A secret report of Krasimir Stefanov, Director of Bulgaria's National Revenue Agency (NRA) to Deputy Prime Minister and Finance Minister Simeon Djankov has warned of a substantial slowdown in NRA's collection rates.

The document, cited by Bulgarian daily 24 Hours, warns that NRA'srevenues are expected to come BGN 622.2 M short of the mark.

Sources close to the matter have claimed that the tipoff about the worrisome revenue collection lag is one of the reasons for the public castigation of Stefanov, which led to reshuffles at NRA and a spate of operations launched by the Customs Agency.

Anonymous sources have also said that, upon learning about the forecast, Djankov ordered the preparation of action plans by the two revenue agencies and demanded reports on revenue collection to be compiled every two weeks, instead of every three months.

Both Djankov and Stefanov have refused to comment on the matter.

The fact remains, however, that in early June, days after the report, Bulgaria's Deputy Prime Minister publicly reprimanded the NRA head, giving him three months' time to to make up for the collection rate drop. If he failed to do that, Djankov warned, high-level reshuffles at NRA could take place.

The Finance Minister went on to specify the two weakest points in Stefanov's work- VAT fraud detection and the lack of initiative for legal amendments.

Several days after that, Stefanov's deputy, Boyko Atanasov, was appointed head of one of the most difficult territorial directorates of NRA, the one in Sofia.

Atanasov's place was occupied by the director of NRA's unit in Bulgaria's central city of Veliko Tarnovo.

"The NRA grew more efficient after my criticism and is currently doing a better job", Djankov said Sunday, commenting on the report and his attitude towards the revenue authority.

"Collection has improved substantially from May until now", the NRA head remarked.

Sources speaking on condition of anonymity have also claimed that Customs Agency head Vanyo Tanov has also been asked to explain about the report to the Finance Ministry.

According to the unconfirmed allegations, Tanov complained that Lukoil sabotaged the installation of measuring devices at the refinery and that the data about a 50% increase in fuel export registered in March did not meet excise tax revenue for the period.

As a result, an inspection was ordered at Lukoil, with ongoing on-site control by tax and customs officers until the completion of the procedure.

The results of the inspection are to be revealed by the end of July.

On Friday, Tanov and Dyankov threatened to revoke the license of the Lukoil Neftochim if it fails to provide the mandatory electronic connection to the tax authorities.

NRA's report indicates a revenue collection lag, especially in the sphere of indirect taxes. Following two months of budget surplus, May brought a retreat into deficit territory.

The monthly drop amounts to BGN 45 M, against a total of BGN 597 since the beginning of the year, or 8% of the budget's GDP forecast.

The deficit is expected to expand to BGN 622 M unless urgent steps are taken to remedy the situation.

The budget envisages a deficit ceiling of BGN 1.9 B.

Compared to last year's collection rates, the figures for 2011 show that, the cononomic recovery, if there is such, does not affect VAT or excise duty revenues.

Budget revenues for the period come in at BGN 9.99 B, fulfilling 38.1% of the annual target.

A supplement to the report shows that VAT and excise duty present are hardest to collect.

Although revenues from indirect taxes go up by 18.3% and 17.8% on the year, respectively, their collection is below the annual target.