site.btaLimitation of Ministries' Costs Means Serious Pressure on Work of Caretaker Government, New Finance Minister Says

Sofia, August 6 (BTA) - The limitation of ministries' costs will put serious pressure on the work of the caretaker government, new Finance Minister Roumen Porozhanov said. He was speaking while taking over the post from former finance minister Peter Chobanov on Wednesday.

At its last plenary on Monday the National Assembly increased the budget of the National Health Insurance Fund (NHIF) at the expense of the costs of ministries.

The caretaker government will analyse the condition of macroeconomics and the medium-term budget forecast. It will also prepare a draft update for this year's budget so that the new government will be in the clear about the actual situation, Porozhanov said. Everything possible should be done to make the payments on the suspended operational programmes in order to avoid losing funds from the EU. The caretaker Finance Minister is particularly focused on OP Environment and OP Regional Development. Bulgaria's is a fragile economy and the compensation of the funds by the EU can be an enormous problem, he said.

Later in the day, the new Economic Policy Deputy Prime Minister and Minister of Regional Development and Investment Planning Ekaterina Zaharieva reiterated these words, saying the caretaker government will do its best to avoid delays in the implementation of such projects. She also stressed it was important to make up for  a certain delay in the implementation of several projects under OP Transport.

Chobanov, in turn, said he firmly supports the update of the budget drafted by his ministry, not the one passed by Parliament. The half-year deficit stands at 995 million leva, he stated. This year 612 million leva more than the same period were paid for European programmes, a 50 per cent increase compared to the same period of 2013, and the bulk of the deficit comes from these payments. The proposed update created far better opportunities and fiscal buffers in a situation in which shocks are constantly raining on the economy, Chobanov said. At least Parliament accepted his suggestion to increase the fund for accidents and emergency situations by 50 million leva, although this, too, is at the expense of ministries costs.

The National Revenue Agency is doing well in terms of collecting revenue, but the same cannot be said of the Customs Agency, Chobanov said. Since the level of the fiscal reserve is good, if there is an update of the budget directly after the elections some imbalances may be cleared, he forecast. In his opinion, there will be no problems with the deficit on an accrual basis, which last year was even lower than the deficit on a cash basis.

Porozhanov pointed out that the update of the NHIF budget will give a breath of air to the health care system, but at the expense of restricted costs of 15 ministries. Five per cent of the budget of these ministries is restricted. If they were operating now at 90 per cent of costs and if reforms had been carried out in them, then this restriction could be accepted as normal, but now this is a great challenge, Porozhanov commented.

The fiscal reserve at the end of July was 8,200 million leva. This creates sustainability within the framework of the present law and considering the present deficit. Large payments have to be made in January 2015 - nearly 1,700 million leva on the debt, nearly 1,100 million leva advance payments for the agricultural policy, as well as the current deficit for January to the amount of some 550 million leva, Porozhanov said. However, revenues are less than planned, between 650 and 850 million leva according to different estimates, the new Finance Minister added, and this may lead to an increase of the deficit.