Bulgarian Parliament approves 2020 Budget Act at second reading

Written by on December 6, 2019 in Bulgaria - Comments Off on Bulgarian Parliament approves 2020 Budget Act at second reading

Bulgaria’s National Assembly has given its final approval to the 2019 Budget Act after a now-familiar marathon of three sittings that went late into the night, on December 5.

As it has done in recent years, Parliament chose to give itself some breathing space and held a special sitting on December 3 to pass the separate healthcare and pension budgets.

It was unable to finish the task on time, with a lengthy debate before the vote to appoint Denitsa Sacheva as Minister of Labour and Social Policy delaying proceedings, part of the debate and votes on the pension budget were held on the next day.

That was followed by the usual opening statements on the central budget as a whole and MPs speaking in favour of amendments tabled between readings, with the result that actual voting on the Budget 2020 Act did not start until after 5pm on November 4.

With the usual sniping between the government coalition MPS and the opposition benches, as well as repeated requests to re-vote amendments, the final provision of the bill was voted close to 10pm on December 5.

Only one major amendment tabled after first reading was passed by Parliament, namely raising the state subsidies for political parties and coalitions that got more than one per cent of the vote at the most recent election to eight leva (about four euro). Earlier this year, the MPs cut the political parties financing from 11 leva for each vote to one lev.

The votes on the amendment caused some confusion as it was defeated twice, only to be passed at the third attempt following a brief recess, sparking accusations from the second-largest opposition party, the Movement for Rights and Freedoms that it was illegal because Parliament’s rulebook did not allow for a third vote on the same amendment.

The 2020 Budget Act envisions increased spending on social policies, education and healthcare, but unlike other years, the draft Budget targets zero deficit.

Revenue and spending are both set to increase in nominal terms, 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. (This summer’s acquisition of F-16 fighter jets now has the finance 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 the 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 2020 Budget Act 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.

(National Assembly photo: parliament.bg)

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