site.btaEcofin Approves Bulgaria's Amended Recovery Plan, Second Payment for Plan Expected before Feb. 2024

Bulgaria expects the second payment from the EU under Recovery and Resilience Fund before February 2024, Finance Minister Assen Vassilev told reporters in Brussels Friday during a visit for a meeting of the Economic and Financial Affairs Council (Ecofin). During the meeting, the Council approved the amended recovery and resilience plan of Bulgaria along with those of Belgium, Croatia, Cyprus, Finland, Germany, Greece, Hungary, Ireland, Italy, Latvia, Poland and Romania.

Vassilev said that now Bulgaria expects to receive some EUR 700 million in the second payment.

He explained that the Enofin approval of the revised national recovery plan was technical. "It was only a technical adjustment of the size of the projects. Some projects dropped out from the plan due to the reduction of the total funding for Bulgaria," he said. The real change is yet to be discussed with the European Commission and will likely be adopted in January or February, said the Minister. 

To meet its commitments under the recovery plan, Bulgaria is yet to adopt the rules for electing the counter-corruption commission and a plan for changes in the energy sector, Vassilev added.

Bulgaria submitted a modified recovery and resilience plan on September 29, 2023. It doesn’t include a REPowerEU chapter. The revision adjusts the EU contribution to the Bulgarian plan in accordance with the update of the allocation key that took in place in June 2022. The total contribution available to Bulgaria has gone down from EUR 6.3 billion to EUR 5.7 billion in grants.

Vassilev reconfirmed that Bulgaria keeps January 1, 2025 as the target date for joining the eurozone. "Today we reported progress in meeting the conditions after the admission to the Banking Union, where he have met almost all requirements. What remains to be done is adopt a new central bank bill, which has already been approved by the European Commission and the central bank. We expect to be done with that in January," said the Minister.

Vassilev also said: "We meet three of the four conditions, including the deficit. At the end of November it was 0.6%, down from the 3% target. The budget for next year is planned in keeping with the Maastricht criteria. We received very strong support in the eurogroup; a report will be prepared to be considered in June after the elections for European Parliament. Based on this report, a date will be set for Bulgaria's admission to the eurozone."

Asked if the government can do anything more to further lower inflation, Vassilev said that the central bank has adopted several measures, including raising the minimum reserve requirement for Bulgarian banks to 12% against 1% for the ECB. "The fiscal policy can hardly get any tighter than that. The E and the EU member states are aware that inflation in Bulgaria is driven by energy and food prices. As we are poorer than the rest of Europe, it [food and energy] makes up a bigger part of the consumer basket. We see than inflation is going down quite fast in Bulgaria and elsewhere in Europe. But if we have to kill the economy to bring inflation further down, we won't do that," said Vassilev.

He said that the 2024 budget has BGN 50 a month for the lowest pensions but no Christmas supplements because the government has a policy of steady increase of pensions.