Bulgaria Parliamentary Body Thrashes Out Budget Draft 2011

Finance | November 25, 2010, Thursday // 10:02|  views

Bulgarian scientists and researchers have slammed the draft budget for next year as "the budget of ignorance." Photo by BGNES

Bulgaria's parliamentary budget committee will vote at second reading the country's budget draft for next year, two weeks after it was approved by the MPs.

Bulgaria is planning to sell bonds amounting to EUR 1 B on the international market in 2011 to shore up its finances, according to a finance ministry draft paper.

Bulgaria aims to have a budget deficit of 2.5% of gross domestic product and a growth of 3.6% in 2011, according to the budget draft.

In budget 2011, financing is going up the most in the social assistance, defense and health care sectors, according to the draft.

Between the two readings the draft budget will have to take into account the increase by 1.8 percentage points in social contributions payments, which was agreed by the government, representatives of the employers and trade unions in the middle of October.

Analysts say Bulgaria's budget 2011 resembles its predecessor in its overly optimistic forecasts and risks. According to them the government's economic-growth estimate for 2011 will be difficult to achieve as credit growth remains moribund and consumer demand weak.

In June, the center-right cabinet revised the state budget increasing its 2010 target for deficit to 4.8% of GDP on a cash basis and 3.9% of GDP under EU accounting rules, far wider than initial estimates.

The center-right government dropped its plans for applying for ERM II after raising the alarm that the 2009 budget gap was 3.7% of gross domestic product rather than the 1.9 % due to unaccounted procurement deals.

Bulgaria's economy contracted by 3.6% on an annual basis in the first quarter of 2010 from 5,9% in the previous quarter, but the government hopes for a 1% economic growth for this year as recovering exports bolster the expansion.

Bulgaria boasts one of the lowest public debt-to-GDP ratio among European Union member states at about 15%.

Economists are cautious in their forecasts for Bulgaria's economy and say it will remain in recession or be about zero this year.

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Tags: growth, budget deficit, growth, recession, GDP, VAT, Boyko Borisov, Simeon Djankov, finance minister, Bulgaria, budget, budget draft, 2011


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