FinMin Goranov Vows to Avoid Overdoing Fiscal Consolidation
The government will do its best to boost investment and consumption while maintaining fiscal stability, Finance Minister Vladislav Goranov said on Sunday.
Commenting on the GERB-led coalition government’s plans to boost budget revenue, Goranov vowed there will be no increase in Value Added Tax, currently set at 20%.
“We’ll make every effort possible to use fiscal instruments … to increase investment and consumption,” Goranov told BNR radio station, adding parliament will work extra hours to have the 2015 budget adopted by January 1.
The government’s budget draft for next year projects deficit equivalent to 3.0% of GDP, lower than the shortfall of 3.7% expected this year. Budget revenue is projected at 36.8% of GDP and expenditure at 39.8%.
Goranov said earlier this week Bulgaria’s economy is expected to grow by 0.8 – 1.0 percent in real terms next year “which, together with some measures to improve collection - especially in regard to excise duties, will lead to around BGN 300-400 M more tax revenues in 2015 compared to 2014".
Commenting on the performance of the previous GERB government (2009-2013), Goranov admitted its fiscal consolidation measures had sometimes been overdone due to unrealistic ambitions to join the Eurozone.
According to Goranov, subordinating everything across the board to the concept of fiscal consolidation sometimes led to unbalanced decisions that increased the share of delayed payments to businesses by the government, Goranov said.
That austerity policy promoted by then Finance Minister Simeon Djankov had been based on the wrong assumption that Bulgaria could quickly meet the minimum requirements to be allowed into ERM-2, the Eurozone’s ‘waiting room’.
“Today, we clearly realize we are far from that,” said Goranov who was Djankov’s deputy in the previous GERB cabinet.
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