site.btaDeficit of Lv 623.5 Mln Budgeted in 2018 State Budget Bill

Sofia, November 9 (BTA) - Parliament adopted on first reading 126-96, one abstention, the State Budget Bill for 2018. The Bill was supported by the MPs of GERB, United Patriots and Volya, while BSP for Bulgaria and the Movement for Rights and Freedoms (MRF) were against. One Left MP abstained.

The budgeted deficit is 623.5 million leva, 240.6 million leva less compared to 2017.

The revenues and grants are projected at 23,515.8 million leva, which is by 1,583.8 million leva more year-on-year. The increase is due to the higher tax and non-tax revenues.

The targeted expenditures for 2018 amount to 11,923.3 million leva, as the year-on-year increase is 831.2 million leva, of which 538.7 million leva are for current expenditures and 292.5 million leva for capital expenditures. The net budget transfers amount to 11,082.1 million leva, 370.7 million leva up from last year.

The contribution of the Republic of Bulgaria to the EU budget for 2018 will be 1,133.9 million leva or 1.1 per cent of GDP.

The GDP for 2018 is projected at 105,609 million leva, while the economic growth is expected to slightly slow down to 3.9 per cent. Next year the level of unemployment is expected to drop to 6.2 per cent. The inflation target is 1.6 per cent and the one for investments - 4.3 per cent.

Regarding the consolidated fiscal programme (CFP), the cash-basis balance is expected to be negative and to amount to 1,100 million leva or 1 per cent of the forecast GDP.

Expenditures of 2,478.6 million leva are budgeted for executive and legislative authorities, part of the executive agencies and commissions and for funds in the field of science within the CFP for 2018.

The budget target for defence and security is 4,451 million leva.

The allocation for education is 3,840.2 million leva and for healthcare - 4,712 million leva. The budgeted expenditures for social insurance, assistance and care within the CFP are 13,071.1 million leva.

The budget of the judiciary for 2018 proposed by the Supreme Judicial Council envisages revenues and grants to the amount of 116 million leva, or 9 million leva less compared to 2017. The total amount of expenditures is 629.2 million leva, or 64.2 million leva up compared to the 2016 budget.

Finance Minister Vladislav Goranov presented the draft budget in the plenary hall. He described it as "feasible budget which takes care of the youth through the expenditure part; provides, albeit not always enough, for the people who cannot take care about themselves - the elderly people, which is not, however, at the expense of those who generate the wealth".

Some 40,000 million leva more will be redistributed through the revenue part of the budget, Minister Goranov also said. The GDP is expected to exceed 100,000 million leva for the first time. Taxes will not be changed as the only amendment is aimed at attaining the minimal excise duty rates for the tobacco, he added. According to the schedule agreed with the social partners, the social insurance contribution will increase by one per cent in 2018.

Goranov also said that the quality of the workforce has been identified as a problem and, therefore, the government keeps on investing in the human resources. There is actually no unemployment on the labour market. There are vacancies for which no adequately qualified staff could be found, he noted.

"We are investing extra money in health care, although the person who will prescribe the right cure for Bulgaria's ailing health care is yet to be born," said Goranov.

Quite a few sectors will see a pay rise, which will not be equal for all. Incomes in Bulgaria are lower than in the countries it is trying to catch up with, but it is not the budget that increases incomes - it redistributes less than 40 per cent, he said. Turning to the opposition, he added: "If you want us to redistribute more, we should go back to your position in favour of levying higher taxes [on the rich]."

Goranov said the government should work towards further lowering the budget deficit. The CFP deficit is projected to go down in 2018, which will help to reduce the debt. "In the coming years we will only repay debts at maturity and will not issue new debt on the international markets," said the Finance Minister.

Education and Science Minister Krassimir Vulchev said that if Bulgaria is to have a good education, it needs good teachers. "Tomorrow's investment in education begins with today's investment in teachers," he said.

The government coalition said the 2018 budget would continue the economic growth.

GERB Floor Leader Tsvetan Tsvetanov said the majority in Parliament is stable because it trusts Boyko Borissov's cabinet and all the ministers. "Given these parameters, no way can an opposition move for a vote of no confidence in the cabinet," said Tsvetanov, urging the opposition not to hamper Bulgaria's EU Council Presidency in the first half of 2018.

The opposition Bulgarian Socialist Party (BSP) and Movement for Rights and Freedoms (MRF) said the budget showed the government badly lacked a vision for reforms, and called it "a budget of stagnation".

The MRF said their analysis showed a risk of overheating of the economy and a dire need for domestic and foreign investments. Yordan Tsonev (MRF) noted that the good economic growth of about 4 per cent was mostly driven by domestic consumption. He singled out the administrative snags to foreign investments.

"There is no health care system in the world with a single health insurance fund; at the same time Bulgaria has 52 universities," Tsonev said, giving examples of unreformed sectors.

While one billion leva has been allocated for pay rises, the net effect will be about 420 million leva because people will pay 450 million leva in higher excise duty on cigarettes, higher minimum contributory incomes and retirement contributions, according to Tsonev.

BSP leader Kornelia Ninova said the budget breakdown showed it was a budget of stagnation. She cited four sociological studies which identified the public's serious concerns: health care, education, incomes and security.

"The government's budget policies are not without an alternative, we will come up with alternatives between the two readings," said Ninova.

The Left suggests that hospitals should not be corporations; the "money follows the pupil" principle in education should be scrapped; and progressive income tax should be introduced.

The BSP listed election promises which the government coalition had not delivered: there are no policies for State and municipal health care in the smaller regions; the proportion of school dropouts is rising; the share of social welfare payments is falling; around 3 million people earn 670 leva a month on average; and the personnel shortage in the armed forces and the Interior Ministry is 6,000 and 5,000 people respectively.

Reacting to the BSP's statements, the United Patriots said that this is the first state budget to prioritize vocational education and that more than 18,000 potential dropouts had gone back to school.