Bulgaria Parliament Debates Budget Revision Plan 2010

The draft bill targets a deficit of 4.8% of GDP on a cash basis and 3.9% of GDP under EU accounting rules, far wider than initial estimates. File photo

Bulgaria's government controversial budget revision plan that envisages a 4.8% deficit for 2010 will be discussed by the financial and economic parliamentary commissions at a joint meeting on Thursday.

The draft bill targets a deficit of 4.8% of GDP on a cash basis and 3.9% of GDP under EU accounting rules, far wider than initial estimates.

This marks a notable change of course in the government's policy as in the early months of 2010 it insisted it would do its best to keep the deficit as low as possible, or at least under 3%, in order to meet the criteria for applying to join the euro zone waiting room, ERM II.

Among other things, the budget revision would allow the government to reach into Bulgaria's fiscal reserve, setting a minimum of BGN 4.5 B at the end of the year.

Minister Djankov has described these measures as “insurance against Europe’s surprises”.

“In case of no surprises from abroad, the fiscal reserve will not slump to BGN 4.5 B. Our estimates are much more positive,” he pointed out, but declined to elaborate on the forecasts of his department.

He has stressed that the swelling of the upper threshold of the foreign debt is “a buffer, which we don’t need at this moment” and issued an ultimatum for reforms, saying that the government will hand out additional funding only provided that the sectors in question implement the required reforms.

The revised budget provides for an additional BGN 200 M for infrastructure projects, as well as BGN 660 M for covering debts to businesses.

“This will give yet another incentive for the economy to bottom out,” the minister has said.

The much-discussed budget revision was tabled to the parliament last Friday and aims to tackle the fiscal and economic crisis in the country. It comes in the wake of widening budget gaps despite continuous efforts to reduce state spending.

If adopted in Parliament, the act is going to effect the first budget update in Bulgaria since the 1996 crisis during the Socialist Party government of Zhan Videnov.

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