced healthcare costs have shifted attention to Bulgaria’s control over prices set at the state level and how those impact consumer price indices.
“The only reason Bulgaria has qualified is, if you look at the inflation data, due to state-administered prices,” a former Bulgarian government official familiar with the data told POLITICO. “It is well known that statistical data was adjusted to show results more favorable than reality — especially in sectors like postal services, transport and healthcare.”
While healthcare is the big factor, rail fares were also cut by over 9 percent, and postage costs were reduced by nearly as much. In all, the reductions in state-set prices helped push the harmonized index of consumer prices [HICP] down by 1.2 percentage points in April compared with March, bringing Bulgaria within the required limits.
Steve Hanke, a professor of applied economics at Johns Hopkins University and the economist who designed Bulgaria’s currency board in the late 1990s, said the data raised red flags.
“I think there’s a high probability that [the inflation data] has been manipulated,” Hanke told POLITICO in emailed comments. “Given my experience as an advisor to the president of Bulgaria (1997–2002) and my observations of the machinations surrounding Bulgaria’s application to formally enter the eurozone, I would not trust inflation data that have been thrown up as far as I could throw them.”
Any discussion of the data used to bind the former Soviet satellite more tightly to the heart of the EU quickly becomes politically charged. Pro-Kremlin, anti-EU politicians have long accused the administration of cooking the books to rush the country into the eurozone before it is ready, running the risk of importing western European prices.