site.btaMedia Review: February 20

The parameters of the 2025 state budget presented on Wednesday dominate Thursday’s news media.

ECONOMY

24 Chasa’s front-page article is dedicated to the 2025 State Budget Bill, reading that the ruling coalition survived its first challenge. After heated political fights that started late on Tuesday at a meeting of the coalition council, the attempt to reduce expenditures by BGN 417 million by giving pensioners by only 5% more this year was scrapped within hours of being proposed by GERB-UDF; instead, pensions are planned to be raised by 8.6% as of July 1, making the minimum pension BGN 630.50 and the average pension, BGN 958.96. As of April 1, the minimum insurance contribution is proposed to be BGN 1,077 and the maximum, BGN 4,130. To remain unchanged are the daily minimum and maximum compensation for unemployment (BGN 18 and BGN 107.14, respectively) and the maternity benefits in the second year of maternity leave, BGN 780. The Government expects BGN 90.27 billion in revenues, up by BGN 20 billion from 2024; of these, BGN 24.8 billion are expected to come from VAT, up by 33% from 2024, through increased checks by the National Revenue Agency and the Customs Agency. Excise duties on all tobacco products will be increased to get an additional BGN 203 million in the Exchequer this year.

Trud writes on its front page that the tax authorities will go after natural and legal persons indebted by over BGN 100. Under the current legislation, the tax authorities can collect the cash in the debtor's possession, but the proposed changes to the Tax Insurance Procedure Code extend these rights. That tax authorities will be able to seize cash from sales made at the debtor's business premises, such as a shop, restaurant or other establishment; the distraint could be not only on the cash in the debtor's cash register, but on the cash coming in for the whole day, for a period of time or until the debts are paid. Natural and legal persons with a debt under BGN 100 to the Exchequer will be left alone.

Telegraph’s front page too is dedicated to the 2025 State Budget Bill, with the focus being on pensioners getting a bigger pay rise than initially announced by the power holders. An inside-page story forecasts that the government of GERB-UDF, BSP - United Left and There Is Such a People will survive at least a year. 

Duma reports on its front page that the pensions will be raised by 8.6% as of July 1, which is yet another proof that BSP – United Left is the social guarantor in the Government.

An analysis at Segabg.com reads that the government storm over the pensions was several hours long, but only Continue the Change - Democratic Bulgaria failed to reap maximum dividend from it. The BSP made themselves out to be social saviours, even though they were only resisting against the smaller pension rise until the moment GERB threatened to take the money from BSP's ministries. The ruling coalition as a whole presented itself as stronger than ever and exchanged pleasantries. The opposition also took an easy brownie point with the pensioners. Even the pensioners won, for whom the 8.6% rise must have been a pleasant surprise. GERB leader Boyko Borissov himself not only got a chance to parade in his favourite clothes of a saviour, but somehow managed to present the government as not GERB's. It is more than obvious that such increases cannot be financed if the size of the social security burden is maintained, but that is exactly what the last governments did, filling the growing deficit from the budget, i.e. from taxes. In just six months of this year, more than BGN1 billion more will be needed to implement the pension rise. Against this backdrop, containing the financial fire should be good news. However, there is nothing good in the events of the last few hours, because they reveal worrying symptoms, Sega's analysis reads. The authorities are increasingly easily hiding the truth from their own citizens. The events surrounding Wednesday's pension controversy also show, inexorably, that it is not the politicians who listen to the experts, but the other way round - the experts obediently carry out whatever the politicians order. A whole set of fresh analyses, forecasts and reports showed in which directions to move in order to bring order to the system. However, these are clearly going to waste. Reforms are out of the question - they will soon cease to exist even in the distant future of governance programmes.

An analysis at Mediapool.bg reads that the Government’s second attempt to draft a state budget for 2025 can be summarized as follows: “We very much wanted to stabilize the state finances but did not have the will to do so.” The latest draft sets almost the same figures as the caretaker cabinet’s budget bill and practically adheres to the same model: a huge increase of expenditures and unclear revenues. Still, the bill formally meets the 3% deficit criterion for entry in the eurozone. With a few exceptions, the power holders promise to adhere to these figures in the coming years until 2028 and to even begin to shrink the deficit a bit, which is important because of the desire to introduce the euro in Bulgaria next year. The only excuse for this bill is that the task the party leaders gave to the Finance Minister is impossible to solve. When an attempt to reduce expenditures was made by reducing the planned increase of pensions to 5%, Borissov quickly made a U-turn and said that would not happen. The analysis concludes that given the figures in the draft budget, there is large-scale irresponsibility in the power holders.

