Covid-19: Bulgaria Cabinet lists sectors eligible for aid, prepares Budget revision

Written by on March 30, 2020 in Bulgaria - Comments Off on Covid-19: Bulgaria Cabinet lists sectors eligible for aid, prepares Budget revision

Bulgaria’s Cabinet approved on March 30 the list of economic sectors eligible for government assistance to pay their employees and was set to hold a second sitting later in the day to discuss a draft revision of the 2020 Budget Act.

The scheme to help businesses pay their employees’ wages, frequently referred to as “60:40” by officials and media alike, envisions the government covering 60 per cent of salaries and the employers the remaining 40 per cent.

Businesses can apply for government aid only if they retain their staff and it is contingent on employers paying their full share, meaning that they would not be allowed to cut salaries to only the amount provided by the government. If an employer does not pay their 40 per cent, they would have to return the state aid, Labour Minister Denitsa Sacheva said, as quoted by Bulgarian National Television.

The mandatory social security contributions would continue to be split by employers and employees, Sacheva said.

The list of sectors that will receive funding under the scheme includes retail (with the exception of car or motorcycle dealerships), land and air transportation, hotels, restaurants and bars, cinemas, tourist operators and trade fair organisers, private kindergartens, artistic and other cultural activities, sports and other recreational activities.

Sacheva said that companies in other sectors that had to suspend all activity as a result of quarantine measures – as has been the case with the winter resort of Bansko since March 17 – will be covered by the scheme as well.

Applications are to be submitted to the Employment Agency, which would be required to rule on a request within a period of seven days, with payment to be made within five days of the agency granting its approval.

Separately, companies that have experienced a 20 per cent fall in sales in March 2020, compared to the same month of 2019, can also apply for assistance.

Sacheva said that applications to local labour bureaus would be processed online and use simplified procedures, but warned that strict oversight would be carried out by the National Revenue Agency and the Labour Inspectorate throughout the rest of the year to cut out any fraud.

A number of sectors were left off the government’s list – notably agriculture, which will be subject to a separate measure, due to the need to take into account existing state aid to the sector.

Similarly, the healthcare and social care sectors will be covered by a separate government assistance measure, to be announced by the Health Ministry in the coming days, Sacheva said.

Also left off the list were financial and insurance institutions, the state administration and the education sector (with the exception of private kindergartens).

Asked about the expected number of employees that would be covered by the “60:40” scheme and the total financial outlay, Sacheva said that it was difficult to make forecasts. She noted that initial estimates showed at least 135 million leva (about 69 million euro) a month would be needed.

Finance Minister Vladislav Goranov said that the additional cost of the scheme required a Budget revision. He said the analysis was still under way and noted that it would take “billions” to ensure that the government meets all its commitments.

Prime Minister Boiko Borissov said that the European Commission would be notified of the state aid scheme “right away” and said that he was confident that it would be approved quickly. “We have discussed this previously, but it is part of the procedure that has to be followed,” Borissov said, as quoted by Bulgarian National Radio.

For the rest of The Sofia Globe’s continuing coverage of the Covid-19 situation in Bulgaria, please click here.

(Bulgaria’s Council of Ministers building. Photo: government.bg)

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