26.01.2018

| POLITICO | 26.01.2018 |

The role of finance minister seems to fit perfectly with Bulgaria's Vladislav Goranov. The 40-year-old studied everything from economics to "accounting and control" in the 1990s, served on the board of a municipal bank, and was a member of the national assembly before taking on the job in 2014. As of the new year, Goranov also helms the Economic and Financial Affairs Council as part of the country’s EU presidency for the first half of 2018. But the challenges he faces are sure to stretch his technical expertise and diplomatic skills to the limit, with thorny files on topics such as the European Commission’s proposed overhaul of the EU’s financial watchdogs and the Council's draft country-by-country tax reporting measures awaiting him. POLITICO sat down with Goranov to discuss these and other issues that he will have to handle in the coming six months. Here are the highlights:

Regarding the plan to overhaul the European Supervisory Authorities, how much will the file be watered down to meet Council concerns about sovereignty?

What we expect is a very technical, very specialized debate. The package is now being considered article by article. And what we see in the debate is that individual member states have very different positions. The commitment that I can make is that we as presidency will invest enormous efforts in resolving the deadlock.

What’s holding up progress on the country-by-country tax reporting file?

Some of the member states think that the legal basis for this proposal is not correct. Nine of the member states share the position that this is a tax issue, and it should be tackled by the respective tax working party.

Who are the nine?

It’s not up to me to say.

How will you move this file forward?

If the debate goes on as it went before, we wouldn’t be able to make much headway.

In term of the banking union, how much risk reduction do you expect to see before risk sharing starts?

Member states have not formulated clear positions on that one, which only suggests and validates my [opinion] that we’re at a very initial process. We don’t know yet. We have the road map, which we will discuss in the coming months, and more specifically the criteria, the risk assessment and the triggers — which only proves my point that we need to clarify to ourselves what exactly we expect. One of the indicators that are easiest to measure is the [non-performing loans]. The capital adequacy and capital buffers of the bank are also a good indicator. But there are no clearly fixed levels to suggest minimized reduced risks. And the other possible pillar indicator relating to risk reduction is insolvency.

Are you aiming to finalize any of the clearing house/derivatives rules (EMIR refit, EMIR 2.2, and clearing house recovery and resolution) during your tenure?

These files are priority files. The EMIR refit file [the review of the EU’s derivatives legislation] is moving somewhat faster than the other two. It’s in Parliament now, and trilogue negotiations are on the way. And the sooner the Parliament is ready, the faster we will make progress. In terms of recovery and resolution of CCPs, more work is being done with the focus on third country CCPs [EMIR 2.2].

What do you think about the Commission's proposal to put the ESM into EU treaties?

Many legal experts are of the opinion that the proposal is not fully applicable in terms of including the [European Stability Mechanism] into part of the treaties. But this is to some extent a technical issue. In as much as for the presidency and the member states, what matters is the debate on substance.

Can you explain how this legal question is a mere technicality? Surely, it’s a political question.

Undoubtedly, this debate will be heavily political, and the sensitive issue here is whether the ESM should remain fully independent. In my opinion, the desirable result is this. I continue to think we’re not yet ready to take a final decision, and there’s no reason to hurry.

On Brexit, what are your main priorities in phase II?

Brexit is a very sad story. The working parties at the Council are headed by [Michel] Barnier. So, the role of the presidency is relatively limited in that respect. This divorce is a sad thing. There’s always financial agreements to be made in a divorce, and the children always suffer.

To what extent will the criticism surrounding Bulgaria’s anti-corruption bill hinder its ambition to join the eurozone? 

Formally, the perception of corruption is present in every country. If you check the Eurobarometer data, you’ll see that. We’re not holding a top position there. We’re ranking somewhere in the middle. So, to raise this issue constantly probably creates interest. But it does not contribute to a productive debate on whether Bulgaria should be a eurozone member. No such polls are to be used when such decisions are taken as to whether a country can become a member or not. It is the macroeconomic indicators that matter for the decision to join the [Exchange Rate Mechanism II].

This interview has been edited for length and clarity. To view online: https://www.politico.eu/pro/vladislav-goranov-interview-bulgaria-finance-minister/

By Bjarke Smith-Meyer and Fiona Maxwell