site.bta2016 National Budget Bill Approved on First Reading

2016 National Budget Bill Approved on First Reading

Sofia, November 19 (BTA) - The National Assembly approved the 2016 National Budget Bill on first reading Thursday by a vote of 138 to 65, with 9 abstentions. The bill now needs to pass on second reading as well in order to become a law.

It was supported by MPs of GERB, the Reformist Bloc, ABV, the Patriotic Front and the Bulgarian Democratic Centre (BDC), as well as three independents. It was opposed by MPs of BSP-Left Bulgaria, the Movement for Rights and Freedoms (MRF), Ataka and two independents. One member of BSP-Left Bulgaria, five of the Patriotic Front and three of BDC abstained from voting.

The 2016 National Budget Bill projects a government deficit of 1.8 billion leva. In its reasoning for the motion, the Budget and Finance Committee said the deficit will equal 2.0 per cent of Bulgaria's GDP. It will result from a national budget deficit of 1,649.4 million leva and an EU funding account deficit of 150.6 million leva.

The bill further stipulates that the government may not incur more than 5.3 billion leva in new debt next year.

Total revenues (including aid and donations) under the 2016 Consolidated Fiscal Programme are projected at 33,015.7 million leva, increasing by 1,366.2 million leva compared with the revised revenue estimate for 2015.

According to the Transitional and Final Provisions of the 2016 National Budget Bill, the 2015 National Budget Act will be amended to increase this year's government deficit by 49.7 million leva to 2,275.4 million leva.

Speaking in the National Assembly, Finance Minister Vladislav Goranov said the philosophy of the proposed national budget is "stability, realism, achievement," and asked the lawmakers to support it.

Goranov singled out two key budgetary priorities: education and infrastructure. He assured the legislature that the right balance has been attained.

GDP is projected to grow by 2.6 per cent in 2016 (driven mainly by end consumption), unemployment to fall to 9.1 per cent, average annual inflation to stand at 0.5 per cent, and public finances to remain stable over the medium term, Goranov said.

He noted that the government's tax and social security policy is geared to support economic growth. Social insurance contribution rates will remain unchanged.

BSP-Left Bulgaria and MRF criticized the government's budgetary policy. They urged Prime Minister Boyko Borissov to attend the parliamentary debate on the bill. MRF said the government ministers from the Reformist Bloc are sabotaging the reforms, while BSP-Left Bulgaria protested that despite allegations of rising public revenues, the new budget bill is silently seeking to revise the 2015 budget.

MRF

MRF voted against the bill, because the group believes that it does not promote economic growth actively enough. The party's Yordan Tsonev said: "Unless we make the Bulgarian economy grow by 4 per cent annually in the coming years, we will have to revise the tax rates." Tsonev noted that the current government is making a second attempt at fiscal consolidation, meaning it is trying to reduce the government deficit, but the first attempt was completely unsuccessful, because some systems failed to make necessary reforms to streamline their expenses.

BSP-LEFT BULGARIA

BSP-Left Bulgaria Floor Leader Mihail Mikov observed that next year's budget is being discussed in the absence of Prime Minister Borissov. "An update of this year's budget has silently crept into the bill," Mikov said. "More and more invisible results for Bulgaria are becoming visible in the wake of the October 25 local elections," he said, pointing to a 2 billion leva increase in spending, which entails a 5.3 billion leva in additional external debt, meaning 740 leva of debt for every citizen.

According to BSP-Left Bulgaria, the proposed budget scheme for 2016 will serve to perpetuate poverty, not taking account of the nation's grim demographic prospects. Mikov said: "Mothers are getting nothing, but the government is taking 2 billion leva for capital expenses. Today, I see that every party in the ruling coalition is trying to distance itself from the budget, and GERB and the Reformist Bloc are defending the parameters rather bashfully." He concluded that public spending will increase next year, because it will be another election year.

PATRIOTIC FRONT

Patriotic Front Co-Chairman Valeri Simeonov said that, traditionally, the national budget provides an occasion for the incumbents and the opposition to draw a line between them. The group's Slavcho Atanassov called on the executive branch of government to show more respect for the legislature. "Two-thirds of the ministers are not here in Parliament, the deputy prime ministers are not here, the prime minister is not here," Atanassov said.

ABV

ABV said they agree that the government deficit should be gradually reduced, but they disapprove of the drive to cut down expenditures instead of boosting revenues. The group's Mariana Todorova said ABV are in favour of increasing the minimum monthly wage to 420 leva from the current 380 leva, but they object to the idea to keep the flat rate of the personal income tax. Todorova called for more funding for the Bulgarian Academy of Sciences and for higher education, and demanded a 20 million leva increase of the money available for the National Employment Plan and a 17 million leva rise of funding for persons with disabilities. While ABV approve of the planned spending increase in the security sector, they demand reforms to improve the sector efficiency.

BDC

The Popular Union, which is a member of the BDC coalition, is against the proposed 2016 national budget, because it follows the philosophy of the previous budget, which was noted for inefficient spending, the group's Georgi Kovachev said. He called for a revision of the tax policy and said it is about time that the administrative reform is implemented. The national economy has been plagued by deflation, foreign direct investment has not risen for two years, and the corporate community relies manly on EU aid, Kovachev summed up.

REFORMIST BLOC

"We should support this budget and show that the government can do, and will do, without MRF," Martin Dimitrov of the Reformist Bloc said. He said it is very good that taxes will be kept low, but the measures promoting small and medium-sized businesses can be improved.

ATAKA

The Ataka parliamentary group is opposed to the 2016 National Budget Bill, because it will not produce tangible results, the group's Deputy Floor Leader Stanislav Stanilov said. "The bill fails to identify the financial leverage which will boost economic production. Those who say that the budget serves the oligarchy are right," Stanilov said.

Over the last 10 years, the national budget has been promoting the same Neoliberal policy, he said. "This is not just about the flat personal income tax; this is about the conservative approach to finance," he said. Stanilov believes that wages in the public-financed sector should be set according to a common classification system, not in a piecemeal manner. He, too, demanded more funding for the Bulgarian Academy of Sciences, because otherwise, he said, the Academy may cease to exist 10 years from now. Stanilov deplored the fact that the skilled workers trained by the Bulgarian education system work for foreign economies.

Independent MP Velizar Enchev also said he is against the proposed budget scheme.