The European Commission is expected to announce on Wednesday whether it will target Bulgaria with an excessive deficit procedure for exceeding the ceiling of 3% of GDP as it issues its report on euro hopefuls.

The Commission will say whether Bulgaria, Denmark, Luxembourg and Finland are in breach of the limits, and should be made subject to ‘excessive deficit procedures' (EDPs), in which they are given deadlines to consolidate their public finances.

Twenty-one countries are already subject to EDPs.

The European Union's official statistics agency said at the end of April the Bulgarian budget deficit in 2009 was wider than the government had estimated, even though Sofia had revised upwards its last year's fiscal gap due to a hidden deficit.

In the first of its twice-yearly reviews of government finances in the 27-member bloc, Eurostat said the Bulgarian government's budget deficit was 3.9% of gross domestic product last year, which is up by 0.2% over the government's revised figure.

Bulgaria's center-right government announced earlier in April a larger than expected 2009 deficit caused by unaccounted procurement deals, signed by the previous Socialist-led cabinet. The previously undiscovered expenses increased the 2009 gap to 3.7% of gross domestic product (GDP) from an initial 1.9% under the EU rules, the cabinet said.

Prime Minister Boiko Borisov has blamed the increase on extra spending due to annexes to public procurement deals the previous government had signed with some 150 contractors at the end of its term.

Borisov said his ministers were kept in the dark about the additional costs to the treasury.

Experts however have commented that though much better than other member states, Bulgaria's larger than expected budget gap will thwart the new EU member's efforts to join the euro in the near future.

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