Bulgaria Starts 2010 with Monthly Deficit of BGN 477 M

Finance | March 1, 2011, Tuesday // 17:27|  views

Bulgaria's FInance Minister Simeon Djankov has the toughest job in the country but appears he himself appears to be sufficiently tough. Photo by BGNES

Bulgaria registered a monthly budget deficit of BGN 477.3 M on cash basis in January 2011, according to latest data of the Finance Ministry.

The monthly deficit was formed by putting together the deficit of BGN 394.7 M from the consolidated fiscal program of the state budget, and a deficit of BGN 82.6 M in Bulgaria's EU-transactions (i.e. its contribution to the EU budget vs. the absorbed EU funds.)

The BGN 477.3 M deficit in January 2011 is still a minor improvement on an annual basis as in January 2010 Bulgaria had a deficit of BGN 499.1 M. In December 2010, Bulgaria registered a monthly deficit of almost BGN 1 B, while in November 2010 it had a surplus of BGN 36.5 M.

The Finance Ministry has explained the high deficit for January 2011 by pointing out that it is mostly the result of the interest payments for Bulgaria's foreign debt amounting to BGN 234.2 M.

It says that regardless of the higher interest payments, Bulgaria's consolidated spending in January 2011 was 4.2% (BGN 95.3 M) smaller than in January 2010.

The total amount of state revenues and foreign aid in January 2011 was BGN 1.675 B, or 6.4% of the projected revenue for 2011.

The tax income (including insurance payments) amounted to BGN 1.440 B (85.9% of the total revenues). BGN 223 M were raised from direct taxes, which 5.9% of the projected sum for 2011.

The income from indirect taxes was BGN 802.3 M, which is 7.7% of the year projection. Of those, VAT revenues amounted to BGN 471 M, or 7.3% of the 2011 estimate; excise duties in January brought to the Bulgarian budget BGN 323.2 M, or 8.5% of the 2011 projection; and customs duties generated BGN 8.2 M, or BGN 8.2% of the expected amount for the year.

Other taxes (on property, etc) raised BGN 43.2 M, or 5.7% of the 2011 projection. The income from social security and health insurance payments amounted to BGN 371.3 M, which is 6.5% of the annual estimate.

Non-tax income and foreign aid amounted to BGN 235.6 M in January, or 4.3% of the projected 2011 amount.

Bulgaria's state spending, including its contribution to the EU budget, amounted to BGN 2.152 B in January, which is 7.6% of the total expenditure projected for 2011.

Compared with January 2010, the state spending in January 2011 featured smaller capital, subsidy, and salary spending, while the healthcare expenditures increased.

The non-interest spending amounted to BGN 1.740 B (7.7% of the 2011 projection), the capital spending including the net increase of the state reserve were BGN 118 M (3.2% of the 2011 amount), and interest payments were BGN 234.2 M – 35.4% of the total projection for 2011.

These included BGN 186 M in interest on foreign loans, and BGN 48 M in interest on domestic loans.

Bulgaria's contribution to the EU budget was BGN 59.7 M in January 2011 according to regulation 1150/2000 of the EU Council.

Bulgaria's fiscal reserve stood at BGN 5.4 B at the end of January compared with BGN 6 B at the end of December 2010.

The Finance Ministry says that the factors that affected the fiscal reserve negatively were the January deficit and the financing of state bonds in the amount of BGN 300 M. Together with the interest payments of some BGN 200 M, Bulgaria's debt payments amounted to more than BGN 500 M in January.

Bulgaria registered a budget deficit of 3.9% in 2010 instead of the forecast 4.8%. 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.

After in mid June 2010, Bulgaria had to revise its state budget for the first time in 14 years, and even though the January 2011 deficit is substantial, it is still unclear whether it might have to go for a mid-year revision of the 2011 budget.

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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