site.btaCabinet Approves 2016 Budget Bill

Cabinet Approves 2016 Budget Bill

Sofia, October 30 (BTA) - The Council of Ministers approved Friday the draft of the 2016 national budget and an update of its medium-term budget forecast for the 2016-2018 period which constitutes the reasoning for the budget bill, the Cabinet's Press Service said.

The key priority of the fiscal policy in the medium term remains preserving the stability of public finances.

The forecasts and expectations for the development of the Bulgarian economy have been adjusted in a positive direction and reflect the better-than-expected performance in 2015 and the favourable trends forecast until 2018.

Real GDP growth is expected to reach 2.1 per cent in 2016 with relatively stable growth levels in 2017 and 2018 (2.5 and 2.7 per cent, respectively).

The process of fiscal consolidation will continue. The revised budget forecast for the 2016-2018 budget deficit is 2 per cent, which is an improvement from the 2.5 per cent in the budget forecast from the spring of 2015. The deficit forecast for 2017 and 2018 is 1.4 per cent and 1 per cent of GDP, respectively.

The taxation and insurance policy will aim to support economic growth, improve the business climate, curtail tax fraud and increase the fiscal stability in the long term. No significant changes of the key taxes are planned for 2016-2018 except for some specific changes in respect of the excise duty called for by the requirement for reaching the minimum excise levels in the EU in keeping with the agreed transition period. Such increase of excise duty will impact positively the revenue side of the budget.

The social insurance contributions will remain unchanged in 2016 but in each of 2017 and 2018 the pension insurance contributions will increase by one percentage point.

The minimum contributory income will be gradually and partially increased for persons whose medical insurance is paid for by the state.

The revenue side of the budget is set to remain relatively stable within the range of 37.4-37.1 per cent of GDP with a slight downward trend.

The expenditure side shows a decrease from 39.4 per cent of GDP in 2016 to 38.2 per cent of GDP in 2018.

The minimum monthly wage is set to increase to 420 leva from January 1, 2016 to 460 leva from January 1, 2017 and unchanged in 2018. This aims to help achieve a nominal growth of the income of the low-income groups on the labour market.