The government has decided to raise minimum wage by BGN 40, increase pension age by four months and keep health and pension insurance contributions unchanged next year.

The decisions were made part of the 2015 budget draft adopted by the minority coalition cabinet at an extraordinary meeting on Monday alongside the budgets of the National Health Insurance Fund and the National Social Security Institute.

Updated budget forecasts for 2016 and 2017 were also approved.

The government projected a budget deficit equivalent to 3.0% of GDP next year, 2.5% for 2016 and 2.0% for 2017.

Assuming new debt worth BGN 8.1 B in 2015 would take total debt figure at BGN 24.5 B at the end of next year. Debt-to-GDP ratio was projected at 29.7%.

According to the 2015 budget draft, to be submitted to Parliament for approval, the minimum wage, currently set at BGN 340, will rise to BGN 360 from 1 January and to BGN 380 from 1 July next year.

Further increases to BGN 420 from 1 January 2016 and BGN 460 from 1 January 2017 were also planned.

According to Finance Minister Vladislav Goranov, the planned increase will boost the disposable income and take the minimum wage closer to the medium level for Bulgaria. Currently the minimum wage stands at about 42% of the medium salary – a relatively low ratio by European standards, Goranov explained.

Pension age will be increased by four months for both men and women next year following a freeze in 2014, the government decided, rejecting the proposal of Social Policy Minister Ivaylo Kalfin to limit the increase to two months. The same rate of increase by four months was projected for each of 2016 and 2017.

Maximum insurable income for 2015 was increased by BGN 200 to BGN 2,600.

Pensions would rise by 1.9% as of July 1 next year. Maximum pension was capped at BGN 910.

A total of BGN 3.1 B including a reserve of BGN 300 M was allocated to the National Health Insurance Fund. Nearly half of the sum, or BGN 1.3 B, was allocated to hospitals, and a further BGN 554 M would go towards procurement of medicines.

The government would also extend a loan of up to BGN 2 B to the Deposit Insurance Fund to help finance repayment of state-guaranteed deposits with collapsed Corporate Commercial Bank, or KTB.

"Without claming that it is possible to make the best financial plan of the state within 20 days, we guarantee that this is a stable and realistic budget which won’t be put to debate like the 2014 budget,” Goranov commented after the cabinet session.