Finance Ministry Forecast: Bulgaria to Have Budget Deficit by 2012
Finance | October 26, 2009, Monday
Despite his best intention, Finance Minister Simeon Djankov will not be able to achieve a balanced budget in 2010 and beyond, according to his Ministry's forecast. Photo by BGNES
Bulgaria is going to have minor annual budget deficits in the next three years, according to the three-year budget forecast of the Finance Ministry for 2010-2012.
In 2010, Bulgaria is predicted to have a budget deficit of 0,7%; in 2011 and 2012, it is expected to drop down to 0,4%.
The Finance Ministry expects BGN 26,4 B of total state revenue in 2010, whereas the state expenditures are expected to reach BGN 26,86 B, leaving a deficit of BGN 456 M. Of the total 2010 state revenue, BGN 6,8 B are to come from value-added tax, BGN 4,5 B from excise taxes, BGN 1,66 B from the corporate tax, and almost BGN 2 B from the personal income tax.
For 2011, the Bulgarian Finance Ministry forecasts a state revenue increase of BGN 1,72 B up to BGN 28,12 B. The state expenses are to go up by BGN 1,51 B to BGN 28,37 B, which is to leave the state budget with a BGN 256 M deficit. The VAT revenue is only go up by BGN 47 M.
Bulgaria’s state revenue is expected to increase by BGN 7 M in 2012, and the state expenditure – by BGN 63 M. This will create a deficit of BGN 270 M.
Bulgaria’s 2010 draft state budget envisages no hikes in direct taxes. Finance Minister Simeon Djankov has made clear the government’s intention to reduce the value-added from 20% down to 16% by the end of the government’s term in 2013.
The new measure that the Finance Ministry is going to focus on in order to achieve greater macroeconomic stability have to do with consistent tackling of fiscal fraud and tax evasion.
The other three measures are the preservation of the currency peg, sustaining as balanced budget as possible, and quick accession to the ERM II, the waiting room for the Eurozone.
The priorities of Bulgaria’s proposed 2010 state budget have to do with education, health care, social security, environment, and road infrastructure.
10,2% of Bulgaria’s 2010 state budget is to go for education, which is 4,2% of the GDP; health care will receive 9,1% of the budget, or 3,8% of the GDP. Social security spending is going to be 37% of the budget, or 15,3% of the GDP.
The main risks for the Bulgarian economy, according to the Finance Ministry, are the steep reduction of the country’s export, the decline of investments, the drop in consumption, and high degree of risk in the banking sector.
The draft budget relies on the absorption of EU funds for the construction of large infrastructure projects.
Tags: state budget, budget, state revenue, expenditure, Simeon Djankov, Finance Ministry, finance minister, forecast, tax, tax fraud, currency peg, ERM-II
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