site.bta2017 State Budget Bill Passes on First Reading

2017 State Budget Bill Passes on First Reading

Sofia, November 18 (BTA) - The National Assembly approved the 2017 State Budget Bill on first reading Friday. The vote was 102-58 with 11 abstentions. The bill, sponsored by the outgoing government, was backed by members of the parliamentary groups of the ruling GERB party, the Reformist Bloc, BDC-Popular Union and Ataka, and one independent MP. The votes "against" came from members of BSP-Left Bulgaria, the Movement for Rights and Freedoms, ABV, and one from the Patriotic Front. The abstentions included nine from the Patriotic Front, one from ABV, and one independent.

BUDGET OUTLINES

The bill projects that budget revenues (including grants and donations) in 2017 will total 21,932,005,400 leva. These include 19,221,600,000 leva in tax revenues.

Expenditures are projected at 11,092,124,100 leva. The total amount includes 8,910,500,000 leva in current expenditures, 2,076,900,000 leva in capital expenditures, 19.2 million leva to increase the contingency reserve (in net value), 14.4 million leva in current and capital transfers abroad, and 71.1 million leva towards contingency costs.

Expenditures for education have been singled out as a priority and set at 3,350,000,000 leva, or 3.6 per cent of GDP. Other expenditures are proposed as follows: economic activities and services - 5,717,800,000 leva (6.2 per cent of GDP); housing construction, public works, public utilities and nature conservation - 2,373,500,000 leva (2.6 per cent of GDP); defence and security - 4,167,700,000 leva, inclusive of reserve funding (4.5 per cent of GDP); and culture, recreation services and religious activities - 620.6 million leva (0.7 per cent of GDP). Bulgaria's contribution to the EU budget will amount to 992.6 million leva.

The state budget deficit is expected to amount to 864.2 million leva. Budgetary flows between municipalities and the central government will increase by 219.2 million leva.

GDP growth is expected to slow down slightly in 2017 to stand at 2.5 per cent. The rate of increase in employment will slow down to 0.6 per cent. Unemployment will decrease at a slower pace and the average unemployment rate will be 7.3 per cent. Inflation is projected at 1.5 per cent.

The government's medium-term budgetary forecast for the period 2017-2019 stipulates increasing the minimum monthly wage from 420 leva to 460 leva as of January 1, 2017 and then keeping it unchanged in 2018 and 2019.

FINANCE MINISTER'S REMARKS

Finance Minister Vladislav Goranov said in the debating chamber of the National Assembly that instead of a government deficit of 1.8 billion leva in 2016, which was projected in the 2016 State Budget Act, state budget performance will be balanced this year, or there may even be a surplus. This means that 2016 may be the first deficit-free year since 2008, he said.

Goranov reported that tax revenues between January and October 2016 increased by more than 1.7 billion leva compared with January-October 2015, with increases recorded in almost all tax groups. Bulgaria's fiscal reserve stands at 14.2 billion leva as at October 31, 2016; if the money that has gone into the Bulgarian Deposit Insurance Fund is added to this amount, it increases to 15.8 billion leva. Discussing the debt programme approved at the end of 2014, the Finance Minister denied allegations that the country has assumed 16 billion leva in new debt. He said the actual amount is a little under 10 billion leva and almost all of it is available in the fiscal reserve.

The proposed state budget for 2017 has the funding necessary to support the basic functions of the government and includes additional money for the welfare sectors and for maintaining the combat worthiness of the Armed Forces, Goranov went on to say. He warned that if the bill is defeated, Bulgaria will be unable to align its excise duty legislation with EU law within the established deadlines and there will be no increase of the minimum wage and of pensions. He urged those who will be implementing the budget to resist populism, refrain from changing taxes, make public spending more efficient and keep the state budget in a balanced position.

OPPOSITION UNHAPPY WITH GROWTH TARGET

According to BSP-Left Bulgaria, the Movement for Rights and Freedoms (MRF) and the ABV, the bill proposes low economic growth which will doom Bulgaria to stagnation.

Roumen Gechev (BSP-Left Bulgaria): The proposed scheme stipulates an unacceptably low level of economic growth, while a country like Romania has projected its own growth at 4.5 per cent. A target of under 3 per cent will keep Bulgaria in the last place in the EU in terms of GDP and living standards. A cut on budgetary expenditures is being proposed for the second straight year. Why should the minimum wage be frozen in 2018 and 2019 after being increased in 2017? BSP-Left Bulgaria will not support the budget on first reading and will withdraw its proposals from the second-reading phase.

Aliosman Imamov (MRF): The proposed budget does not ensure growth, it will perpetuate the stagnation in social development. The scheme has been worked out using statistical tricks. Worst of all, it will break the chain which links investment, employment, incomes and prosperity.

Moustafa Karadayi (MRF): There is no consensus among the mainstream parties, therefore the MRF will not support the bill on first reading.

Mariana Todorova (ABV): Our group will not support the proposed budget scheme. Since this government is going to step down, it is necessary to seek consensus for a different budget in the next National Assembly.

Naiden Zelenogorski (Reformist Bloc): The budget will be supported by the Reformist Bloc.

Roumen Hristov (Reformist Bloc): The scheme is realistic and sustainable, but not as conservative as it ought to be. The low profit tax and the flat income tax are two of only a few advantages of Bulgaria's economic climate and should be preserved.

Martin Dimitrov (Reformist Bloc): Why does the bill propose a 1.4 per cent budget deficit in 2017 if the budget balance in 2016 is expected to be zero? I will not support the bill on first reading.

Stefan Kenov (BDC-Popular Union): The proposed budget is neither leftist nor rightist, it is not GERB's budget - it is a budget for Bulgaria.

Dimiter Bairaktarov (Patriotic Front): The draft budget is conservative and easy to implement. The scheme has not been discussed with our parliamentary group, although political culture requires the opposite. We are talking about economic development, investments, using the budget to channel monetary flows into the economy - but in fact, the easiest and most efficient way to influence the economy in a positive manner is to increase the incomes of retired people and thus boost domestic consumption.

JUDICIAL SYSTEM UNDERFUNDING

Dimiter Ouzounov, representative member of the Supreme Judicial Council (SJC), said in the debating chamber of the National Assembly that the government-projected expenditures in the judicial system for 2017 are lower by 32.7 million leva compared with what the SJC has calculated. According to Ouzounov, the proposed scheme is inaccurate as to increasing staff costs and does not provide funding for current maintenance and capital expenditures.

He said an additional 11.2 million leva is needed to finance basic functions arising from recent amendments to the Judicial System Act - this includes 2.4 million leva towards jurors' pay, 2.7 million leva towards the costs of organizing and holding general meetings to elect SJC members, 3.6 million leva for managing immovable property (including paying rent for buildings), and 600,000 leva necessary in connection with the additional powers of the SJC Inspector. The projected 108 million leva in three-year revenues from the activities of judicial bodies are in keeping with the policy of equal access to justice, Ouzounov said.