Mixed Results for Bulgaria in 2024: Budget Deficit on Target, Social Issues Persist

Business » FINANCE | January 3, 2025, Friday // 09:23
Bulgaria: Mixed Results for Bulgaria in 2024: Budget Deficit on Target, Social Issues Persist

Bulgaria’s Ministry of Finance projects a budget deficit of approximately 6.1 billion leva for 2024, equating to 3% of the anticipated GDP. This forecast aligns with the reference value set by the Stability and Growth Pact and is marginally better than the initial estimate of 6.2 billion leva outlined in the annual budget. The Ministry highlights significant efforts to enhance revenue collection and curb expenditure pressures, contributing to the improved outlook. Final figures for the year will be available at the end of January.

Revenues under the Consolidated Fiscal Program (CFP) for 2024 are expected to total about 72 billion leva, which represents 95.6% of the annual target. The shortfall is primarily attributed to the absence of funds from the second and third tranches of the Recovery and Resilience Plan. Tax revenues, however, exceeded expectations, reaching 58.7 billion leva, a 12.2% increase compared to 2023. This overperformance largely offsets lower-than-expected non-tax revenues, which amounted to 9.7 billion leva. Revenues from grants and donations, primarily linked to EU programs, fell significantly short of projections, amounting to 3.6 billion leva instead of the anticipated 7.1 billion leva.

Expenditures under the CFP, including Bulgaria’s contributions to the EU budget, reached 78.1 billion leva, or 95.8% of the annual estimate. Increases were noted in social spending due to higher pensions, which rose in July 2023 and 2024, and personnel expenses following salary hikes for teachers and other administrative staff. Municipal budgets reported higher-than-expected expenditures, while accounts related to EU funds experienced notable underspending. Bulgaria’s EU budget contribution for the year amounted to 1.6 billion leva, adhering to current EU resource regulations.

Separately, Bulgaria’s performance in meeting the UN Sustainable Development Goals revealed mixed results. The country continues to lag behind the EU average in government spending on social protection, education, and healthcare as a share of GDP. Notable progress has been made in reducing poverty, achieving gender equality, promoting inclusive education, and lowering school dropout rates. However, challenges remain, particularly with the aging and declining population. In 2023, Bulgaria recorded the highest mortality rate in the EU at 15.7‰, while the birth rate stood at 8.9‰.

The report also highlights growing concerns over food price anomalies, which have increased due to global disruptions, including the war in Ukraine. Education indicators have declined, with lower secondary education completion rates dropping by nearly 30% since 2015. Adult participation in education remains minimal, and many small and medium-sized enterprises lack adequate training opportunities for employees.

Environmental challenges persist, as water quality in rivers deteriorates, linked to agricultural fertilizer use. Public transport faces significant setbacks, with the share of buses and trains in domestic passenger transport falling by 23% between 2015 and 2021, emphasizing the need for substantial investments and reforms. Bulgaria will present its findings at the UN Sustainable Development Forum in July.

The Ministry of Finance remains optimistic that the 2024 deficit will stay within the 3% threshold, a critical criterion for eurozone membership. However, ongoing budgetary constraints and missed Recovery and Resilience Plan funds highlight the challenges facing fiscal policy implementation. Detailed fiscal data and an information bulletin will be published by the Ministry at the end of January 2025.

Sources:

  • Bulgarian National Radio (BNR)
  • OFFNews
  • Bulgarian National Television (BNT)
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Tags: Bulgaria, deficit, budget, GDP

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