Bulgaria’s government may have to increase the value-added tax if it fails to renounce what is described as illegal public procurement contracts made by the previous Cabinet.

This has been stated by Prime Minister Boyko Borisov during Wednesday’s news conference after the signing of an anti-crisis package by the representatives of the government, business sector, and trade unions.

“I have agreed to keep the VAT at 20% even though I am convinced that it has to be reduced. However, if I have to, I will increase the value-added tax without asking anybody,” Borisov stated.

He emphasized that his Cabinet had to renounce state contracts for BGN 2,16 B made by the former government. Borisov claims that the Stanishev Cabinet made the deals in question even though its ministers knew the state did not have the funds to pay for them.

He has referred the contracts made by 13 of the 16 ministries of the Stanishev government to the Prosecutor’s Office claiming that if the Bulgarian state had to keep the contracts, this would lead to a budget deficit of up to 7% placing Bulgaria in the position of Greece.

The anti-crisis package of 59 measures approved Wednesday by the employers, trade unions, and the state is expected to have a positive effect for the state budget amounting to BGN 1,63 B by generating fresh revenue and by cutting expenses.

The document is to be adopted by the Council of Ministers first, and is to be discussed by the Parliament on Thursday.

Borisov said the duration of the new measures will depend on the condition and development of the Bulgarian economy.

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