Bulgarian FinMin:I Bet My Career on Budget 2012, Further Cuts Likely

Bulgaria’s FinMin Simeon Djankov is pictured here next to a photo of a meatless pizza, which he famously used as a metaphor for the austerity 2010 budget. Media have described budget 2012 as a meatless pizza too, but even without olives. File photo

Bulgaria's finance minister has fiercely defended the austerity draft budget for 2012, saying that its failure would spell the end of his term in the government.

"I bet my career as a minister on this budget," Simeon Djankov told the morning broadcast of Nova TV channel on Friday.

"If the government steps back from its demands for a later retirement in the interior and defense ministries and a cut in their benefits it will prove to be a leftist government," the minister pointed out, referring to the cut by BGN 60 M, which analysts have described as symbolic.

"I am a right-wing economist and I would have no reason to serve in a leftist government," Djankov said.

He warned that the government may be forced to consider an even more conservative budget if the crisis in Italy and Greece does not ease within the next couple of weeks.

Bulgaria's government approved on the last day of October the draft budget for 2012, which aims at a budget deficit of 1.35% of gross domestic product, a growth of 2.9% and inflation of 2%.

The government hopes that bringing down the budget deficit will shield the economy from the blows of the European debt crisis.

Spending is forecast at 35.4% of GDP, or BGN 29 B, while revenues are expected to total BGN 28.7 B, or 35.2 percent of GDP, according to the draft budget.

The government may sell up to EUR 1.0 B in bonds on the international markets next year to finance a bond that matures in early 2013.

It plans to issue BGN 1.2 B on the domestic market.

The government decided to increase the minimum monthly wage from BGN 270 to BGN 290 by the second quarter of next year.

Two years ago Bulgaria's finance minister Simeon Djankov famously used a meatless pizza as a metaphor for the austerity 2010 budget. Local media have described budget 2012 as a meatless pizza too, which is however even not decorated with olives.

Driven by strong exports, as well as the good performance of the industry and services sectors, the Bulgarian economy has started to expand, but too weakly and unsteadily.

In the middle of October Bulgaria's government sharply revised downwards its economic growth forecast for next year from 4,2% to 2,5%, citing the slow-down in Western Europe and in particular Germany, the country's biggest trading partner.

The economy expanded by 2% in the second quarter on an annual basis, down by 1.4% in comparison with the previous quarter, which marked the first considerable increase in economic growth since the country plunged into a recession. The seasonally adjusted GDP edged up by 0.3%.

The government expects this year's growth to be 2.8%.

The International Monetary Fund recently downgraded its forecast for the 2011 growth of the Bulgarian economy to 2.5% from a projected 3% estimate made at the beginning of the year.

Meanwhile the European bank for Reconstruction and Development (EBRD) lowered its annual economic growth forecast for Bulgaria from 3.1% to 2.3% in 2011.

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