Exchange-Rate Regime Shifts and Public Debt – Opportunities and Perspectives
Exchange-Rate Regime Shifts and Public Debt – Opportunities and Perspectives

Author(s): Darina Koleva
Subject(s): Politics / Political Sciences, Politics, Economy, Supranational / Global Economy, Economic policy, EU-Approach / EU-Accession / EU-Development, Public Finances
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: public debt; currency board; monetary union
Summary/Abstract: Over the last 35 years, Bulgaria has undergone several transformations in its exchange-rate regime. The transition to a market economy began on an unstable footing, burdened by severely weakened economy and a substantial inherited public debt. Although the capacity to manage public debt has improved over time, the pace of adjustment, the timeliness of the measures taken, and the consistency of fiscal policy determine whether the opportunities created by a change in the exchange-rate regime may be effectively exploited. The paper analyzes two consecutive exchange-rate regime shifts – from a managed float to a currency board, and subsequently to a common currency union - and their implications for public debt management.

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