Bulgaria's 2013 budget deficit at 1.8% of GDP, below 2% target

By bne IntelliNews February 3, 2014

Bulgaria's consolidated budget deficit stood at BGN 1.45bn (EUR 740.6mn) in 2013, equal to 1.8% of the full-year GDP projection, which is below the 2% target of the government, finance ministry data showed. The lower-than-planned cash-basis deficit resulted from smaller-than-expended expenditures.

Bulgaria's 2013 budget execution, BGN mn Initial plan Amended plan Execution
Revenues and grants 30,589.6 30,382.2 28,981.4
Taxes 23,405.2 22,850.3 22,370.2
Non-tax revenue 3,444.8 3,792.3 3,966.1
Grants 3,739.7 3,739.7 2,645.0
Expenditures (EU contr. incl) 31,689.6 31,975.4 30,429.8
Budget balance -1,100.0 -1,593.4 -1,448.4
% of GDP 1.3 2 1.8
Source: Finance ministry      

Budget revenues in 2013 increased by 5.5% to BGN 28.9bn thanks to the improved economic activity. Proceeds from corporate taxes rose 5.1% to BGN 1.5bn, income tax revenue climbed 2.3% to BGN 2.3bn and VAT revenue (the biggest source of cash to the state's coffers) amounted to BGN 7.4bn - up 3% from the previous year. Proceeds from custom duties surged 24.2% to BGN 146.2mn. 

Nevertheless, the government's actual revenue was BGN 1.4bn short of the BGN 30.4bn target for the year. However, budget expenditures were BGN 1.54 below target, because of which last year's budget gap was smaller-than-expected. 

Expenditures (including Bulgaria's contribution to the EU) rose 9.4% to BGN 30.4bn in 2013 mostly because of higher social welfare spending (due to higher state pension transfers), which increased 7.3% to BGN 12.7bn. Total current spending rose 8.8% to BGN 25.4bn, while capital outlays climbed 11.8% to BGN 4.1bn.

The government of PM Plamen Oresharski (backed by socialist BSP and ethnic Turk MRF) targets 1.8% budget deficit in 2014. The debt-to-GDP ratio is expected to reach 22.1% at year-end, up from an estimated 18.5% at end-2013, as the government plans to borrow BGN 4.4bn in 2014.

Bulgaria's consolidated govt budget, BGN mn 2012 2013 Change, y-y Change, y/y
Revenues and grants 27,469.6 28,981.4 1,511.8 5.5%
Tax revenue 21,523.4 22,370.2 846.9 3.9%
Non-tax revenue 3,578.9 3,966.1 387.2 10.8%
Grants 2,367.2 2,645.0 277.8 11.7%
Expenditures 27,010.5 29,495.7 2,485.2 9.2%
Wages and salaries 4,138.0 4,452.1 314.0 7.6%
Social and healthcare expenditures 1,067.4 1,368.7 301.3 28.2%
Maintenance 4,454.0 4,705.6 251.5 5.6%
Interest expenditures 572.5 688.7 116.2 20.3%
Social expenditure, scholarships 11,878.7 12,750.5 871.8 7.3%
Subsidies 1,232.7 1,429.4 196.7 16.0%
Capital expenditure and net state reserve gain 3,667.1 4,100.7 433.7 11.8%
Contribution to the EU budget 809.3 934.1 124.8 15.4%
Budget balance -350.2 -1,448.4 -1,098.2 313.6%
Source: Finance ministry        

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