Bulgarian finance minister says budget deficit to reach 2% of GDP in 2013

By bne IntelliNews July 8, 2013

The budget deficit for this fiscal year is likely to reach 2%/GDP (BGN 1.7bn) against a current target of 1.3%/GDP (BGN 1.1bn) as the government is looking for additional BGN 500mn (a slight drop from the previously discussed figure of BGN 511mn) to cover unexpected costs, finance minister Petar Chobanov announced in an interview for the Bulgarian National Radio. Thus, after the revision, Bulgaria's budget gap will still adhere to the Maastricht criterion for a 3% of GDP ceiling on government budget deficits.

The extra funds will not be used for an increase in social expenditure but to cover gaps resulting from overly optimistic revenue forecasts of the previous government, Chobanov noted. The additional funds are also need to repay outstanding liabilities to businesses and to speed up the process of VAT reimbursement (unpaid reimbursements currently amounting to BGN 315mn).

We remind that on July 5, finance minister Chobanov announced government's intentions to issue BGN 1bn (EUR 511mn) in new public debt by the end of the year in order to cover the higher than initially projected budget deficit.

In a recent op-ed piece by Desislava Nikolova, chief economist of the Institute for Market Economics, a Bulgarian think-tank, an argument is made that the government is facing problems not with the revenue but with the expenditure side of the budget. Public expenditure on wages has grown by 8% for the first five months of 2013, while a 4% rise was planned for the whole year. Similarly expenditure on maintenance has grown by 7% for the first five months, while the planned growth was just 1% for the whole year.

Following a regular staff mission to Bulgaria, the IMF said on July 3 that the 2013 budget deficit target is achievable. The Fund welcomed the planned increase in targeted social protection but only within the existing budget envelope. The country should continue with the fiscal consolidation, as described by the EU's Convergence Program, according to the IMF.

According to latest budget data, the general government budget this year is falling only slightly behind last year's performance. The budget posted a BGN 45.5mn surplus at end-May versus BGN 67.4mn at end-May 2012.

Related Articles

EU asks CEE to comment on Russian gas promises

The European Commission has invited comments from Central & Eastern European states on proposals put forward by Russian gas giant Gazprom to meet competition concerns. Visegrad and the Baltic ... more

EBRD says 2016 net profit was around €1bn

The European Bank for Reconstruction and Development (EBRD) said it made a net profit of around €1bn in 2016, up by a quarter from the €802mn it made in ... more

New Bulgarian government reports irregularities in defence contracts

A check on public procurement under Bulgaria’s previous centre-right government has revealed dozens of violations in the defence ministry, caretaker Prime Minister Ognyan Gerdzhikov said on ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss