Bulgaria's Budget Gap Widens Despite April Surplus

According to the Bulgarian Finance Ministry information by April 30, the fiscal reserve is BNG 6.7 B. File Photo

Bulgaria's budget deficit is growing with higher expenditures year on year despite Cabinet efforts to reduce substantially state spending.

The Finance Ministry distributed Tuesday an official account for the implementation of the budget by the end of April 2010 according to the Consolidated Fiscal Program (KFP).

Bulgaria had a monthly budget surplus of BGN 370 M in April, but due to the deficit in the first quarter of 2010, the deficit accumulated since the beginning of the year is BGN 1.3 B with BGN 958 M coming from the state budget and the rest – from the EU accounts.

The budget revenues in January-April amount to BGN 7.5 B, which is 28% from the total forecast revenues for the year, while the expenditures are BGN 8.8 B – 33% of the forecast amount for the year.

According to the Finance Ministry information by April 30, the fiscal reserve is BNG 6.7 B.

The BGN 354.7 M contributed to the state budget by the Bulgarian National Bank in April have appeared to be an important factor for generating a monthly surplus. As early as the beginning of May the Socialist opposition has criticized the Finance Minister for failing to ensure a monthly surplus with the argument that the BNB contribution is just one-time thing.

Despite the good news about the budget in April, Bulgaria’s total revenue is down by 17% in the first four months of 2010 year-on-year – or by BGN 1.6 B. The VAT revenue has seen the greatest decline in that period – 23% year-on-year, as only BGN 1.54 B have been raised from the major indirect tax.

The net state revenues from excise taxes in January-April 2010 amount to BGN 908 M; the gross revenue was BGN 1.169 B but BGN 261 M have been reimbursed to cigarette producers.

Bulgaria’s corporate tax revenue in the first four months amounted to BGN 697 M, a 25.1% decline year-on-year. According to the Finance Ministry, this poor performance is due to the suffering profits of businesses as a result of the economic crisis.

At the same time total income tax revenues declined by only BGN 11.3 M, generating a total of BGN 705.5 M for the state budget.

In April 2010, Bulgaria’s state spending grew by 4.35% year-on-year despite the push of the government to reduce it. The reference data shows that the increase comes only from the higher current costs, i.e. money the state spends for everyday operations and social payments.

By the end of the current week, the Bulgarian government is expected to table the draft bill for the revision of the 2010 state budget; it is going to provide for a 2010 budget deficit of 4.8% of the GDP and for using funds from the fiscal reserve with the only requirement that the reserve amounts to BGN 4.5 B in December 2010.

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