CABINET APPROVED 2002 BUDGET BILL

Views on BG | October 31, 2001, Wednesday // 00:00

Bulgarian Press Agency BTA

GDP growth for 2002 is projected at 4%, year-end inflation is projected at 4.2% and midyear inflation at 4.2%; the budget is based on a dollar/lev exchange rate of 2.10/1.
Privatization proceeds are expected to come in at 300 million dollars. `That amount will cover 100 per cent the projected budget deficit of 257 million leva,` Velchev said.

1,700 million dollars of external debt repayments have been budgeted for 2002; 670 million dollars of them will be principal repayments and 490 million dollars interest payments. The bill allows for the issue of Eurobonds worth up to 700 million leva. There are no concrete plans at the moment regarding the bond issue. It will be used to boost the fiscal reserve and offset the balance of payment deficit, Finance Minister Velchev said.

Deputy finance minister Kiril Ananiev noted that the average monthly pay will increase 4.5%; the increase in the budget-subsidized sector will be 7.5% and that in the extrabudgetary sector will be 3.6%. The average pension will have a nominal increase of 5.5%. The average monthly pay for 2002 will be 282 leva and the average monthly pension will be 100 leva.

Investment in the municipalities is more than doubled. The text under which the state subsidy for a particular municipality is reduced by the amount of revenue overcollected by that municipality will be amended to apply only to the general income tax and the corporate income tax revenue whereas the net overcollection of revenue will be reimbursed to the municipalities under a procedure set by the Council of Ministers on the basis of objective criteria. All other tax and nontax revenue will be left at the disposal of the respective municipality, Ananiev said.

75 of social benefits will be paid from the executive budget and the other 25% from the municipal budgets. The energy sector will get a subsidy of 40 million leva in 2002; although it got 55 million leva in 2001 there is no actual decrease in the subsidy because the direct subsidy for the heating utilities has been cut in favour of financial support for socially-disadvantaged people that cannot pay their heating bills, Ananiev said.

The Bulgarian State Railways will get a subsidy of 70 million leva in 2002; they got 60 million leva in 2001. 4,690 million leva (15.2% of GDP) have been budgeted for the payment of pensions and benefits and of health insurance and Vocational Training and Unemployment Fund (VTUF) contributions. Pension costs are budgeted at 2,882 million leva (9.4% of GDP); social benefits total 766 million leva (2.5% of GDP); VTUF contributions are at 297 million leva (1% of GDP); health insurance contributions are budgeted at 477 million leva (16% of GDP).Unemployed is projected at 635,000.

The general subsidy for executive and legislative state authorities and science is increased from 736 million leva to 802 million leva (up 8.9%); money for defence and security increases from 1,478 million leva to 1,558 million leva (5.4%); the budget of the judiciary increases form 98 million leva to 123 million leva and of the educational sector from 1,079 million leva to 1,271 million leva (17.7%); money for social security, assistance and care is upped from 3,938 million leva to 4,398 million leva (11.7%); money that will be spent on the construction of residential buildings, on public works and on environmental protection goes from 293 million leva to 328 million leva (12%); the cultural sector will get 211 million leva or 35% more than last year.

The only expenses that are cut in terms of GDP are capital expenditures, Velchev said, adding that the budgets of all spheres are sound. He pointed to the reduction by 0.4% in terms of GDP of the tax burden and the increase, again in terms of GDP, of all but interest expenses as examples of good budget-balancing. The money budgeted for regional development and public works in 2002 is way short of the funding that will be needed, Regional Development Minister Kostadin Paskalev said.

The country needs 3,667 million leva to improve its potable water piping. That amount of financing will be impossible to raise without the participation of private businesses in the management of the water sector, Paskalev said. That is why the ministry will devise a state policy for partnership with the private sector for the implementation of joint projects. "Otherwise we will have no chance of building a new infrastructure," he warned. The 200 million leva deficit in the budget of the National Social Security Institute, the 200 million leva deficit in the budgets of the municipalities and the 70 million leva deficit in the budgets of the hospitals are all problems inherited from the previous government, Paskalev said.

The 20% increase of social spending was assessed as a very positive development by Social Minister Lidia Shuleva. Unfortunately, the number of people eligible for social assistance is also rising, she noted.The biggest shortage of funding in the budget of the Transport Ministry will be in the sphere of capital investment in infrastructure projects, Transport Minister Plamen Petrov said.

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