site.btaGovernment Adopts 2018 State Budget Bill

Sofia, October 30 (BTA) - Bulgaria's Council of Ministers Monday adopted the
2018 State Budget Bill, a three-year national budget framework, and the drafts of the National Health Insurance Fund budget and the public social insurance budget for 2018, Finance Minister Vladislav Goranov told the media on Monday. The bills will be moved to the National Assembly for approval.

"The proposed state budget will make it possible to implement the main political priorities about education, security, social and physical infrastructure and will allow the government bodies and institutions to function normally," Goranov said. He admitted that the pay rise in the public sector cannot match the pace of increase in the private sector. "But this is not necessarily bad news," he noted. As the economy improves, pay levels in the public sector will be rising, which is something that we have been unable to afford since the financial crisis of 2008-2009."

In the medium term, the revenue side of the budget tends to decrease, from 36.2 per cent of GDP in 2018 to 35.5 per cent of GDP in 2020. No appreciable changes in taxes are envisaged during that period. An increase of the excise duty rate on cigarettes will be phased in until the minimum rate reached 177 leva per 1,000 cigarettes by January 1, 2018.

Financing of public spending policies is limited to 37.2 per cent of GDP in 2017 to 35.5 per cent of GDP in 2020, conforming to the targets set for the deficit under the consolidated fiscal programme and the expected level of budget revenues. In the medium term, total expenditures under the consolidated fiscal programme tend downward in GDP percentage terms.

The 2018 budget priorities focus on measures for continuing the reforms in education, defence and security, social and health policy, and holding of the EU Council Presidency in the first half of 2018.

Under the updated medium-term budget forecast for the 2018-2020 period, the minimum monthly wage is to increase from 460 leva in 2017 to 510 leva, effective January 1, 2018, 560 leva, effective January 1, 2019, and 610 leva, effective January 1, 2020.

During that period, financial resources are budgeted for the implementation of most of the major projects under Operational Programme Transport and Transport Infrastructure 2014-2020, such as the Blagoevgrad-Kroupnik and Kresna-Sandanski sections of the Strouma Motorway, rehabilitation of the railway infrastructure, and an extension of Sofia's underground railway system.

Government debt implementation is expected to reach 23,600 million leva by the end of the budget 2017. New internal public debt in the form of government securities of up to 1,000 million leva is planned to be issued in 2018 in order to cover part of the forthcoming debt repayments aggregating 1,600 million leva, including 1,200 million leva maturities of government securities on the domestic market and 400 million leva repayments on the external public debt. The negative net debt financing is expected to result in a decrease of the government debt to 23,500 million leva by the end of 2018 or 22.3 per cent of projected GDP. With the government-debt-to-projected-GDP ratio diminishing over the three-year period, the debt is expected to amount to 23,800 million leva or 20 per cent of GDP by the end of 2020.