Bulgaria Govt Oks Austerity Budget 2010

Bulgaria's new center-right government approved unanimously on Wednesday a balanced but austerity 2010 draft budget for next year, which will be tabled in parliament on Thursday.

Finance Minister Simeon Djankov entered the press conference hall at the Council of Ministers with two pizza boxes – a big, but empty one, which he compared to budget 2009, and another one containing a small, meatless pizza in it, which Djankov said described best the budget for next year.

The minister refused to disclose any figures from the draft budget, but said all ministries, except the environmental and sports department, had objections to the cuts in their financial resources.

“'We have tried to show to the Bulgarian society that there is no money and at the same time to show to EU institutions that we can balance the budget and walk Bulgaria through the crisis,” Prime Minister Boiko Borisov told the same news conference.

According to unofficial information the government has set a fiscal deficit at BGN 465.7 M or 0.7% of GDP next year but will target a zero gap in a bid to speed up euro zone entry.

It put aside a reserve of BGN 406 M in the budget, which would be spent only if unforeseen needs occurred.

The budget draft put spending at BGN 25.8 B and revenues at BGN 26.4 B, which are expected to include BGN 20,900 M in tax revenue and BGN 3,400 M in non-tax revenue.

Aid, the main share of which will come from the EU budget, is planned at 2,000 million leva.

The government expects the economy to shrink by 2% next year after contracting by 6,3% in 2009.

Foreign investments, which collapsed this year from BGN 6,5 B to BGN 3 B, have been penciled in at BGN 3,3 B.

Excise duties on cigarettes will be raised 43% next year in a bid to curb smoking, relieve the health care system and redirect more money to it.

The tax policy remains unchanged. The social security burden will be cut by 2 percentage points to help businesses and protect jobs.

The budget will be reviewed once again in the middle of 2010, when the economic parameters of the country and the spending side of the budget will be clear.