site.btaPM: Public Finances Picture in May Was a Cause of Concern but Government Preserved Finances Stability and Improved Tax Compliance

Sofia, July 29 (BTA) - The picture of public finances in May was a cause of concern, to put it mildly, caretaker Prime Minister Stefan Yanev said Thursday during a parliamentary hearing on the financial and economic shape of Bulgaria. He said that his government, however, has been able to preserve financial stability and improve tax compliance.

He said that much of the buffers for restructuring of the budget were used up in the first four months of the year: for the 60/40 job retention scheme (a total of 117 million leva), for the 50 leva pension bonus in April (105 million leva), other employment measures (120 million leva), 61 million leva for municipalities and 22 million leva for the Bulgarian National Television and the Bulgarian News Agency (BTA).

The caretaker government found systemic tax non-compliance and lacking control on businesses, which had resulted in large deficits across the public financial systems.

In 2020 alone, the previous government paid 15.8 billion leva to private companies and 3.4 billion of those went to seven companies. In January-April 2021, three companies received 1.3 billion leva of tax-payers' money, said Yanev.

Huge resources were spent for in-house contracts. Between January 2019 and the end of April 2021, in-house orders totalled 8.6 billion leva. The biggest spender was the Road Construction Agency with signed deals for 2.4 billion leva with 55 private companies and another 3.1 billion with the state-owned road construction company Avtomagistrali even though it lacked the capacity to do the work and had to hire subcontractors in intransparent procedures.

Avtomagistrali signed up subcontractors for projects worth 5.5 billion leva bypassing the public procurement procedures.

The Road Infrastructure Agency signed contracts for road repair and maintenance worth 1.6 billion leva in 2021 while its annual budget was 382 million leva for 2021, and made commitments for spending of 1.3 billion leva in 2022. Any finding above the company budget was secured through government decrees. "This practice was widely used in the past two years," said Yanev adding that more than 60 alerts for wrongful spending have been submitted to the prosecution service.

"During its short time in office, the caretaker government managed to preserve financial stability and improve tax compliance, so that Parliament now can make a decision for restructure the budget and increase social spending," the Prime Minister said.

Over 1 billion leva in additional revenues is now expected from the National Revenue Agency and some 500 million leva from the Customs Agency, and the budget revision bill that the government will submit to the legislature shortly can provide for an additional expenditure of 1.8 billion leva for a pensions update, for a supplement to pensions with incomes below the poverty line and for costs that may have to be made in a possible new COVID wave in the autumn, said the Prime Minister.

He was asked by There Is Such a People, the largest group in Parliament, which parties they discussed the budget revision bill with and if that was the reason to have a budget that allows for 2-in-1 elections - presidential and new parliamentary elections - in the autumn. Yanev said that while the proposed budget revision allows for all election scenarios, whether there will be two elections this autumn is not a matter of a decision to make through the budget.

He also said that the budget revision was discussed with the unions and employers, and with "a number of political parties", and urged the legislators not to put the budget in a political context or seek conspiracies. NV/LN/