Bulgaria Consolidated Budget Deficit Tops BGN 1.5 B H1

Finance | September 1, 2010, Wednesday // 15:18|  views

Finance Minister Simeon Djankov. Photo by BGNES

Bulgaria's consolidated budget deficit exceeded BGN 1.5 B in the first six months of 2010 due to a fall in revenues and a rise in spending for social payments, the finance minister announced on Wednesday.

However, for the first 7 months of the year, the deficit decreased to BGN 1.230 B.

In July 2010, Bulgaria registered a monthly budget surplus of BGN 284 M, mostly thanks to the increased rate of absorption of EU funds.

Revenues that flowed into the budget were two times lower than expected and totaled BGN 11.2 B. Expenses also account for 50% of the forecast and stand at BGN 12.7 B.

Despite pledges to stick to a strict fiscal policy, the government has adopted a draft bill for 2010 that 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.

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

The government midterm fiscal policy plans envisage that Bulgaria will halve its fiscal shortfall to 2.5% of gross domestic product next year.

Bulgaria's center-right government was forced to drop plans for euro adoption in April this year after it turned out that the 2009 budget gap was 3.7% of gross domestic product rather than the 1.9 % reported under European Union rule due to unaccounted procurement deals, signed by the previous Socialist-led cabinet.

Bulgaria, the European Union's poorest country, is currently going through its first recession in 12 years after a three-year lending boom stalled and foreign investment dried up.

Earlier this year, the government adopted a package of austerity measures, freezing public pays and pensions in a bid to reduce the bloating deficit.

Bulgaria's government has revised up to 1% its economic growth forecast for this year as recovering exports bolster the expansion.

A recent Eurobarometer poll showed that some 33% of Bulgarians say they approve the government's raising the budget deficit to create more jobs.

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Tags: budget deficit, fiscal policy, euro

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