Bulgaria Finance Minister Outlines 3 Pillars to Fight Crisis

Bulgaria's Finance Minister, Simeon Djankov, presented the update of budget 2010 before the Parliamentary Economic and Budget Committees. Photo by BGNES

Bulgaria's Finance Minister, Simeon Djankov, motivated the need to update the 2010 budget with the uncertainty brought by Greece and other countries in Europe.

Djankov presented Thursday the update of budget 2010 before the Parliamentary Economic and Budget Committees.

The Finance Minister confirmed the main goals of Bulgaria's fiscal policy are to remain the same, adding that as early as last December, the cabinet had presumed a possible need to change the parameters of the planned budget for 2010, and tabled its eventual update for June.

Djankov confirmed earlier reports for a budget deficit of 4.8% of the Gross Domestic Product (GDP) on a cash basis, but presented the deficit of GDP under EU accounting rules at 3.8% of GDP, one percent lower than previous estimates for 3.9%, but still far wider than the initial ones.

The 3.8% budget deficit is what is going to be presented before the European Commission, since it has been calculated using the Eurostat methodology.

The Minister further confirmed the government will reach into Bulgaria's fiscal reserve of BGN 6.3 B, setting a minimum of BGN 4.5 B at the end of the year while the limit of external debt will go up from BGN 1.2 B to BGN 2 B.

Djankov outlined the 3 pillars the cabinet will use to adapt its fiscal policy to the crisis:

Maintaining the current level of direct and indirect taxes

Increasing funds for social assistance and for supporting the economy, including money for infrastructure projects, and for covering debts to businesses to BGN 800 M, at the expense of a reduced State administration.

A budget deficit of 4.8% of GDP on a cash basis, and of 3.8% of GDP under EU accounting rules.

The updated budget deficit 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 Eurozone waiting room, ERM II.

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