Speaking on behalf of the ruling coalition at a briefing on Wednesday about the measures the government suggests by way of compensation for the high inflation, Prime Minister Kiril Petkov said that "when the living standards of the Bulgarian people and curbing the crisis are concerned, we stand united".
Petkov stressed the measures are an opportunity to support the most vulnerable who at the moment are at the greatest risk from the impact of inflation, and young families with kids. Specific focus has been placed on fuels and electricity, the Prime Minister said.
Measure number one is support for families with kids. "This is a long-term measure under which the tax relief for children will increase to 6,000 leva per year, from the current 4,000 leva, with an opportunity to use it every three months. In other words, families with children will be able to take advantage of this tax relief immediately," Petkov said.
The next measure is updating pensions by and average of 20% as of July 1. All pensioners will also get the additional coronavirus payment of 60 leva, Petkov said, adding that in this way the minimum pension increases to 467 leva, from 370 leva. The PM noted that in the past twelve months the increase totals 167 leva, or 56%. Petkov stressed that when GERB governed Bulgaria in the past twelve years, the minimum pension increased by 100 leva. "Now we have an increase of 167 leva in just a year," he said.
The next measure is having zero VAT on bread, a reduced VAT to 9% on central heating and running hot water, natural gas and methane. The threshold for VAT registration is increased to 100,000 leva from the current 50,000 leva. Furthermore, excessive profits from generation and sale of electricity will be taxed as a way to compensate industrial consumers.
The growing fuel prices will be offset by a discount of 0.25 leva per litre of A95-H petrol and diesel any time drivers fill up their tanks at filling stations.
Furthermore, the total amount of electronic vouchers to be used to buy food, pay utility bills, and tickets for cultural and artistic events will be increased. Another measure is cutting the interest on overdue payments to the state and municipal authorities.
The majority of the measures, which are worth a total of 2 billion leva, will be enacted in the budget update planned to be passed in June.
Finance Minister Assen Vassilev, who too spoke at the briefing in the building of the Council of Ministers, said that the government has several scenarios about "the evolution of inflation".
Vassilev described as the most likely and moderate scenario an average yearly inflation of 10.4% as forecast by the Finance Ministry. He said there is a more favourable, as well as a more unfavourable, scenario but the projected 10.4% is the likeliest. He stressed that even in the worst-case scenario, Bulgaria continues to report economic growth. Vassilev said that this is corroborated by the data for the first quarter of the year when the economic growth was 4.5%, where inflation has been taken into account.
The Finance Minister said that the main cause of inflation is the military conflict in Ukraine which disrupted the supplies of gas, oil and grain.