Bulgaria may close the year with a budget gap of 4.0-4.5% of GDP instead of planned 1.8%, Sofia-based daily 24 Chasa reported on Thursday, citing “high-placed state sources”.

The expected shortfall, which exceeds the Maastricht ceiling of 3% of GDP, will amount to BGN 3.2-2.5 M, the daily said.

The Finance Ministry is preparing a budget update and its preliminary version will be unveiled on Monday, when it is expected to be discussed at a meeting of government officials, trade unions and employers.

Caretaker Finance Minister Rumen Porozhanov has declined to comment when approached by 24 Chasa. When he took office last month, he said budget deficit could reach 3% of GDP at the end of 2014 and vowed the government will try not to exceed that limit to avoid the launch of an excessive deficit infringement procedure against Bulgaria by the European Commission for failing to meet budget targets.

The caretaker cabinet will discuss budget update options next Wednesday. The new parliament that will be formed after October 5 vote should then vote a budget update into law.

According to inside sources, Porozhanov will make a media statement on the matter over the weekend, 24 Chasa said.

According to the sources, revenue projected for 2014 is expected to be cut by BGN 1 B in the revised version of the budget. Budget deficit amounted to BGN 1.2 B at end-July, which was 78% of the figure projected for the full year.

Despite efforts to bolster customs revenue collection, the cabinet has only managed to shrink the shortfall in this sector to some BGN 530 M from BGN 600 M. Additional  BGN 120 M came into state coffers from improved collection of sales turnover tax.

On the expenditure side, the caretaker cabinet directed BGN 750 M to finance projects under two operational programmes, funding for which has been suspended by the European Commission. If EU funding for the two programmes remained frozen by the end of the year, this extra spending will translate into additional 1% of budget deficit, said 24 Chasa.