Bulgaria’s outgoing government has come under scrutiny over sudden hike in budget deficit in the opening months of 2021.
Bulgaria reported a consolidated budget deficit of BGN656.5mn (€335.7mn) in the first quarter of 2021, equal to 0.5% of the projected end-year GDP.
Bulgaria needs to make an urgent revision of the 2021 budget to find out why it has turned to such a deep deficit in the past month, former finance ministers Simeon Dyankov and Milen Velchev said as quoted by Investor.bg.
According to Dyankov, an urgent revision is needed in order to show where several billion levs were spent as the finance ministry has not provided clear information about that.
Velchev noted that the spending in the first quarter of 2021 was significantly higher and for the first time in years Bulgaria’s budget ran a deficit in this period.
Meanwhile, Bulgaria’s new parliament asked outgoing Finance Minister Kiril Ananiev to provide information on the budget spending on April 16. However, the hearing could not begin as the members of the Gerb party, of which Ananiev is a member, started shouting and preventing it.
On April 18, Ananiev explained that the government spent BGN5.1bn (€2.6bn) to deal with the coronavirus pandemic and claimed that the budget will turn to surplus in April.
Ananiev explained that the budget swung to deficit due to the spending on social measures related to the coronacrisis. He also said that the fiscal reserve will reach BGN8bn, which is almost twice the BGN4.5bn minimum required.
However, Vladislav Panev, a prominent economist and member of the opposition Democratic Bulgaria, commented that the expected compensation of the deficit in April is not good news, because traditionally in the first months of the year revenue is much higher than spending and this trend will change in the following months.
Panev noted that the next government will face significant challenges and will be forced to take out loans to patch the budget gap.
“Minister Ananiev has escaped the difficult for him question why the inviolable funds are more than the amount of fiscal reserve. [This is] really important topic for the past months. There is the pebble in the shoe. From this many economists judge that there is no free money. And that loans will be drawn,” Panev wrote on Facebook.
He added that the task of new political formations in parliament is to demonstrate competence and prove they can remove Bulgaria from the position of the EU’s poorest member state.