Bulgaria aims to have a budget deficit of 1.35% of gross domestic product, a growth of 2.9% and inflation of 2% in 2012, according to the budget draft for next year.

"In nominal terms, the 2012 budget resembles the 2011 budget," Finance Minister Simeon Djankov told reporters after the cabinet discussed the draft on Monday.

Djankov stressed that more money have been allotted for science and justice, while the budget for security agencies have been cut. He expressed the hope that bringing down the budget deficit will shield the economy from the blows of the European debt crisis.

The government may sell up to EUR 1.0 B in bonds on the international markets next year to finance a bond that matures in early 2013.

It plans to issue BGN 1.2 B on the domestic market.

The government is expected to approve the budget on October 31 after discussing it with the trade unions. After the cabinet gives it the green light, it will be tabled for debates in parliament.

Two years ago Bulgaria’s finance minister Simeon Djankov famously used a meatless pizza as a metaphor for the austerity 2010 budget. Local media have described budget 2012 as a meatless pizza too, which is however even not decorated with olives.

In the middle of October Bulgaria's government sharply revised downwards its economic growth forecast for next year from 4,2% to 2,5%, citing the slow-down in Western Europe and in particular Germany, the country's biggest trading partner.

Driven by strong exports, as well as the good performance of the industry and services sectors, the Bulgarian economy has started to expand, but too weakly and unsteadily.

The economy expanded by 2% in the second quarter on an annual basis, down by 1.4% in comparison with the previous quarter, which marked the first considerable increase in economic growth since the country plunged into a recession. The seasonally adjusted GDP edged up by 0.3%.

The government expects this year's growth to be 2.8%.

The International Monetary Fund recently downgraded its forecast for the 2011 growth of the Bulgarian economy to 2.5% from a projected 3% estimate made at the beginning of the year.

Meanwhile the European bank for Reconstruction and Development (EBRD) lowered its annual economic growth forecast for Bulgaria from 3.1% to 2.3% in 2011.