Brussels to Clear Soon Deficit Offender Bulgaria - Deputy Min

Finance | May 10, 2012, Thursday // 15:02|  views

A view of the European institutions buildings with the EU commission and EU council headquarters. Photo by EPA/BGNES

The European Union's executive will suspend in the short term the excessive budget deficit procedure against Bulgaria as the country has taken adequate steps to correct it, a deputy finance minister believes.

Bulgaria's budget deficit dipped below the European Union limit of 3% of gross domestic product last year because of the government's prudent fiscal management, Deputy Finance Minister Boryana Pencheva told MPs from the European affairs parliamentary committee.

"Eurostat, the EU's statistical agency, already confirmed that Bulgaria's budget deficit was a notch above 2% of GDP in 2011," she added.

According to the deputy minister the European Commission usually suspends the proceedings for excessive budget deficit once the country meets the EU target and shows stable fiscal indices.

"The good news is that Bulgaria has one of the lowest budget deficit in EU and the second-lowest debt in the EU - at the end of 2011, the lowest ratios of government debt to GDP were recorded in Estonia 6.0% and Bulgaria 16.3%," said Pencheva.

The European Commission launched in July 2010 an excessive budget deficit procedure against Bulgaria and 24 other EU member-states to ensure that the countries reduce swiftly their state spending, and keep their budget deficit below 3% of the GDP.

The measure came shortly after Prime Minister Boyko Borisov and Finance Minister Simeon Djankov said the previous Socialist-led government had kept them in the dark over BGN 2.16 B contracts, which pushed the 2009 deficit up from a projected 1.9% to 3.7% of GDP

In the first of its twice-yearly reviews of government finances in the 27-member bloc, Eurostat said the Bulgarian government's budget deficit was 3.9% of gross domestic product in 2010.

Prime Minister Boyko Borisov placed the blame squarely on the shoulders of the country's former Socialist-led administration, saying the government has lied to the EU colleagues about the country's readiness for the euro zone, being unaware of this trap.

The EU's stability and growth pact requires governments to maintain public deficits below 3% of gross domestic product.

Bulgaria's government and the European Commission recently revised downwards their forecast for the economy of the Balkan country, estimating it is to grow 1.4% in 2012 due to worsening growth prospects in key trading partners across Europe and stagnant domestic demand.

Experts however have warned of looming recession. They have criticized the government for refusing to present updated forecasts for the economy's growth this year and adapt the state budget to a more realistic scenario, not ruling out technical recession.

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Tags: European Union, Simeon Djankov, finance minister, Boyko Borisov, Prime Minister, Bulgaria, European Commission, procedure, deficit, excessive, gross domestic product, GDP, budget

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