site.btaUPDATED Parliament Adopts Conclusively 2024 State Budget Bill

Parliament on Thursday adopted the 2024 State Budget Bill at the second reading. The state budget for next year totals BGN 43,406,519,700.

Tax revenues are expected to total BGN 38,116,002,000. Nearly BGN 6 billion is expected to be collected from corporate tax. Value added tax revenue is set at BGN 18,626,102,000.

The 2024 State Budget has been prepared with expectations for 3.2% GDP growth next year (BGN 205.8 billion), a continued decline in inflation to 4.8% on an annual basis and an expected 11% growth in labour costs. The financial framework for the year assumes a deficit on a cash basis of BGN 5.8 billion, or 3% of GDP and 2.9% of GDP on an accruals basis. That implies additional debt of around BGN 8.4 billion to finance the planned deficit "and secure the liquidity position of the fiscal reserve".

The minimum amount of the fiscal reserve until December 31, 2024, is set at BGN 4.5 billion.

The government debt may not exceed BGN 48 billion until December 31, 2024. A cap of BGN 11.7 billion is set on new government debt that may be assumed in 2024 as per the Government Debt Act.

In 2024, political parties will receive a state subsidy of BGN 8 for every vote won in the latest parliamentary elections in accordance with the Political Parties Act.

School students who will be in eighth grade in the 2024/2025 school year will receive a one-off allowance of BGN 300. The same amount will be provided to kids in first, second, third and fourth grade.

Families will receive BGN 375 as a one-off allowance on the birth of a first child in 2024 under the Family Allowances for Children Act, BGN 900 for a second child, BGN 450 for a third baby, and BGN 300 on the birth of a fourth and every next child.

An additional monthly benefit of BGN 100 will be provided for a child with lasting disabilities of 50% and over until 18 years of age.

State-owned higher education establishments may assume a maximum debt of BGN 20 million to fund projects using financial instruments. The debt must be coordinated with the education minister, who will judge whether the respective establishment has the capacity to service such a debt.

Public-financed organizations housed in state- or municipal-owned buildings will not be required to pay rent.

The minimum basic salary in the public sector in 2024 will be BGN 933.

The MPs allocated BGN 54 million for the construction of an air ambulance system and BGN 5 million for the construction of a new blood centre.

An additional BGN 68 million will be allocated to the culture sector in the 2024 budget.

An additional BGN 11.6 million are allocated for salaries in the National Insurance Service.

The Constitutional Court will receive money for building renovation.

BGN 2 million are allocated for the regional centres of the Bulgarian News Agency, BGN 4 million for the Court of Auditors and another BGN 20 million for ongoing renovations of the Interior Ministry buildings.

The MPs rejected a proposal by There Is Such a People (TISP) party to reduce party subsidy to BGN 1. TISP's proposal to reinstate the 20% VAT (from the current 9%) for restaurants was also rejected.

In the final vote, it was agreed that contracts signed under the Public Procurement Act could be indexed by up to 50%.

Municipal projects

The budget has appropriations for investment projects of the 265 Bulgarian municipalities. There will be no limit to the number of projects that each municipality can request to be financed with funding from the national investment programme. These now total over 400. Depending on the category of the municipality, caps are set for the municipalities by category (based on population size): up to BGN 50 million for category 1 municipalities ; up to BGN 30 million for category 2 municipalities; up to BGN 15 million for category 3 municipalities; up to BGN 10 million for category 4 municipalities; and up to BGN 6 million for category 5 municipalities. For municipalities with a population according to the National Statistical Institute (NSI) of over 180,000 people, the total value of the projects will be up to BGN 100 million.

The 2024 subsidies to municipalities for activities delegated by the central government were also approved on second reading. Among the larger municipalities, Sofia will be subsidized with BGN 1,090,472,900, and the allocation for the city's capital expenditures is set at BGN 23,457,300; the figures for Plovdiv are, respectively, BGN 344,978,000 and BGN 5,364,100; for Varna, BGN 309,880,700 and BGN 5,791,100; for Burgas, BGN 227,068,800 and BGN 4,072,100; for Ruse, BGN 137,214 and BGN 3,457,400; and for Stara Zagora, BGN 147,199,800 and almost BGN 6 million.

Comments

Following is a takeaway from comments made in and out of the debating chamber following the adoption of the state budget.

Finance Minister Assen Vassilev: The budget is realistic, but it will not be easy to implement. Budgeting based on capital expenditure is fully transparent in both revenue and expenditure components. For the first time the budget catalogues absolutely all capital expenditures, project by project, both national and municipal. Every capital expenditure is recorded in detail and implementation can be monitored on a monthly basis. With the adoption of this capital investment programme, resources are provided to make these projects happen, but for it to become a reality, many ministries, agencies, municipalities have to do their work, conduct the procurement, do the projects, monitor the contractors. The budget strongly supports incomes, because this is extremely important, so that we stop saying that Bulgaria's competitive advantage are the low wages, but rather good education, health care, good infrastructure and entrepreneurs' initiative.

Parliamentary Budget Committee Chair Yordan Tsonev: This is the first budget since the fall of the communist regime in Bulgaria in 1989 that features programme budgeting of municipal investment. The entire capital programme is designed in such a way that it can be supplemented and modified depending on the level of absorption of the national municipal investment programme. We believe that all of this innovation will lead to good results and enable accelerating economic growth.

TISP floor leader Toshko Yordanov: The majority adopted a very harmful budget. I am extremely "happy" that we will have up to BGN 8 billion of additional debt, that money is being channeled for whatever without there being any need.

GERB leader Boyko Borissov: I have always said that without God nothing can be done. That's why, after I spoke to the leaders of the parties supporting the government, we agreed that the care of religion should always be a priority for statesmen. That is why we raised the issue with the government and the Council of Ministers allocated BGN 10,545,000 for 19 church sites.