Bulgarian Cabinet approves draft 2015 Budget

Written by on December 1, 2014 in Bulgaria - Comments Off on Bulgarian Cabinet approves draft 2015 Budget

Bulgaria’s Government approved at a special meeting on December 1 the 2015 Budget bill drafted by the Finance Ministry, the final step before it is sent to Parliament.

The bill, published by the Finance Ministry last week, envisions a consolidated fiscal programme – which includes the state Budget, local administration budgets, healthcare and pension funds – with total revenues of 30.33 billion leva – compared to 30.89 billion leva initially envisioned in this year’s budget (prior to the Budget revision), a figure has been criticised as overly-optimistic. Total spending is set at 32.82 billion leva.

Economic growth is forecast at a conservative 0.8 per cent, another departure from this year’s macroeconomic forecast of 1.8 per cent growth that banked on favourable developments in the European Union, which is Bulgaria’s main trading partner, and an increase in household demand domestically.

The Budget deficit is set at three per cent of gross domestic product, with a medium-term commitment to reduce the deficit by 0.5 percentage points in each of the next two years.

The bill envisions two increases of the minimum salary in 2015, from 340 leva to 360 leva on January 1 and to 380 leva on July 1. The three-year macroeconomic framework envisions more hikes in 2016 (to 420 leva) and 2017 (to 460 leva).

Retirement age, which was left unchanged under the previous socialist-led administration, is again set to increase by four months in 2015, with similar hikes envisioned in 2016 and 2017. Pensions will increase on July 1 2015 by 1.9 per cent.

To cut costs on the spending side of the Budget, all ministry staffing expenses will be reduced by 10 per cent, the government media service said in a statement.

The draft budget raises the debt ceiling to 24.5 billion leva, or two billion leva higher than the figure in the revised 2014 Budget. At the same time, the government is allowed to issue up to 8.1 billion leva in new debt, compared to 8.9 billion leva this year, with the bulk of the funds used to cover the deficit and re-finance short-term debt taken on this year.

(The Bulgarian Government building in Sofia. Photo: Clive Leviev-Sawyer)

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