Bulgaria Explains Mystery Budget in Brussels

Bulgaria’s Finance Minister Simeon Djankov went to Brussels to assuage fears of a new Greek-style budget fraud. Photo by BGNES

By Vesselin Zhelev

waz.euobserver.com

Bulgaria provided information that was too sparse and too late about plans to substantially revise its state budgets for 2009 and 2010, puzzling the European Commission and prompting doubts about the credibility of the new member state's statistics, an EU official said on Monday (21 June).

Finance Minister Simeon Djankov met the EU's economic and monetary affairs chief, Commissioner Olli Rehn, to explain why the government revised last year's public deficit to 3.9 percent of gross domestic product (GDP), from the initial 1.9 percent and is planning to widen this year's fiscal gap to 3.8 percent of GDP, from the planned 2.8 percent.

Earlier this month, Mr Rehn expressed surprise about the abrupt changes, with government projections having envisaged an unchanged and even slightly improved economic scenario.

Mr Djankov implicitly recognised Sofia did not announce the modifications to Brussels in time and in the detail required, while waiting for parliamentary approval. This year's budget revision is still pending a final vote in the chamber, but is expected to safely sail through.

"Our interpretation is that the revision cannot be notified to the commission before parliament approves it," Mr Djankov told reporters in Brussels.

"The problem is that it took too long and information was not available on the revisions," Mr Rehn's spokesman Amadeo Altafaj told WAZ. He said the commission was informally told in advance about the upcoming revisions. However, EU rules require the government to base them on detailed figures, which it failed to manage on time.

The problem stems from the loud noise the government made in late March about discovering alleged unpaid public procurement bills of its predecessors worth the equivalent of €1.08 billion in total.

Mr Djankov said prosecutors were currently looking into the matter and the government would publish annexes to deals with some 150 contractors that the previous cabinet had signed shortly before leaving office in July 2009.

Mr Rehn's remarks about Bulgaria triggered a short rise of the risk premium on the country's €2 billion public foreign debt by some 0.5 percentage points to 4.2 percent. "Now it is down to 3.2 percent, because the markets look to the fundamentals," Mr Djankov said.

Bulgaria boasts the second smallest foreign government debt in the EU - 14.8 percent of its GDP, compared to an average ratio of over 80 percent in the euro area.

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