site.bta Economists Frown on Inefficient Spending in Healthcare, Security and Judiciary

Economists Frown on Inefficient Spending in Healthcare, Security and Judiciary

Sofia, November 17 (BTA) - One of the main drawbacks of the
draft national budget for 2016 is that it proposes large and
inefficient spending in the systems of healthcare, security and
the judiciary, Dessislava Nikolova, Chief Economist at the
Institute for Market Economics (IME), told a BTA-hosted news
conference on Tuesday.

Nikolova noted that the Medium-Term Fiscal Framework 2016-2018
does not show clear commitments to structural reforms.

The aggregate government deficit in the three years between 2013
 and 2015 is expected to amount to 7.4 billion leva, which is
more than the 5.3 billion leva deficit of the previous four
years (2009 to 2012), which were a period of economic recession
and recovery, IME experts said.

IME proposed an alternative national budget scheme for 2016,
envisaging a zero government deficit, a thoroughgoing reform in
the sector of justice and internal order, breaking the monopoly
of the National Health Insurance Fund, and streamlining the
budgets of the Ministries of Interior and Defence.

The Institute further proposed abolishing the taxes on dividend
and on bank deposits and reducing the tax on sole
proprietorships from 15 to 10 per cent. It is necessary to limit
 the tax breaks for farmers and tourism operators, the experts
said, adding that 20 per cent of the proceeds from personal
income tax should flow to municipalities.

IME Senor Economist Peter Ganev said total public spending can
be reduced by 10 per cent, and government subsidies, including
national co-payments for agricultural production, can be cut
down. Public assets could be managed more actively by
privatizing debt-ridden state companies, such as Bulgarian Posts
 and Bulgarian State Railways, Ganev said. IME estimates that
the total positive effect of these changes would be 1.4 billion
leva, not counting privatization proceeds.

The Interior Ministry system should be reformed to make police
work more efficient and ease the pressure on the public purse,
IME proposed. Two percentage points of the health insurance
contribution should be channelled towards a private health
insurance fund in order to break the monopoly of the National
Health Insurance Fund. According to Ganev, the practice of
increasing social insurance thresholds by administrative means
should be abolished immediately, and the thresholds themselves
should be removed later on. IME advised against pursuing a
planned increase of pension insurance contributions, saying it
is necessary to encourage a gradual rise in personal savings,
which will give taxpayers a choice in the social security
system.

IME Executive Director Svetla Kostadinova noted that, on the one
 hand, Bulgaria's population is decreasing and the number of
crimes and lawsuits is also falling, but on the other hand, the
number of prosecutors, judges and judicial administrators is on
the rise. This compromises the efficiency of the judicial
system, as it needs more money to spend. At the same time,
public confidence in the judiciary is very low, Kostadinova
said.

She reported that Bulgaria has the highest number of prosecutors
 and prosecutorial administrators for every 100,000 inhabitants
among all EU member states; this was the case in 2012, and now
the situation is even worse. The country also has the fourth
highest number of judges and the seventh highest number of
judicial administrators per 100,000 population.

The Supreme Judicial Council is the only organization that does
not report on its expenses on a regular basis, Kostadinova said.

IME proposed removing the vacant job positions in the judicial
system, downsizing the judicial administration, consolidating
lawcourts and shutting down institutions where the workload is
low, incorporating the length-of-service supplement into the
base wage of judicial officers, and scrapping clothing
allowances and other extra benefits in the system.

The electronic equipment used in the judiciary is of very low
quality and even the simplest operations involve carrying around
 paper files and registering documents by hand, Kostadinova
said.