Bulgaria's center-right government has officially dropped plans for a health tax hike, which was approved last week amid doctors' walkouts and in a bid to raise additional funds to support the ailing system.

The cabinet of the ruling GERB party approved last Wednesday a 2 percentage-point rise in health insurance levies to 10 percent of an individual's income, effective from April.

The private sector cried foul, saying that the measure will deal a heavy blow to the companies, which are already struggling in these times of crisis and will create conditions for the expansion of the grey economy.

The government is expected at its meeting next week to back the alternative solution, which would make state officials, who are currently making no health insurance installments, dip deeper into their pockets.

According to Finance Minister Simeon Djankov the installment of health care taxes by the employees in the state sector will raise BGN 150 M thanks to cuts in the budget spending.