site.btaGovernment Approves 2017 State Budget Bill

Government Approves 2017 State Budget Bill

Sofia, October 31 (BTA ) - The Government Monday approved the 2017 State Budget Bill and the updated medium-term budget forecast for 2017-2019 which constitutes the reasoning behind the bill, the government's information service said.

The updated medium-term budget forecast for 2017-2019 sets out the medium-term economic prospects and priorities of the government, along with the key parameters of the budget framework for 2017.

The 2017 budget framework and the forecasts until 2019 were drawn up on the basis of updated macro-economic projection, key assumptions, a realistic estimate of revenues, and limiting the pace of growth of expenditure, by relative restraining on national spending.

The updated medium-term budget forecast for 2017-2019 includes for the first time a comparison between the projections of the Finance Ministry and the European Commission in respect of the indicators in General Government.

The real GDP is expected to slow down slightly to 2.5 per cent in 2017 before accelerating to 2.7 per cent in 2018-2019 with consumption and investment seen fuelling domestic demand.

The budget deficit is projected at 1.4 per cent of GDP in 2017, 1.0 per cent in 2018 and 0.5 per cent in 2019.

Revenues, grants and donations under the consolidated fiscal programme range from 38.4 to 37.7 per cent of GDP in the 2017-2019 period. The slight downward trend is due to the measures to improve tax revenue compliance, changes in social insurance policy, and bringing non-tax revenues planned for 2016 forward to 2017, while next year is expected to see an increase from the estimated performance for 2016.

In the medium term, total expenditures under the consolidated fiscal programme will tend down, from 39.8 per cent of GDP in 2017 to 38.2 per cent of GDP in 2019.

Tax policy in the 2017-2019 period will target mainly increasing budget revenues and rolling back the shadow economy. A policy of keeping the low rates of direct taxes and shifting the tax burden from direct to indirect taxes will be pursued. To implement the revenue side of the budget, revenues will be maintained at a stable level, keeping the tax burden unchanged and expecting a positive effect of invigorated revenue administration action.

The updated medium-term budget forecast for the 2017-2019 period envisages a rise of the monthly minimum wage to 460 leva, effective January 1, 2017, and retaining that level for 2018 and 2019.

The proportions of social insurance contributions to the public social insurance funds will remain unchanged in 2017-2019. The rate of the social insurance contribution to the Pensions Fund is to increase by 1 per cent for 2017 and 1 per cent for 2018. The idea is to reduce the deficit of the public social insurance budget and its subsidization by the State budget. As from 2017, the social insurance contribution to the Pensions Fund for defence, law-enforcement and national security personnel will increase by 20 percentage points.

As from January 1, 2017, the weighting of a year of contributory service in the pension calculation formula will be growing gradually. The rise for 2017 is 2.4 per cent. As from January 1, 2017, the contributory service required for entitlement to pension will be increased by two months annually until it reaches 35 years and 8 months for women and 38 years and 8 months for men in 2019.

The priorities of the 2017 budget focus on measures encouraging educational reforms, maintaining modern and combat-capable armed forces and developing the country's defence capabilities, improving the functioning of the healthcare system, and implementing the National Programme for Energy Renovation of Multifamily Residential Buildings.

In order to implement the priorities in education, integrated measures will be put in place to ensure equal access to education, encourage professional training and growth, based on knowledge, science and development of young people and recruit young teachers in the system of school education.

In 2017, defence expenditures won't be lower than the approved minimum by a decision of the Consultative Council for National Security under the President of April 27 2015 and funds have been secured for aircraft and naval patrol boats.

The healthcare budget will continue to prioritize emergency medicine, e-healthcare, obstetric and pediatric care, hospitals and medicine policy.

The National Programme for Energy Efficiency for multi-family residential buildings is aimed at providing better living conditions and a better quality of the living environment.

As a result of the fiscal consolidation the level of government debt is at a low and sustainable level, far below the average for the eurozone and the Maastricht criteria for public spending. The 2017 budget does not provide for new debt under the midterm debt programme.

Between 2017 and 2019, the government debt is projected to reach 25 per cent of GDP at the end of the period as a result of the improved budgetary position of the country.