Bulgarian Cabinet approves Budget revision after junior partner ministers walkout

Bulgaria’s government approved the 2022 Budget Act revision bill on June 8 despite three ministers from one of the junior partners in the ruling coalition walking out of the weekly Cabinet sitting, the latest sign of disagreement in Prime Minister Kiril Petkov’s coalition.

Deputy PM and Regional Development Minister Grozdan Karadjov, Foreign Minister Teodora Genchovska and Sports Minister Radostin Vassilev, representing cable television presenter Slavi Trifonov’s ITN party, all left the Cabinet sitting before the Budget revision proposal was voted.

ITN’s fourth member of the Cabinet, Energy Minister Alexander Nikolov, did not attend the sitting. The ministers did not speak to the media to give a reason for their walkout.

Speaking to reporters in the National Assembly, ITN MP Lyubomir Karimanski, the head of Parliament’s budget committee, said that the walkout was “a signal that the revision should have been first discussed by coalition partners and then tabled to the Cabinet,” as quoted by public broadcaster Bulgarian National Television.

Media reports claimed that requests for additional funding as part of the Budget revision, made by ITN ministers for their departments, had been denied and that may have contributed to the walkout decision.

A ruling coalition council, initially scheduled for the eve of the Cabinet sitting, had been postponed by one day and is still expected to discuss the Budget revision when it meets later on Wednesday.

The Budget revision tabled by the Finance Ministry envisions a consolidated fiscal programme – which includes the state Budget, local administration budgets, healthcare and pension funds – with total revenues of 58.9 billion leva and total spending of 65.13 billion leva.

The spending side would increase by 1.97 billion leva and the revenue increase is projected at 1.65 billion leva, compared to the 2022 Budget Act passed by Parliament earlier this year.

The bulk of the new spending would go towards increasing pension benefits by 10 per cent starting July 1, on top of the 60 leva monthly assistance, initially granted by earlier administration as a measure to reduce the impact of the Covid-19 pandemic on pensioners.

That monthly assistance would remain as a permanent increase in retirement pensions, with the ceiling on monthly pensions also increased from 1500 leva to 2000 leva.

Also on the spending side, the revision includes an increase in the tax benefits awarded to families with children and disabled children.

As regards revenues, the bill sets reduced VAT rates of nine per cent (the regular VAT rate in Bulgaria is 20 per cent) on central heating and natural gas, zero per cent VAT rate on bread, as well as no excise duties on electricity, liquefied petroleum gas and natural gas.

Higher excise duties would be levied on cigarettes and other tobacco products, including the introduction of an excise on liquids used in e-cigarettes, the Finance Ministry said.

Additionally, the bill raises the limit on new government borrowing in 2022 by three billion leva to 10.3 billion leva, with an equal increase to the total government debt ceiling to 38.5 billion leva.

In opening remarks at the start of the Cabinet sitting, Prime Minister Kiril Petkov said that the revised Budget would not have a pro-inflation effect because the Budget deficit target remained unchanged at 4.1 per cent of gross domestic product.

“We are not spending more money, we are giving it to people who have the greatest need,” he said.

The revised macro-economic framework of the Budget projected that this year’s average monthly harmonised consumer price index inflation, the indicator calculated by statistics body NSI for comparison with European Union data, would reach 11.9 per cent.

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

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