Bulgaria's 2010 Budget Deficit Better Than Expected, Still Above 3%

Finance | January 12, 2011, Wednesday // 12:39|  views

Bulgaria's Finance Minister Djankov (left) with PM Borisov and Revenue Agency head Stefanov (right). Djankov's administration seem to have performed better than the grim 2010 scenarios had forecast. Photo by BGNES

Bulgaria registered a budget deficit of 3.9% in 2010 instead of the forecast 4.8%, according to preliminary data released Wednesday by the Finance Ministry.

According to estimates of the Finance Ministry, Bulgaria's deficit under the consolidated fiscal framework on cash basis was BGN 2.8 B in 2010, or 3.9%.

The accrual deficit, which is measured according to EU accounting rules, was 3.6%. According to Bulgaria's revised 2010 State Budget Act approved in June, the expected 2010 budget deficit was 4.8%, or BGN 3.691 B.

Thus, even though its state finances performed better than expected, Bulgaria still failed to keep its deficit under 3% as required by the EU Stability and Growth Pact; after its 2009 deficit exceeded 3%, since the summer of 2010, Bulgaria has been placed under the EU Excessive Deficit Procedure, a program for reducing the deficit below 3%.

The Finance Ministry said on Wednesday that the state revenues raised in 2010 were slightly over 100% of the projected figure. The fiscal reserved amounted to BGN 6 B at the end of December 2010.

The Ministry will provide detailed data about the 2010 state budget performance till the end of December 2010 in a special bulletin on January 31, 2011.

The preliminary state finances data presented Wednesday indicates that Bulgaria's budget deficit grew by an entire BGN 1 B and that the fiscal reserved declined by BGN 400 M in December 2010 after the previous data set showed that Bulgaria registered a budget deficit of only 2,65%, or BGN 1.866 B in the first eleven months of 2010.

As it stood at BGN 6.4 B at the end of November, and BGN 6 B at the end of December, Bulgaria's fiscal reserve was depleted by a total of BGN 1.67 B in 2010. This is still better than the worst case scenario in which the government envisaged a possibility to deplete it down to BGN 1.5 B.

Bulgaria's consolidated budget fiscal program actually saw a deficit of BGN 1.967 B in the first eleven months of 2010 but part of that is covered by the BGN 101.3 M surplus in Bulgaria's EU dealings.

In November alone, the Bulgarian state budget registered a surplus of BGN 36.5 M.

In the first 11 months of the year, Bulgaria's state revenues amounted to BGN 21.355 B, or 87% of the year forecast. The total tax revenues are BGN 16.985 B, which is 79.5% of the total state revenues in that period.

Bulgaria's state spending in first eleven months of 2010, including Bulgaria's contribution to the EU budget, amounted to BGN 23.221 B, which is 83.5% of the projected amount.

Final Eurostat data showed that Bulgaria ended 2009 with a deficit of 4.7%, while the 2010 projections were for a deficit of 4.8%.

In early December 2010, the Bulgarian Parliament approved the 2011 state budget, which provides for an economic growth of 3.6%, and a budget deficit of about 2.75% of the GDP, barely below the 3% threshold of the EU Stability and Growth Pact, which is also required for ERM II and euro zone accession.

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Tags: state budget, budget deficit, fiscal reserve, Finance Ministry, state spending, tax revenues, taxes, VAT, 2010 Budget Revision Act, 2010 budget


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