Bulgaria’s main opposition party GERB has said that it would not accept the proposed Budget revision, approved by the cabinet on July 16 and due to be tabled in Parliament by the end of the day. The proposal envisions increasing the deficit target for this year to about 2.7 per cent of gross domestic product (GDP), as well as raising the government debt ceiling by about 3.4 billion leva (about 1.75 billion euro).
The revision has been prompted by the looming deficit at the National Health Insurance Fund, the state fund that handles the payment of mandatory health care contributions to the health care sector (as funding for hospitals and medicine subsidies). The Cabinet initially opposed all proposals despite the agreement of all parliamentary parties and the NHIF governor and health minister’s recommendations, but caved in after opposition party GERB threatened to boycott parliamentary proceedings unless the Budget was revised.
The cabinet’s proposal envisions the allocation of 225 million leva to NHIF, of which 200 million leva will go for hospital care and the rest will fund the treatment of cancer patients, Finance Minister Petar Chobanov said after the cabinet meeting on July 16.
In a surprise move, the proposal also revised the Budget revenue downward by 500 million leva. Chobanov said that the Cabinet would not have suggested the change if it were staying in office beyond the end of this month, but such a downward revision would give the caretaker cabinet, due to be appointed in early August, more flexibility.
Following the debt ceiling increase, the new government debt limit will be 21.4 billion leva. Beyond the 725 million leva new debt to cover the increased Budget deficit for this year, the remaining 2.7 billion leva are meant as a “buffer” to cover the potential costs of dealing with the Corporate Commercial Bank fallout, Chobanov said.
To increase the available options to address the situation, the state deposit guarantee fund has been given permission to issue debt, guaranteed by the state, of up to two billion leva.
The cabinet’s Budget revision proposal was scheduled to be tabled and discussed in parliamentary committees on the same day it was approved by the Government, clearing the way for the bill to be debated on the House floor on July 17.
GERB MP Menda Stoyanova, who was head of the budgetary committee in the previous legislature, said that the party would not back the revision because it did not go far enough. She said that the party demanded an increase of NHIF’s funding by 330 million leva and reducing the revenue target for this year by one billion leva.
Additionally, the current administration had stopped all payments of EU funds and owed “roughly” three billion leva, which the incoming caretaker government will be unable to pay out unless the current administration gave it the option of deficit spending, she said.
“For us, the Budget revision must show a deficit increase of 5.72 billion leva, or the equivalent of seven per cent of GDP. […] This is the situation and if the cabinet refuses to acknowledge it and the National Assembly does not vote this figure, this means the collapse of the state by the end of this year, postponing spending for next year and risking next year’s Budget,” Stoyanova said.
She said GERB would not participate in further parliamentary debates unless the “correct revision” was tabled, raising once again the prospect of gridlocked Parliament, unable to hold sittings because of lack of quorum.
(Bulgarian Government building. Photo: Clive Leviev-Sawyer)