site.btaGovernment Approves 2020 State Budget, Public Social Insurance Budget and National Health Insurance Fund Budget Bills

ESD 15:05:31 31-10-2019
SN1501ES.110
110 ECONOMY - GOVERNMENT - BUDGET BILLS

Government Approves
2020 State Budget, Public Social Insurance Budget
and National Health Insurance Fund Budget Bills


Sofia, October 31 (BTA) - Bulgaria's Council of Ministers Thursday approved the 2020 State Budget of the Republic of Bulgaria Bill, the 2020 Public Social Insurance Budget Bill and the 2020 National Health Insurance Fund Budget Bill.

The Cabinet also approved an updated medium-term budget forecast for the 2020-2022 period, which provides the reasoning for the State Budget Bill.

The forecast provides for achieving a balanced budget for the 2020-2022 period and keeping it that way in the ensuing years. The low rates of corporation taxes and of income taxes on natural persons are to remain unchanged in the medium term, which will contribute to economic growth and will catalyze labour demand and supply.

Both budget revenues and expenditures are forecast to decrease in the 2020-2022 period as a percentage of GDP from 36.9 per cent to 35 per cent, while in nominal terms they are expected to increase from 46,827 million leva in 2020 to 50,143 million leva in 2022.

The 2020 budget prioritizes education, healthcare, defence, pension policy and incomes policy.

Another priority is a successful absorption of resources from the EU funds and programmes so as to achieve sustained economic growth, enhance employment, social inclusion, social, economic and territorial cohesion, and building a competitive and innovative economy.

Education

In the 2020-2022 period, the Government will continue to implement the measures intended to make the teaching profession more attractive, to motivate current teachers, and improve teachers' social status. To this end, an extra 360 million leva will be allocated annually for an increase of the teaching staff salaries, so that their level will double in 2021 compared to 2017.

Healthcare

The 2020 National Health Insurance Fund (NHIF) budget provides for 4,744,704,900 leva in revenues and transfers. Health insurance revenues alone will amount to 4,640,733,700 leva, including 3,107,134,200 leva from health insurance contributions (up by 264,880,000 leva from 2019) and 1,533,599,000 leva from health insurance transfers (up by 139,000,000 leva). The year-on-year increase in health insurance transfers will result from increased pensions, a higher minimum wage, and a 5 per cent rise of the contributory income on the basis of which the government pays health insurance contributions for unemployed people, children and socially vulnerable persons, among others.

Revenues from sources other than health insurance contributions are projected at 20,571,200 leva, up by 811,400 leva from 2019.

NHIF budget expenditures and transfers will amount to 4,744,704,900 leva. Expenditures alone will stand at 4,739,172,700 leva, up by 394,227,700 leva from 2019. Current expenditures will be 4,594,950,700, increasing by 382,111,000 leva from 2019. Health insurance payments will amount to 4,453,976,800 leva, growing by 337,580,600 leva from 2019.

Of the health insurance payments, 2,850,282,600 leva will be allocated to medical services (of which 244,000,000 leva to primary outpatient care, 264,700,000 leva to specialist outpatient care, including patient monitoring, 94,300,000 leva to medical diagnosis, and 2,247,282,600 leva to inpatient care), 179,800,000 leva to dental services, and 1,243,800,000 leva to medicines, medical products and diet food for special medical purposes. Health insurance payments for medical treatment provided according to the social security systems coordination rules will amount to 70,094,200 leva.

In 2020, the health insurance contribution rate is to remain unchanged at 8 per cent.

Defence

The share of capital expenditures in total defence spending exceeds the 20 per cent NATO criterion. Defence spending complies with the National Plan for Increase of Bulgaria's Defence Spending to 2 Per Cent of GDP by 2024.

Pensions

As of July 1, 2020, all pensions granted by December 31, 2019 are to be increased by 6.7 per cent (according to the Golden Swiss Rule, whereby pensions are adjusted by 50 per cent of the previous year's inflation, whether positive or negative, and by 50 per cent of the growth of the average contributory income). The average pension will stand at 412.28 leva, 31 leva more than in 2019.

As of July 1, 2021 and 2022, the pensions granted by December 31, 2020 and 2021, respectively, will to be adjusted according to the Golden Swiss Rule. In the 2020-2022 period the weight of one year of contributory service in the pension calculation formula will be kept at 1.2.

As of July 1, 2020, the minimum monthly contributory-income and retirement-age pension will increase from 219.43 leva to 234.13 leva, and the social old-age pension will reach 141.63 leva, up from 132.74 leva now.

The 1,200 leva cap on the aggregate monthly pensions drawn by an individual will remain unchanged and will apply to all pensions, regardless of when they were granted.

The Government proposes an average monthly contributory income of 1,063 leva for 2020, up by 7.8 per cent from the projection for 2019. The annual average number of persons covered by social insurance is expected to increase to 2,796,000.

The proposed pensions appropriation for 2020 is 10,576 million leva, 729.1 million leva more than the amount projected for 2019. The minimum monthly contributory income for self-insured persons will rise to 610 leva from 560 leva now (up from 400 leva for registered agricultural producers and tobacco growers). The maximum monthly contributory income remains unchanged at 3,000 leva.

The social insurance contributions to the public social insurance funds remain unchanged.

Incomes

From 560 leva now, the national minimum monthly wage is forecast to be raised to 610 leva, effective January 1, 2020, and to 650 leva, effective January 1, 2021, and is to remain unchanged in 2022.

A 10 per cent increase is budgeted for 2020 in the costs of remunerations of people working under employment and civil-service relationships in the public-financed sector and in the costs of social-security contributions for these employees.

Government Debt

A positive net debt financing is forecast for the 2020-2022 period. The ratio of government debt to projected GDP will tend downwards, from 18.6 per cent by the end of 2019 to 17 per cent by the end of 2022.

The consolidated debt-GDP ratio is projected to remain well below the 60 per cent admissible reference level of the Maastricht convergence criterion, which will ensure containing the government debt level within sustainable limits and enable Bulgaria to keep its leading position in the EU-28 in terms of the low debt burden. RY/LG, DD, VE

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