Trud has an analysis by Prof. Boyan Dourankev, an economist and university lecturer, who argues that Bulgaria finds itself in hypercrisis. That is a situation in which the demographic system does not sufficiently feed the economic system and vice versa; when the economic system is in chronic crisis; when the State does not know how and in what way to change the situation. According to him, the draft budget for 2025 should not be people’s only focus but the budget forecast for the next three years, which shows an aging population and an economic growth resulting from inertia, abandoning the strive to reach more advances economies in the EU. In what he calls the Boyan Dourankev Plan, the article’s author proposes over ten steps to achieve an average economic growth of over 3%, a positive revenue-expenditure ratio in the budget, and a decrease in inequality. Among the steps are the introduction of progressive taxation, stricter control on the gray sector, and keeping the defence spending at 2% of GDP this and next year. 

On Bulgarian National Radio, Prof. Dourankev said that Bulgaria is in hypercrisis but that the problems lie not so much in the budget as in the economy, in Bulgaria's relations with other European countries. "As Bulgaria's debts will reach fantastic levels, revenues are unlikely to be met as budgeted, and the pressure to raise incomes will continue, even though the government is gnashing its teeth on this very issue," he argued. Dourankev also commented on the intention for only a 5% pay rise in the state sector, unlike at the Interior Ministry and the security forces, where there will be a 50% rise. "Every government, when it feels that it is not stable, increases salaries in the power structures. It seems to be the same in Bulgaria at the moment," the expert said. According to him, not only this government, but also the previous ones made a mistake by setting the salary levels based on the average salary in Bulgaria, and that salary is constantly being raised.

Bulgarian National Television’s morning show aimed to answer the question whether Bulgarians will be richer or poorer in light of the new 2025 State Budget Bill. Former social minister Hristina Hristova commented that it will become more and more difficult with each successive budget because of the decisions that the National Assembly has taken in the last four years. According to her, the problem is related to the increased costs, which have to be covered by revenues. "If we read the bill more carefully, we see that our expenditures are strictly fixed, but for the revenues it is said how we will fight the grey economy, how we will tighten control, etc.," she said. Bulgarian Industrial Capital Association Executive Director Dobrin Ivanov commented that "the new budget is like the old one, only it is new." He expressed disappointment that there were no revolutionary changes in the budget, despite its long drafting. "We really expected something revolutionary to happen in this budget, because many experts commented on the studies that the problem was in the expenditure part, not in the revenue part of the budget, and that measures should be taken to normalise the growth of expenditure, which is increasing at an incredibly accelerated pace. But unfortunately, we do not see this in the proposal for a new budget", Ivanov noted.

On bTV’s morning show, former economy minister and GERB member Vladislav Goranov commented that this is the only budget possible at the moment. “GERB has 69 MPs and has to comply with a very complex structure, so we rather deserve admiration for what we managed to achieve” he added. Goranov described the financial framework for 2025 as a budget of Zhelyazkov’s government. “It was drafted by the ruling majority and authored by the Finance Ministry. [Finance Minister] Temenuzhka Petkova, with the political capacity behind her, took part in a meeting of the Eurogroup, reported and was encouraged to submit a request for an ad hoc convergence report. For me, that is the first step for entry in the banking union and ERM II, and to a large extent means fulfillment of the biggest task before the current majority: the replacement of the lev with the euro, and as soon as possible,” Goranov argued. He expects the 2025 State Budget Bill to be tabled in Parliament on Monday the latest.

On Nova TV’s morning show, parliamentary Budget Committee Chair Delyan Dobrev (GERB-UDF) commented that the draft budget has its pros and cons. "The budget we have presented is a numerical expression of the policies that have been adopted by the National Assembly and the governments in the last four years," he explained. "The difference between the current and the previous GERB budget is that there is a significant increase in social spending and money for salaries in the public sector. In these two items alone, the increase is 5.5% of GDP. This is where the hole [in the budget] and the challenges come from," he commented. Ivaylo Mirchev MP of Continue the Change - Democratic Bulgaria commented: "We said that we will support every effort of the government to join the euro area because for us this is an extremely important priority. But the budget is something completely different. The draft in its first version, announced late on Tuesday, was this: we take half of the increase for pensioners and give it to the Interior Ministry and the security forces. Not only that, the bill for this increase in the Interior Ministry, the State Agency for National Security, State Agency Technical Operations will be paid by people working mainly in the private sector. This year they will most likely not get any salary increase, because tough times are ahead, or if they do, it will be low." Mirchev stressed that there should be an increase at the Interior Ministry but coupled with reforms, and the state administration should be optimized.

