Covid-19: Bulgaria to seek 1B leva EU loan to fund recovery stimulus

Bulgaria’s Labour and Social Policy Ministry said on August 5 that the Cabinet has approved a proposal to borrow one billion leva, or about 511.3 million euro, from EU’s temporary wage support mechanism SURE.

The Cabinet decision authorised Labour Minister Denitsa Sacheva to make the formal request, with the goal of “assisting the state Budget to implement measures to reduce the negative social-economic repercussions of the crisis caused by the coronavirus,” the ministry statement said.

The additional financial support would help keep 250 000 people employed until the end of 2020 and help shore-up the stability of Bulgaria’s unemployment benefits system, the ministry said.

Bulgaria’s main wage support programme, referred to usually as the “60:40” scheme, has the government cover 60 per cent of an employee’s salary and mandatory social security and healthcare contributions, while employers cover the rest.

Introduced in March and approved by the European Commission in April, its reach was expanded last month and its duration extended until the end of September.

EU’s temporary support to mitigate unemployment risks in an emergency (SURE) was approved by the European Council in May. Under this programme, member states can borrow up to 100 billion euro under favourable terms “to help finance the sudden and severe increases of national public expenditure”.

Bulgaria’s Parliament approved a Budget revision in April raising the annual borrowing ceiling for 2020 to 10 billion leva, but so far, Bulgaria has avoided taking on new debt to fund economic recovery measures.

The Cabinet’s latest Budget figures showed a consolidated surplus of 1.61 billion leva for the first half of the year, half the size of the surplus recorded at the same stage of 2019.

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The Sofia Globe staff

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