site.btaFinance Minister: Around 20 Municipalities Need State Aid to Prevent Bankruptcy

Finance Minister: Around 20 Municipalities Need State Aid to Prevent  Bankruptcy

Sofia, February 3 (BTA) - Through the proposed amendments to the Public Finances Act, the State is trying to introduce order into the financial aid it provides to municipalities, Finance Minister Vladislav Goranov told journalists Wednesday following the bill's approval by the Council of Ministers.

Preliminary assessments show that around 20 municipalities will need State aid, particularly Velingrad (Southern Bulgaria), Vidin (on the Danube) and Sliven (Southeastern Bulgaria). The municipalities' total debts are quite large but those overdue amount to 150-160 million leva, Goranov explained. The idea of the mechanism proposed in the bill is not only to solve the problem but also to engage the local authorities in its solving, as well as let the people know about it, he added. "Our observations show that there currently is no mechanism obliging the mayor to inform the people and the municipal council about financial problems. These usually are brought out into the open when the municipality is on the verge of bankruptcy," the minister noted.

The municipality of Velingrad , for example, has distrained accounts and is facing bankruptcy, Goranov said. It currently cannot pay what it owes to schools and kindergartens, and has debts exceeding 20 million leva.

The municipalities participating in EU programmes do not bear the burden of this funding because the money from the EU funds and national co-financing are provided from the State, Goranov explained. The small municipalities which receive money from the Rural Development Programme have been provided with VAT as well, he added.

The assistance plans of the municipalities will be elaborated and proposed by them but the State decides whether to approve or reject them, the Finance Minister added.