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24 Chasa has an interview with Ivo Zhelev, founder of the ESTAT research and consultancy company, which specializes in surveys of the public sector and political attitudes as well as economic studies. He comments on the food prices in big retail chains in Bulgaria, over which customers staged a boycott on February 13; another one is planned for February 20. Zhelev notes that the results from his company’s Bulgarian Business Climate Index with a focus on the trade sector show an increase of the index in 2024 following the rise in people’s purchase power, the trade sector being left to develop in peace, the good GDP growth, and the relatively low unemployment rate. The data show that food prices did not push the inflation rate up. Trade ranked second for growth and contribution to the national GDP; the top sector was transport, logistics and IT. At the bottom were agriculture and real estate operations. Entrepreneurs in the trade sector, especially in big retail chains, know that if the population gets poorer or shops less, the financial results will worsen, Zhelev argues. The managers of these chains know that if they have excessive profit, they will kill the market and, consequently, themselves, because there is big competition on the market. If the State intervenes too much to appease the protesting consumers, the balance will be affected. The big problem in Bulgaria lies not only in poor consumers but also in the decrease in their number for demographic reasons; personnel shortages post another risk in the trade sector, Zhelev notes.

Telegraph has an interview with economist Assoc. Prof. Ralitsa Simeonova-Ganeva, who argues that Bulgarians are currently the richest they have ever been. 

On bTV's morning show, the head of the Commodity Exchange and Wholesale Markets State Commission, Vladimir Ivanov, commented on the February 13 and Thursday's boycott of large supermarkets by customers over high prices. "I'm not much of a fan of extreme measures, the boycott is a good thing in terms of getting the public excited, but it could have been done in a completely different way. The important thing is to be well informed and shop rationally every day. Let's remove emotions and look for the price-quality effect," he noted. He advised customers to check wholesale prices then visit four or five shops to determine what prices they sell at; customers should then form a consumer basked according to what they need and shop where those goods are at the best price. That requires time for going around shops but there is no other way in a free market economy; consumers should bear responsibility for their choice, Ivanov argued.

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24 Chasa presents the latest data on GDP at the regional level in 2023, according to which there is normalization among the various anomalies in the energy sector, agriculture and tourism from previous years. Sofia restored its 43% share in the national economy, but the fastest increase was registered by the relatively poorly developed regions. Still, regional disparities remained significant and convergence remains far in the future. In 2023, the biggest regional economy was that of the capital with over BGN 79 billion of GDP and BGN 62,000 of GDP per capita, up by over BGN 7,000 within a year. In the top five are also Plovdiv (BGN 14 billion), Varna (BGN 11.7 billion), Stara Zagora (BGN 10.6 billion), and Burgas (BGN 8.5 billion). For the first time, there is not a single regional economy with a GDP below BGN 1 billion, partially because of the high inflation rate in 2022 and 2023 and partially because of the fast growth after the COVID-19 pandemic. 

ENVIRONMENT

Trud has an interview with Minister of Environment and Water Manol Genov, who says that the situation with water shortages in the country is critical, and the Government will not postpone taking measures. The situation is bad because of the very old water and sewerage network and the years of no investment in improving the infrastructure in the sector, he explains. For example, the water and sewerage operator in Shumen incurs water losses of 83% along the network. The problems with water supply in Lovech and Pleven are not from the last five years; such existed back in the 1980s and 1990s, too, he recalls. Asked what are the most urgent matters he would work on in the next six months, he replies that everything in his sector is equally important: ambient air quality, water, environmental problems faced by companies. It is hard to give exact answers half a month after taking office, he adds. "So you'd better ask me in six months what turned out to be most important and how we solved it. Of one thing I am sure: the Ministry's team and its structures on the ground will work expeditiously to get the results people expect from us," he notes.