site.btaFinance Minister Vassilev: Draft Budget Law Envisages BGN 4.582 Billion Deficit

The draft budget law envisages a deficit of 4.582 billion leva - 3% of the accrued base and 2.5% of the cash base, Finance Minister Assen Vassilev told journalists at the Finance Ministry on Tuesday.

The draft budget will be submitted to Parliament in the first week of July so that it can be voted on by the end of July and come into force on August 1.

The budget's macro framework envisages BGN 184.486 billion in gross domestic product this year with GDP growth of 1.8% and 7.8% annual average inflation.

The revenue side of the budget will be BGN 69.321 billion. The state's revenue will be raised by BGN 3.526 billion from the work of the NRA and the Customs Agency, the Finance Minister said.

The main new things are to get the Recovery and Resilience Plan payment this year. The ministry will also collect 100% dividend from state-owned companies - that is a revenue of BGN 780 million. Revenue from the NRA and the Customs Agency will also be raised, Vassilev said.

A reduction in spending is foreseen - capital expenditures fall by BGN 1.89 billion to BGN 8.870 billion, which is still a record level, but it secures the money for the European programmes and for all approved capital expenditures, the minister said. Expenditures for which no procurement has been launched have been removed from the capital programme. There is a reserve in the budget, so if the circumstances are right "and the stars align" such capital spending will not be stopped, Vassilev added.

In the draft budget, there is a reduction of BGN 1.5 billion in the maintenance costs. The main reductions come from the maintenance of administrations. Spending on salaries and pensions remains as agreed, Vassilev said. There will be money for certain policies, including raising the money for the second year of maternity, for teachers' salaries, an increase in scholarships, extra money for BAS and the Agricultural Academy, as well as money for culture and sports funds, among others.

Under the current plan, public debt is to remain at the same level as a percentage of GDP, but is being raised on a nominal basis. This brings Bulgaria into the Maastricht criteria, Vassilev said. The budget is feasible, there is spending in defence and for the implementation of European programmes, he added.

Vassilev presented the progress in preparing the country's 2023 budget after a meeting with members of the Budget and Finance Committee in the 49th National Assembly.

The main collapse now is at the Customs Agency from VAT on imports. It turned out that there is no commodity group where there is no decrease in import VAT revenues and by about 30% compared to a year earlier, Vassilev said.

The tax breaks which were introduced last year remain in place until the end of 2023. Only the normal VAT rate of 20% on natural gas will return. It wouldn't be good to raise taxes in the middle of the year, so that predictability is ensured for businesses, Vassilev said.

The state debt plan will be clear once the budget is adopted, he said, adding that the budget will be accompanied by a three-year forecast.