site.btaCaretaker Government Holds Extraordinary Meeting a Day Before Parliament Votes on New Cabinet, Calls off Budget Procedure

Sofia, December 12 (BTA) - The caretaker government of Stefan Yanev held an extraordinary meeting on Sunday, its last day in office. It resolved, among other things, to discontinue the coordination procedure towards the drafting of the 2022 national budget in a view of the fact that a new government will likely be voted in office by Parliament on Monday, said the government press office.

In other decisions that the government made, it proposed to Parliament to approve an increase of the Bulgarian share in the statutory capital of the International Investment Bank in keeping with the programme for the Bank's capitalization in 2018-2022. Bulgaria is currently the third biggets shareholder with 10.04 per cent of the paid up capital (equal to 42,203,226.32 euro).

The government also decided to take action towards the discharge of the Bulgarian representative in the IIB Managing Board.

The government ministers approved a report on the costs for official trips by the ministers, deputy ministers, regional governments and the leaders of state agencies and institutions, in the third quarter of 2021.

They also gave the greenlight to additional transfers for a total of 1,150,437 leva to municipalities to offset the drop in revenue from taxing taxi services.

What is in the 2022 draft budget

The Finance Ministry published earlier in the outgoing week its 2022 draft budget together with a revised mid-term budget forecast for the 2022-2024 period. The budget deficit is expected to reach 5.1 per cent of GDP in 2022.

Even with this deficit, Bulgaria remains below the 3 per cent cap for the mid-term and expects the deficit to be around 2.8-2.9 per cent for the entire period thanks to a budget surplus of 0.2 per cent and 1.3 per cent in 2020 and 2021, respectively, the Ministry explains.

In the medium term, the budget expenditures are expected to decrease from 39.6 per cent of GDP in 2022 to 35.7 per cent in 2024.

The revenue is expected to grow nominally to 38.3 per cent of GDP in 2022, 39.3 per cent in 2023 and 39.2 per cent in 2024.

The tax policy in 2022-2024 will stick to the established principles and will continue to aim for encouraging economic growth, improving the business environment, fighting tax fraud and improving the tax sustainability in the long term.

The income policy in the revised mid-term budget forecast includes an assumption that the minimum work wage will grow from 650 leva to 710 leva from January 2022 and stay unchanged in 2023 and 2024. The cost for wages (including social and medical insurance) in the public sector will increase by 5 per cent in 2022.

To contain the COVID crisis, funding has been provided for 2022 for: purchase of more vaccines (267.2 million leva); payments to front-line workers, including for medical staff administering vaccines to people without medical insurance (352 million leva); medicines for treatment of COVID and a stockpile of medicines (158.8 million leva).

The expenses for defence stand at 1.7 per cent of the GDP for 2022, which is in line with the country's commitments in the national plan for increasing defence spending to 2 per cent of GDP by 2024.

The financial package which Bulgaria expects to use from the Recovery and Resilience Facility includes 6.268 billion euro in grants and some 4.549 billion euro in loans. The basic financial package is expected to be made available before the end of 2022.

The revenue and expenditure for COVID response measures in the 2022 measures total 3,114.1 million leva (2.2 per cent of GDP) as the bulk of is scheduled for six months in 2022. The measures for 2023 total 467 million leva (0.3 per cent of GDP) and for 2024 no such measures are planned.

Based on the forecasts and assumptions, the net debt financing in 2022-2024 is expected to reach 49.1 billion at the end of the period, resulting in a debt-to-GDP ratio of 31 per cent. RY/LN