Bulgaria's government will target a budget deficit of 1.8% of GDP in 2014, equal to BGN 1.47bn (EUR 750mn) in absolute terms, as part of a plan to gradually reduce the gap from the expected 2% of GDP this year to 1.1% of GDP in 2016, according to the 2014 budget draft published online by the finance ministry on Wed, Oct 23.
The state intends to spend BGN 32.35bn next year, up by 1.2% from the estimated expenses in 2013. The bulk of the increase in expenditures will represent higher spending on social programmes and education.
Meanwhile, revenue is expected to grow by 1.6% to BGN 30.86bn. Tax proceeds are seen rising 6.5% to BGN 24.3bn on the back of recovering external demand and improving business climate in the country that should support investment and household consumption. On the other hand, non-tax revenue is projected to fall by 12.4% to BGN 3.32bn.
The debt-to-GDP ratio is expected to reach 22.1% at end-2014, up from an estimated 18.5% as of end-2013. The government plans to borrow BGN 4.4bn in 2014, of which BGN 3bn will be used to roll-over maturing debt and the rest will be used to finance the deficit in that year.
|General govt budget, BGN mn||2013||2014||2015||2016|
|- Tax revenue||22,851.2||24,328.7||25,561.0||27,002.3|
|- Non-tax revenue||3,794.0||3,322.0||3,349.2||3,464.1|
|Expenditures (EU contr. incl.)||31,978.2||32,358.3||33,820.1||35,058.1|
|% of GDP||2||1.8||1.5||1.1|
|Source: Finance ministry|
On Wednesday, the government also released its mid-term budgetary framework for 2014-2016. Real GDP growth is seen accelerating to 1.8% in 2014 from expected economic expansion of 0.6% in 2013, pushed up by domestic demand, which is projected to increase 1.9% (reviving from an estimated drop of 0.9% this year). Furthermore, the rate of growth of exports is projected to quicken to 7.2% in 2014 from 6.8% in 2013.
The growing economy next year will push the rate of unemployment down to 12.6%, from 12.9% in 2013, according to the government's estimate.
|Main macro indicators||2013||2014||2015||2016|
|GDP (nominal, BGN mn)||78,932||81,582||85,728||90,516|
|Real GDP growth, %||0.6||1.8||2.9||3.4|
|HCPI, annual average, %||0.6||1.8||2.1||2.2|
|Current account (EUR mn)||234||-76||-261||-541|
|% of GDP||0.6||-0.2||-0.6||-1.2|
|FDI (EUR mn)||1,548||1,702||1,788||1,931|
|% of GDP||3.8||4.1||4.1||4.2|
|Source: Finance ministry|
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