Bulgarian Cabinet approves draft 2020 Budget

Written by on October 31, 2019 in Bulgaria - Comments Off on Bulgarian Cabinet approves draft 2020 Budget

Bulgaria’s Government approved the 2020 Budget bill drafted by the Finance Ministry at a cabinet meeting on October 31, which is also the legal deadline for submitting the bill to the National Assembly.

In keeping with the trend set in recent years, the bill envisions increased spending on social policies, education and healthcare, but unlike other years, the draft Budget targets zero deficit. The Finance Ministry’s conservative revenue forecasts in the past few years saw budgets with small deficit targets, but higher-than-expected revenue collection resulted in small surpluses instead.

The draft Budget envisions both revenue and spending increasing in nominal terms in 2020, with targets set at 46.83 billion leva (about 23.94 billion euro) – compared to revenues of 43.86 billion leva and spending of 44.46 billion leva in 2019 Budget Act, although this summer’s acquisition of F-16 fighter jets now has the ministry forecasting a deficit of two per cent, with revenue estimated at 43.54 billion leva and spending at 45.97 billion leva.

In its three-year macroeconomic forecast, the ministry also set set zero deficit targets for 2021 and 2022.

For a third year running, the education sector will receive increased funding, to 4.81 billion leva from 4.2 billion leva, which will include a 17 per cent pay rise for teachers.

The Budget allocation for healthcare is set to rise by about 500 million leva to 5.76 billion leva, while pensions and other social safety net spending in 2020 will increase by 900 million leva to 14.85 billion leva.

Defence spending is set to be reduced drastically, from 3.53 billion leva in 2019, when it was boosted by the lump-sum payment for the acquisition of eight F-16 fighter jets for about 2.13 billion leva, to 1.94 billion leva next year.

In line with previous commitments, the minimum salary will increase to 610 leva starting January 1, to be followed by another increase to 650 leva in 2021, but no further increase is planned for 2022.

Economic growth in 2020 is forecast at 3.3 per cent, while this year’s GDP target is lowered to 3.4 per cent, from 3.7 per cent envisioned in the 2018 Budget Act.

The draft budget sets the debt ceiling at 23.1 billion leva, with the government allowed to issue 2.2 billion leva in new debt in 2020. The Finance Ministry said it expected debt to be 24.1 billion leva at the end of 2019, which would represent 20.4 per cent of GDP.

(Bulgaria’s Government building, photo: Clive Leviev-Sawyer)

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