Bulgaria’s Finance Ministry expects Average Annual Inflation of 12.6%

Business » FINANCE | August 29, 2022, Monday // 12:38
Bulgaria: Bulgaria’s Finance Ministry expects Average Annual Inflation of 12.6% Acting Finance Minister Rositsa Velkova

The average annual inflation is expected to be 12.6%, announced the Acting Finance Minister Rositsa Velkova. She presented the preliminary calculations of the macroeconomic forecast until 2025.

Next year, inflation will slow down to 5.8%, expect from the Ministry of Finance.

"Inflation will slow down due to a reduction in consumption not only in Bulgaria but also in the EU," the acting finance minister pointed out.

According to the Finance Ministry, GDP will grow this year by 2.9%, and next year - by 2.2%. However, Minister Velkova noted that economic growth is expected to slow down in the third and especially in the fourth quarter of this year.

Velkova also warned that if savings in capital expenditures are not undertaken and the current policies contained in the budget are maintained, next year's deficit may exceed BGN 11 billion. This makes 6.8% of the expected gross domestic product:

"The only option we believe should be used is savings and cost restructuring to the extent possible to fund priority emergencies and urgent contingencies."

Velkova added that the finance ministry of the caretaker government will develop a basic budget for the next year, in which there will be no increase in the minimum wage.

"Pensions have been developed in accordance with the rule adopted in the Social Insurance Code, with 12% indexation from July 1, 2023," she noted.

Rositsa Velkova warned that if no changes are made in the direction of cost optimization, there is a danger of an excessive deficit procedure and moving our country away from adopting the euro in the target year of 2024.

According to the updated fiscal program (CFP) of the Ministry of Finance, the deficit for 2022 will be BGN 6.2284 billion (or 4.1 percent of the estimated GDP), and for the "State Management" sector - a deficit of 6 percent of GDP. For the year 2023, the forecast is for a deficit of 11.3191 billion BGN (or 6.8 percent of GDP) under the CFP, and a deficit of 6.4 percent for the "State Management" sector.

Of the BGN 10.3 billion state debt voted by the parliament, BGN 1.8 billion has been withdrawn so far. "We will enter the international and domestic markets in the coming months," Rositsa Velkova said on this occasion.

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