Shadow Economy in Bultgaria at 30%: Government Pushes Ambitious Revenue Plan

At today's government meeting, scheduled for 4:00 p.m., Bulgaria's State Budget is expected to be adopted. The budget, which has already been reviewed by social partners, will be submitted to the National Assembly for approval after the Cabinet gives its approval. The budget has been planned with a deficit of 3% of GDP, which is the maximum permissible under the criteria for adopting the euro.

Minister of Social Affairs, Borislav Gutsanov, referred to the financial framework as a "rescue budget," while Minister Temenuzhka Petkova emphasized that the draft budget does not raise taxes or social security contributions, but focuses on boosting revenues. Petkova noted that the revenues are set at ambitious levels to address the financial challenges the country faces, especially with the country’s imminent move towards the eurozone.

One of the major points raised by Minister Petkova was the size of the shadow economy, which she pegged at 30% of Bulgaria’s GDP, placing the country second in the EU. This, she explained, directly impacts VAT revenues, a key area where efforts will be focused by the revenue agencies.

The unions and employers have expressed differing views on the budget. While acknowledging the complexity of the situation, Dimitar Manolov of KT "Podkrepa" noted that they did not expect major changes. On the other hand, Dobri Mitrev from the Bulgarian Industrial Chamber remarked that although no one seemed entirely satisfied with the budget, it brings Bulgaria closer to joining the eurozone. He also expressed hope that Eurostat would provide the necessary figures today to move forward with submitting a convergence report to the European Central Bank and the European Commission by the end of the month.

While the budget aims to meet the criteria for eurozone membership, there remains some uncertainty about its overall reception, with the political situation over the past few years contributing to a sense of division on its contents.