Bulgaria’s Finance Ministry published the 2015 draft Budget bill on November 26, which envisions a consolidated budget deficit of three per cent of gross domestic product (GDP), in line with EU deficit guidelines.
The ministry said that the deficit will be kept in check by implementing measures to “remove factors that led to the worsened Budget position in 2014”. Bulgaria’s revised Budget Act for this year envisions the deficit reaching 3.7 per cent of GDP, which could trigger excessive deficit proceedings by the European Commission.
To show commitment to a prudent fiscal policy, the Finance Ministry updated its three-year Budget forecast for 2015/17, targeting a reduction of the Budget deficit by 0.5 percentage points to 2.5 per cent in 2016 and two per cent of GDP in 2017.
The consolidated fiscal programme, which includes the state Budget, local administration budgets, healthcare and pension funds, envisions total revenues of 30.33 billion leva – compared to 30.89 billion leva envisioned in this year’s budget (prior to the revision), a figure has been criticised as overly-optimistic.
Total spending in 2015 is set at 32.82 billion leva, up from 32.36 billion leva this year (pre-revision). The bill envisions a 1.9 per cent increase of all pensions, as well as cutting all personnel expenses at state institutions by 10 per cent. The minimum salary will remain unchanged at 340 leva, although it is set to rise to 360 leva in 2016 and 380 leva in 2017.
The draft budget raises the debt ceiling to 24.5 billion leva, the equivalent of 29.7 per cent of GDP. Bulgaria’s 2014 Budget Act initially set the ceiling at 18 billion leva, but the budget revision will raise that figure to 22.5 billion leva. The government will be allowed to issue up to 8.1 billion leva in new debt, compared to 8.9 billion leva (after the Budget revision) in 2014.
Economic growth is forecast at 0.8 per cent.
(Photo: Clive Leviev-Sawyer)