The budget update will not solve the problem with the payment of debts of municipalities to the business sector, according to a statement of the National Association of Municipalities in the Republic of Bulgaria (NAMRB).

The NAMRB insists that the budget revision project, which is to pass first reading in Parliament on Thursday, must guarantee equal treatment of the debts of municipalities and the state.

According to the press release, debts of municipalities to the business sector are substantially bigger than state obligations.

According to official data, as cited by the NAMRB, outstanding obligations of local authorities to the business sector amounted to BGN 150 M by end-March 2013, accounting for 58% of the total debt of central and local government bodies.

The main portion of outstanding payments is owed to utility companies and construction firms.

The NAMRB argues that the proposed budget update fails to solve the problem with the so-called financial corrections imposed on municipalities during the term in office of the center-right GERB government on EU-funded projects in progress over public procurement.

The financial corrections amount to a total of BGN 50 M for a total of 264 municipalities.

The NAMRB insists that this problem must be solved and wants the state to earmark at least BGN 30 M for covering financial corrections in the budget revision proposal.

The Association noted that the step will guarantee that the principle of shared accountability is applied and demands that the approach be preserved for Budget 2014.

The statement also informs that the number of financially troubled municipalities has increased over the past few years due to decreasing revenues and growing prices, while the equalizing state subsidy, which is the main instrument for reducing financial inequalities among municipalities, has remained unchanged.

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