Bulgaria's Budget Deficit Climbs to BGN 750 M in Jan-Feb 2010

Finance | April 1, 2011, Friday // 14:07|  views

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

Bulgaria registered a deficit of BGN 750 M on cash basis in the first two months of 2011, according to fresh data of the Ministry of Finance, which is higher than the expectations of Finance Minister Simeon Djankov.

In February, Bulgaria had a deficit of BGN 273.2 M, after registering a deficit of BGN 477 M in January. Just two weeks ago, Bulgaria's Finance Minister said he expected a combined deficit of BGN 650 M for January and February, with the latest data showing the deficit exceeds his forecast by BGN 100 M.

In the first two months of 2010 Bulgaria had a budget deficit of BGN 1.398 M, BGN 647.6 M more than in January-February 2011.

Bulgaria's balance on its consolidated budget in February 2011 consists of a national budget deficit of BGN 796.3 M, and a surplus of BGN 46 M in Bulgaria's incoming foreign assistance, primarily EU funds.

At the end of February 2011, Bulgaria's state budget registered a total revenues of BGN 3.3 B, or 12.6% of the 2011 projection.

Compared with the same period of 2010, the state revenues grew by 6.6% (or BGN 205 M). The Finance Ministry says the growth comes primarily from higher income from VAT payments, which grew by 21.1% (or BGN 144.5 M) in the first two months of 2011 year-on-year.

The income from direct taxes and excise duties is about the same as in January-February 2010.

Non-tax revenues grew by BGN 55.3 M year-on-year thanks to increased collection of state fees, and a higher amount of incoming EU funding.

The total tax revenues for the first two months of 2011, including income from social security payments, amount to BGN 2.75 B, which is 83.4% of the total revenues.

Direct taxes brought the Bulgarian budget a total of BGN 481.5 M, or 12.7% of the 2011 projection. Indirect taxes generated BGN 1.409 B, or 13.5% of the estimated amount of 2011.

VAT income amounts to BGN 828.6 M, or 12.8% of the projection of the 2011 State Budget Act.

Excise taxes generated BGN 558 M, or 14.7% of the total sum expected in 2011; customs duties brought the budget BGN 21 M, or 21% of the projection for the year.

Income from other taxes such as property tax generated BGN 78.3 M, or 10.4% of the projection.

Bulgaria's state income from social security and health insurance payment in the first two months of the year are BGN 786.5 M, or 13.7% of the total 2011 projection.

Non-tax revenues and foreign aid amounted to BGN 547.7 M, or 9.9% of the 2011 estimate.

Bulgaria's state spending including its contribution to the common EU budget amounted to BGN 4.053 B in January-February 2011, or 14.4% of the total projected 2011 spending.

Compared with the first two months of 2010, Bulgaria's state spending declined by 9.8% (or BGN 442.4 M) in January-February 2011.

Capital spending, subsidies, and spending on salaries and social security payments are lower year-on-year, while health insurance payments have increased.

Current non-interest spending amounts to BGN 3.336 B (14.8% of the annual projection), capital spending – to BGN 251.5 (6.8% of the 2011 projection), interest payments – to BGN 254.9 M (38.6% of the annual projection).

Bulgaria's contribution to the common EU budget in accordance with Regulation 1150/2000 of the Council of the EU amounted to BGN 211 M in the first two months of 2011.

Bulgaria's fiscal reserve amounted to BGN 5.1 B as of February 28, 2011, a decline of BGN 300 M.

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.

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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