The general budget posted a deficit of BGN 536.5mn (EUR 274.3mn) in January 2013, up by 80% compared to the deficit reported in the same month of the previous year, according to preliminary data of the finance ministry. The gap accounted for 0.7% of the full-year GDP projection as compared to 0.4% of GDP a year earlier. The deterioration came on the back of 6% annual drop of budget revenues. In CPI-deflated terms, the revenues drop was even larger - close to 10%. Tax revenue inflow shrank by 7.9% y/y in January but the ministry expects that the tax proceeds decline is only temporary (due to amendments in tax declaration deadlines) and will be compensated in the coming months. Total expenditures (including the country's contribution to the EU budget) rose by 5.8% y/y in January. The annual increase in expenses was mainly due to larger interest payments in the first month of the year, in line with scheduled government debt service payments. The general government budget ended 2012 with BGN 350mn (EUR 179mn) deficit, representing 0.5% of GDP. Bulgaria will target a 1.3% of the projected full-year GDP budget deficit in 2013, according to 2013 budget law.
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