Bulgaria Parliament Votes Conclusively Revised Budget 2010Finance | July 8, 2010, Thursday // 08:09| views
Bulgaria's Parliament gave the green light to the bill in the middle of June, turning thus into the first mid-year budget update in the country since 1997. Photo by Sofia Photo Agency
Bulgaria's Parliament will vote at second reading the 2010 Budget Revision Act tabled in early June by the center-right government of the GERB party over rising deficit necessitating austerity measures.
The bill was given the green light in the middle of June, turning thus into the first mid-year budget update in the country since 1997.
A total of 120 MPs from the rightist ruling majority voted in favor of the revised budget, while 51 MPs from the opposition Bulgarian Socialist Party and the ethnic Turkish party DPS voted against.
Only 171 MPs out of a total of 240 were present and took part in the vote of the bill at first reading.
The GERB party government has sought to justify the revision with the reduced revenues as a result of the economic crisis, and its unwillingness to increase any taxes.
One of the main factors that necessitated the revision of Bulgaria’s 2010 state budget is the low level of domestic consumer demand, according to Finance Minister Djankov.
The 2010 Budget Revision Act projects a 1% GDP growth in 2010, and a deficit of 4.8% of GDP on a cash basis and 3.8% of GDP under EU accounting rules, far wider than initial estimates.
Thus, the country’s consolidated fiscal framework will end the year with a gap of BGN 2 B. The current 2010 Budget Act provided for a 2010 deficit of only BGN 560 M.
It also provides for a 20% reduction of non-interest state spending; cuts in administrative expenses are expected to save BGN 900 M.
At the same time, however, the revised state budget will provide additional BGN 220 M for Bulgaria’s National Health Insurance Fund, BGN 116 M in subsidies for the tobacco producers, and BGN 142 M for social spending and benefits.
About BGN 200 M are set aside for funding infrastructure projects, while another BGN 660 M are envisaged for paying out debts owed by the state to private companies.
It also provides for a 20% reduction of non-interest state spending; cuts in administrative expenses are expected to save BGN 900 M, and for a deficit of 4.8% of GDP on a cash basis and 3.8% of GDP under EU accounting rules. It sets the fiscal reserve minimum at BGN 4.5 B, down from BGN 6.3 B.
The new law will also allow the government to spend money from the fiscal reserve with the only requirement to leave at least BGN 4.5 B in it at the end of 2010.
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