The collapse of Corporate Commercial Bank (Corpbank) last year and the subsequent payout of insured deposits by the Bulgarian Deposit Insurance Fund (BDIF) has resulted in a huge budget defict for Bulgaria, according to revised data, announced on October 21. However, the government debt level remained largely unchanged.

Following an analysis by Eurostat in cooperation with the Bulgarian National Statistics Institute, BDIF has now been reclassified inside the general government, leading to an increase in the 2014 budget shortfall to 5.8% of GDP from previously estimated 2.8%, the two institutions said in separate statements. Thus, Bulgaria, which has long been praised for its macroeconomic prudency, racked up the fourth largest budget gap in the EU after Cyprus (8.9%), Portugal (7.2%), and Spain (5.9%).

In nominal terms, the 2014 deficit was revised up by BGN2.6bn (€1.3bn) to BGN4.8bn. BDIF has paid out some BGN3.66bn to guaranteed depositors in the country's once-fourth-largest-bank since December 4, 2014.

Bulgaria’s finance ministry said it does not expect the launch of an excessive deficit procedure against Bulgaria, because BDIF’s reclassification will not affect the deficit targets for the coming years. Bulgaria aims to trim the shortfall to around 2% of GDP next year from a projected 3% this year.

Meanwhile, the revised estimates reduced Bulgaria's government debt by BGN130mn to BGN22.56bn at end-2014. The debt-to-GDP ratio was thus 27%, significantly up from 18% at end-2013, but still one of the lowest in the EU. As at end-August, Bulgaria’s government debt was equal to 28.4% of the projected 2015 GDP, according to finance ministry data.