Public Sector Salaries and Eurozone Entry Prioritized in Bulgaria's New Budget Plan

Finance | January 28, 2025, Tuesday // 15:42|  views

Kostadin Angelov, the first rotating chairman of the JMC

The Bulgarian Ministry of Finance, led by Minister Temenuzhka Petkova, announced that by February 14, a new draft of the State Budget Act for 2025, as well as the draft budgets for the National Health Insurance Fund and the State Social Insurance, will be submitted to the Council of Ministers. The proposed budget aims to address the financial challenges facing Bulgaria while avoiding salary cuts in the public sector and tax increases. These commitments were reaffirmed during a meeting of the Joint Management Council (JMC), as reported by the GERB press center.

The state budget deficit for the first quarter of 2025 is projected to reach approximately 3.634 billion leva, based on the Ministry of Finance's analysis. For January alone, revenues are expected to amount to 3.684 billion leva, while expenditures and transfers will reach 4.092 billion leva, resulting in a 407 million leva deficit. In February, revenues are estimated at 2.267 billion leva, with expenses projected at 4 billion leva, creating a deficit of 1.736 billion leva. For March, revenues of 3.063 billion leva are anticipated, with expenditures reaching 4.553 billion leva, contributing to a 1.491 billion leva deficit. These figures underscore the significant financial strain the state faces.

In response, the ruling coalition of GERB, the Bulgarian Socialist Party (BSP), "There Is Such a People" (TISP), and Dogan's Movement for Rights and Freedoms (DPS) has emphasized measures to combat the shadow economy rather than implementing salary reductions or raising taxes. During the JMC meeting, it was also highlighted that salary increases are planned for several ministries and agencies, with some increases reaching up to 20% and, in certain security services, exceeding 50%. For example, salaries in the State Agency for Technical Operations (SATO) are set to rise by 75%, while those in the State Agency for National Security (SANS) will increase by over 60%.

The draft budget also reflects broader political debates. Finance Minister Petkova attributed a financial shortfall of 18 billion leva to previous policies under former finance minister Asen Vassilev, a claim Vassilev has denied, stating that the deficit remains within the 3% threshold. He warned that responsibility for any increase above this limit would rest with GERB. Despite these political disputes, the JMC affirmed its stance against public sector salary cuts or increased taxes and reiterated its commitment to prioritizing Bulgaria's entry into the eurozone.

Kostadin Angelov, the first rotating chairman of the JMC, emphasized that joining the eurozone remains a key priority for the government, dismissing opposition claims to the contrary as unfounded speculation. However, criticism from the "We Continue the Change-Democratic Bulgaria" (WCC-DB) party has suggested the ruling majority might be attempting to delay the adoption of the euro. Finance Minister Petkova has declined to request an extraordinary assessment of Bulgaria's readiness for eurozone entry from the European Commission.

In the meantime, the government has explored options to ensure the state's normal functioning until the adoption of the 2025 budget, particularly addressing the need to finance deficits. The GERB press center reaffirmed the coalition's unified stance to maintain social payments, protect public sector salaries, and avoid burdening citizens with additional taxes, while also planning measures to stabilize the economy and improve financial governance.

Sources:

  • GERB press release
  • BNR
  • BNT
  • Sega
  • Radio Free Europe Bulgaria

Tags: Eurozone, Petkova, budget, Bulgaria

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