site.btaUPDATED Finance Minister Comments on State Budget, Recovery Plan, Entering the Eurozone

Caretaker Finance Minister Rositsa Velkova said in a Bulgarian National Radio interview that Bulgaria must limit expenses and stabilize the revenue part of the budget, because at some point it may run out of liquidity. Eurozone countries are massively reducing their deficits in the forecast for next year, she added. 

"Towards the end of October, we expect a balanced balance or a slight deficit, but traditionally in November and December significant deficits are formed, because the payment of capital costs, of activities carried out during the year, begins," Minister Velkova added. "Last year up to and including November we were in surplus and in December we ended up with a BGN 3.5 billion deficit, which will happen this year as well," she added.

"We have three options for the budget that we can submit to the National Assembly, and the one that we will agree with the departments and ministries, as well as with the National Council for Tripartite Cooperation, is the option with a deficit of 6.6%. This deficit is formed while preserving absolutely all current regulations and policies, without any change in the revenue and expenditure part of the policies," Minister Velkova pointed out. 

The Bulgarian National Bank (BNB) predicts next year's gross domestic product (GDP) growth of 0.1%, while the Finance Ministry predicts 1.6%. When the Finance Ministry  developed the macroeconomic forecast for GDP growth, it complied with forecasts developed by 14 institutions, three of which are Bulgarian. The forecasts of these 14 institutions for GDP growth are between 0.1 and 3.8% and the average is 2.3%. 

There are significant expenses stemming from current policies, as personnel expenses increased by BGN 1.9 billion, pensions expenses - by BGN 3.7 billion, social insurance and health insurance payments, including pensions, increased by BGN 4.9 billion.

"In December of this year we will receive BGN 2.6 billion under the Recovery and Resilience Plan, but the expenditure that will be carried out this year will be no more than BGN 100 million, which means that in 2023 we have to catch up with the investment costs under the Plan. Otherwise, we will not be able to achieve the results to receive subsequent payments under the Plan," the Minister stressed. 

In response to a question about whether there is money in the budget to increase incomes, the minimum wage, to support people in extreme need, Minister Velkova indicated that support should be given to the most vulnerable groups of the population, having minimum incomes. A salary increase in the budget realm is hardly something the state can afford, especially since personnel costs have grown more than those in 2019. 

"At the moment, we expect to fulfill the revenues stipulated in the updated Budget Act and we expect a surplus of BGN 200 million in revenues, of which BGN 150 million are from social security contributions and BGN 50 million - from personal income tax , stated Velkova.

She also commented on Bulgaria's readiness to enter the Eurozone, stating that at the technical level all working groups are working and moving towards a target date of January 1, 2024. She said that talks have been held with the European Union, the European Central Bank, as well as with certain Eurozone member states, so as long as all the technical and expert work is done, it could happen. "The most important thing is that there is political will, because if there is no political will, it means that we are not ready for the euro," Minister Velkova added. She argued that it would be much better for the fiscal if Bulgaria was in the Eurozone. 

According to the agenda of the extraordinary plenary session scheduled for Tuesday, October 25, at 10 am, the Parliament will hear Velkova on the implementation of the State budget.