site.btaGovernment Presents Parameters of Draft State Budget, Opposition Reacts

At a briefing here on Tuesday, Prime Minister Rosen Zhelyazkov presented the main parameters of the draft state budget for 2025: spending up to 40% of GDP and maintaining a budget deficit of no more than 3%. No tax increases are planned, he added. Zhelyazkov made the statement after a meeting of the Joint Governance Council at the National Assembly, where the ruling coalition discussed the draft. 

In recent days, there has been significant debate over the closing of the 2024 financial year, the Prime Minister noted.  He said the issue concerns commitments and invoiced expenditures that have not yet been settled. The discussion was crucial in determining the expenditure base for the draft budget and the revenue framework under the consolidated fiscal program.

Zhelyazkov explained that the government must finalize and submit the 2025 State Budget Bill, including the draft budgets for public social security and the National Health Insurance Fund, in compliance with the Public Finance Act’s requirements - keeping spending within 40% of GDP and the deficit below 3%. "This will be the proposal of the Council of Ministers," Zhelyazkov said.

"We discussed the individual measures in both expenditure and revenue, how feasible and relevant they are, so that the investment programme in the central government and in the municipalities continues to be implemented, as well as other important matters such as renovation, but the budget should allow, after a vote in the National Assembly, the government to have the basis to submit a request for a convergence report on the fulfillment of the criteria for membership in the eurozone, with the clear understanding that at the moment the ratio of the Bulgarian lev to the euro is fixed, it is 1.95583, it is not subject to change and this is confirmed by an act of the National Assembly," said the Prime Minister.

Zhelyazkov expressed the hope that the draft budget will be supported in view of Bulgaria meeting the criteria for membership in the eurozone. He pointed out that the opposition Continue the Change - Democratic Bulgaria group should clearly say whether they will back a budget that would allow Bulgaria to submit a request for an extraordinary convergence report.

When asked where expenditures will be cut, the Prime Minister said that specific measures both in terms of costs and revenues are being discussed. "We will not propose exotic measures like those that were put forward in the caretaker government’s draft budget for 2025," Zhelyazkov said. "We have clearly stated that we will not change the tax and social security burden and will submit a draft budget with the current Value Added Tax Act," he added.

Continue the Change to support draft budget with 3% deficit target

Continue the Change will support a state budget with a 3% deficit target, according to a post by co-leader Kiril Petkov on social media. "If [Prime Minister] Rosen Zhelyazkov works for attaining a 3% budget deficit target, they will have our support for the steps that will be taken," Petkov wrote on Facebook. He reiterated that his party's priority is a 3% budget deficit, request for a convergence report in February and entry in the eurozone from January 1, 2026.

Continue the Change - Democratic Bulgaria MP and former finance minister Assen Vassilev commented that if a draft 2025 budget with expenditures of up to 40% of GDP and a deficit not exceeding 3% is laid before Parliament, this would be "the right step vis-a-vis Bulgaria's Eurozone entry and keeping the debt at a low level".

"We've had a 3% deficit during all recent years. There is no problem with fiscal stability, and the point from now on is to see a responsible behaviour in the 2025 budget which would keep the policies that we have managed to keep during all those years," Vassilev said.

"Let us see a budget with up to 3% deficit and what it spells out, and after that we can have ideas about improvement. The National Assembly always has ideas about improvement or modification depending on the priorities that a political party concerned pursues in line with its election campaign promises. Some parties have promised 9% VAT to restaurant owners, others, like us, have promised larger tax concessions to young married couples. It is a matter of priorities and a National Assembly resolution whether a BGN 300 million excess in this budget, if any, would be go for lower VAT for restaurants or for tax relief for young families," he pointed out. 

Vassilev recalled that all budgets that Continue the Change has been tabling since the budget update in 2021 have kept expenditures down to 40% of GDP, as required by the Public Finance Act.

He criticized the Finance Ministry for failing to publish the end-January figures. "The data are always published on the first working day after the end of January. This is a tradition of at least ten years and the data have never been delayed, but they are now 24 hours overdue," he said, adding that he hoped that the Ministry will release the figures before Thursday when Finance Minister Temenuzhka Petkova will appear before the parliamentary Budget and Financing Committee.

Democratic Bulgaria does not rule out support for some budget bill texts

Bozhidar Bozhanov MP of Democratic Bulgaria (DB) told journalists he was "surprised" by the call of Prime Minister Rosen Zhelyazkov to the opposition to back the 2025 State Budget Bill when it is ready. "We have said clearly that we would back modernization policies and we do not rule out support for some texts [of the budget bill] if they match our priorities," said the MP.

Bozhanov also said: "We wonder if the majority is still stable and if it will back the budget bill, and maybe then they won't need support from opposition MPs."

He noted DB has proposed concrete measures to cut on expenditures in the Interior Ministry system by streamlining its wage bill, to require civil servants to pay social security contributions instead of having the state pay the full amount for them, to oblige private hospitals to conduct tenders, and to reduce the public administration by 15% in stages over the next few years. "If we see these policies written down, we may support the respective provisions on second reading," Bozhanov said.

Yordan Ivanov of DB said they expect the incumbents to propose a budget which ensures Bulgaria's accession to the euro area and fosters economic growth rather than piecemeal public spending. "After the Prime Minister's statement earlier today [Tuesday], we have the feeling and the reasonable suspicion that Mr Zhelyazkov is behaving as a hostage to a plot to sabotage Bulgaria's euro area bid," Ivanov commented, adding that GERB's state budget bill is a phantom because no one has seen it.

Ivaylo Mirchev said GERB have accepted their proposal for 20% VAT on restaurants. The restaurant business should not be placed in a privileged position, Mirchev commented. Discussing the dismissal of Deputy Finance Minister Lyudmila Petkova, Mirchev said there is obviously much turbulence in the Ministry of Finance, but it is a matter for the Prime Minister and the Finance Minister to comment on.

Concerning the Budget and Finance Committee's refusal to accept their proposal that candidates to regulatory institutions should undergo an integrity check, DB's Martin Dimitrov said: "The ruling majority obviously wants just to share them out and get them elected, which will result in bad regulators."