Bulgarian PM, FinMin Mull Loan, Budget Update

Finance | July 5, 2013, Friday // 12:43|  views

Bulgarian Finance Minister Petar Chobanov, photo by BGNES

Prime Minister Plamen Oresharski presented Friday a general fiscal and economic picture of the situation in Bulgaria and argued before MPs why budget actualization is required.

"The last 4 years, from the mid-2009 until the government of the Citizens for European Development of Bulgaria party, GERB, resigned at the end of February this year, can be characterized as a period of substantial worsening of the fiscal standing of the country," Oresharski said.

"For this period, public finances deteriorated by nearly BGN 8 B. The Fiscal Reserve shrunk by about BGN 4 B and at the end of February it even dropped to BGN 3.9 B. For the same period, the government debt increased from BGN 10 B in the middle of 2009 to BGN 14 B by the end of February this year. Contracts have been signed for over BGN 1.1 B to be paid by the end of the year, but half of this amount was not planed in the budget. The hospitals owe BGN 350 M," Oresharski said.

The total obligations of the government amount to BGN 3 M. State companies register increased debt as well with the 12 largest ones owing BGN 5.4 B total. Of them 8 are in the energy sector with a debt of BGN 4.6 B.

Oresharski informed that for the first 5 months of 2013, revenues from the Value Added Tax, VAT, are only 37.8% of the planned, while those from excise duty - only 33.8%.

In the same period, expenditures in the amount of BGN 357 M have been approved, form them BGN 209 M for emergencies, which has depleted the opportunities of the new Cabinet to be flexible.

"We already cut expenditures of State institutions by 5%, but this will hardly help. I am certain that by the end of the year we will face months when expenditures will be much higher than the revenues, even with the measures we are undertaking to improve the collection of the latter, thus the need to update the budget," said the PM, adding the recently announced social assistance package had nothing to do with the update.

He added that the only option to move forward without a budget actualization would be to act like GERB and not pay contracted amounts and to continue the detrimental policy of prioritizing the fisc on the expense of economic development.

Meanwhile, Finance Minister Petar Chobanov made a statement on a possible loan.

"The new loan will be enough to cover the shortfall of revenues and to provide a buffer for the beginning of 2014, so as not to repeat the issues from the beginning of this year," he said.

"The first reason why actualization is needed is the poorly budgeted revenue, as it exhausts the buffer for a new debt," he also said.

Given that we have poorly budgeted revenue, the gaining will not come, but funding must be provided somehow– this will happen partly with a new loan, which will fit in the limit for State debt – BGN 1 B," Chobanov stated.

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Tags: Economics, revenue, Petar Chobanov, Financial Minister, National Assembly, Plamen Oresharski, Prime Minister, finances, Bulgaria, loan, debt, GERB


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