site.btaFinance Minister: Early Elections May Cause 2014 Economic Growth to Halve

Sofia, July 30 (BTA) - The early elections may cause Bulgaria's economic growth in 2014 to halve, said Finance Minister Petar Chobanov during Tuesday's debate on the budget update in Parliament. The businesses stopped working once it became clear that there would be early elections, which proves the need for updating the budget and boosting fiscal buffers, he added.

The Minister said that the budget should be updated in order to boost fiscal buffers available to the caretaker government to ensure financial stability at a time when trust in the institutions is weakened. Chobanov disproved suggestions that healthcare expenditures could be streamlined to avoid updating the National Health Insurance Fund budget.

Dismissing allegations that the budget update points to a financial collapse, Chobanov said that the budget buffers could prevent much more serious problems.

Chobanov disproved GERB's allegations about a drop in construction, citing figures  that construction turnover grew 1.7 per cent in May.

In the first half of 2014, capital expenditures in proportion to the budget were 600 million leva more from the like period of 2013, while cohesion funds allocations grew by 48 per cent.

A proposed debt increase by 3.4 billion leva should provide all the buffers to withstand financial pressure by the year's end, said the outgoing Finance Minister. He added that the National Revenue Agency is performing well and if the current trend persists, it will fulfill its annual revenue target. The first half of 2014 saw an economic growth of 1.4 per cent on an annual basis.

Some 725 million leva will be needed to rein in the deficit within projections of 1.8 per cent, while 2 billion will be used if deposits at Corporate Commercial Bank are to be paid out. Unlike previous budgets, the 2014 budget has buffers and while updating the budget revenues, these buffers will remain and won't offset revenue shortfall.

The Finance Minister said that Bulgaria commands the trust of international markets despite the downgraded credit rating due to the political instability, while the fiscal reserve has been increased to 8 billion  leva.

Outlining economic performance, the Minister noted a 1.4 per cent economic growth, a 4.6 growth of domestic investments in two consecutive quarters, and improved business climate for four straight months until May.