Bulgarian FinMin at Final Stretch of 'Stability Pact'

Bulgarian Finance Minister, Simeon Djankov, pictured as he delivers a lecture before Harvard University students and professors. Photo by finmin.bg

Bulgaria's Deputy Prime Minister and Finance Minister, Simeon Djankov, informed over the weekend he has revised and improved his Financial Stability Pact.

The changes include making it more difficult to up direct taxes with the required 2/3 of the vote in the Parliament; a budget deficit no larger than 2%, and State expenditures up to 40% of the Gross Domestic Product (GDP) and the EU funds.

The changes will be discussed next week with all parliamentary represented parties, except the main opposition formation – the Bulgarian Socialist Party, BSP.

Djankov announced the changes during a meeting with representatives of the business from the southern city of Yambol, where he also presented the main tasks his institution has been working on in the last three months – creating and modernizing infrastructure along Bulgaria's most important cultural and historical sites; the opportunities to increase export of Bulgarian food based on analysis of global trends; the creation of a sound strategy for the development of the country's farming.

When prompted by the meeting participants, the Minister said his team is also working on amendments to the Public Procurement Orders Act, which are to be submitted for discussions by the cabinet within the next 2-3 weeks.

Djankov explained he favors the registration of all companies under the Value Added Tax (VAT) Act, regardless of the turnover, but added he was afraid it might lead to increased VAT draining.

The three main pillars of Djankov's Financial Stability Pact to be solidified via Constitutional amendments are: introducing a limit to the budget deficit; restricting the ability of the state to redistribute public funds as a percentage of the GDP, and introducing a qualified majority vote in Parliament to change Bulgaria's direct taxes.

The "Financial Stability Pact" was first announced by Djankov on February 8 at a lecture at the New Bulgarian University in Sofia following the US tradition in which crucial policy speeches are delivered at academic institutions. During his visit to the US, which took place between February 27 and March 6, the Bulgarian Finance Minister presented the measures at Harvard University.

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