The Parliamentary Committee on Budget and Finance Tuesday adopted at first reading the 2024 State Budget Bill with 13 votes in favour, 6 against and no abstentions.
Presenting the main parameters of the Bill, Finance Minister Assen Vassilev said that the overall philosophy of the 2024 draft state budget is one to prevent Bulgaria from selling cheap labour. "We cannot become a rich country if we maintain cheap labour," Vassilev stressed.
In his words, Bulgaria will reach the average European wage level through investment. "That is why we are betting on a wage growth of 11% - twice as much as the inflation rate, while maintaining the level of tax rates, the only exception being the raising of the income tax for large corporations to 15%," he added.
"Over the years, the Bulgarian economy has been closely linked to the big economies in the EU because our growth has been linked to exports. Such effect can be weakened by stimulating domestic consumption, and if there [the EU] economies are going down, then here too there can be a decline, but not so considerable one. In a year when European economies are on the brink of recession, we can boast GDP growth of 1.8-1.9%. This is a success for our economy and for our producers," Vassilev explained.
Addressing the Committee, Bulgarian National Bank (BNB) Governor Dimitar Radev said that he appreciates the budget and the budgetary procedure, which is returning to its normal rhythm. He highlighted the transparency of budget financing, but pointed out that the budget pursues a pro-cyclical fiscal policy, which is a precondition for macroeconomic imbalances and higher inflation.
"To have an anti-inflationary policy, I would recommend a budget deficit of 1% of GDP in 2024 and a balanced budget within 2026, although this is not realistic to achieve. However, a clear downward trend in the budget deficit should be set," the BNB Governor added.
Fiscal Council Chairperson Lyubomir Datsov noted that it is also necessary to have a reserve list of investment projects because Bulgaria has a problem with absorption of capital expenditures and only 30 to 36% of the budgeted ones are absorbed on average. "The budget policy is pro-cyclical and there is no way inflation will come down in the coming years. Our inflation, compared to that of the Eurozone, is three times higher," Datsov warned.
/RY/
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