Bulgaria Austerity 2010 Draft Budget Tabled in Parliament

Bulgaria's finance minister tabled in parliament on Thursday a balanced but austerity 2010 draft budget, which the government approved on Wednesday.

"The draft was very hard to prepare in these times of crisis," Simeon Djankov said after handing over the bill to Parliamentary Speaker Tsetska Tsacheva.

"We are actively working so that the country can emerge from the crisis even more competitive than before, so that we can safely say it has a moderately developed European economy."

Minister Djankov surprisingly stated that next year's budget envisages more spending in the health care, environment, domestic security and justice sectors.

In fact the budget bill imposes a freeze on pensions and public sector wages and envisages less spending on almost all sectors, ranging from health and education to defence.

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.

The budget draft put spending at BGN 26 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.