The Ministry of Finance is preparing a draft budget in which the indicators fully meet the Maastricht criteria, that is, for entry into the Eurozone. For now, Bulgaria plans to do this in 2025.
Asen Vassilev presented some parameters after they were discussed with the deputies from the parliamentary committee on budget and finance. He added that the estimates are for an executable budget, which represents a good basis for the budgets in the following years as well.
The projected budget deficit is 3% (4.5 billion leva) on an accrual basis (which is the criterion by which parameters are calculated in the Eurozone, while in Bulgaria the cash basis continues to be used for budget planning and reporting) and 2.5% on a cash basis, Vassilev said.
He explained that the macro framework of the budget has not been changed compared to the budget submitted by the government in the National Assembly, so that the law can enter into force on August 1. The plan is to be adopted by the deputies by the end of July.
An increase in revenues of 3.5 billion leva is planned, mainly through the National Revenue Agency and the Customs Agency.
The tax reliefs remain until the end of the year, only the VAT on natural gas is returned from 9% to 20%. “My opinion is that it is not good to touch taxes in the middle of the year“, explained the minister.
Pension and salary costs, as well as a 10% pay rise in administrations that have not yet received a raise, are being retained. This year’s planned increase in the allowance during the second year of maternity leave, as well as the increase in scholarships for students, remains. There is also the additional money for the Bulgarian Academy of Science, the Agricultural Academy and expenses for the “Culture” fund and for sports.
The amount of government debt is not expected to grow compared to GDP, as by the end of 2022 the ratio is around 24%. Regarding the debt policy, the minister announced that he will speak when he has a ready budget.
For now, the Cabinet’s idea of 100% of the profits of state-owned companies going to the budget is being retained, which is expected to provide revenues of 780 million leva.
The budget being prepared envisages a reduction of capital expenditures by 1.8 billion to 8.8 billion leva, which is again a record level, Vassilev explained. His assessment is that in this way, funds are secured for all European programs whose payment expires by the end of the year, plus those for which contractors have been selected or are in the process of being implemented. The costs, for which no public procurements have yet been announced, have been removed from the capital program, because it is difficult to reach payment by the end of the year, Vassilev pointed out.
He clarified that there is a provision for a reserve in case the circumstances come together well, so that such expenses are not stopped.
For now, Bulgaria is also expected to request a second payment under the Recovery and Sustainability Plan, which was supposed to be made at the end of last year.
Vassilev did not announce the total amount of the expenses, but indicated that there will be a cut of 1.5 billion leva, mostly in maintenance expenses.