site.btaMPs Debate Budget Deficit, Capital Expenditures after Finance Minister's Hearing

Bulgaria's National Assembly on Tuesday debated the amount of the budget deficit and the economized capital expenditures.

The debate was prompted by a hearing of caretaker Finance Minister Rositza Velkova on the implementation of the 2022 budget and the options for the 2023 draft budget, initiated by BSP for Bulgaria, and on the state of deficit financing, moved by GERB-UDF.

Kiril Ananiev MP of GERB-UDF: The absorption rate of the money under the Recovery and Resilience Plan is very low, and BGN 1.7 billion have been saved on capital expenditures. If the tax compliance rate is improved, Bulgaria can reduce its budget deficit by some 1.2%, so that we can meet the Stability and Growth Pact requirements next year.

Kiril Petkov MP of Continue the Change: The Finance Ministry's economic growth projections are lower than the official figures announced by the International Monetary Fund. The understating of the growth leads to an old model of non-transparent capital spending commitments. The actual difference between the Finance Ministry's plan and the IMF projections is BGN 7 billion, which translates into a budget deficit of 2.5% of GDP, given that all policies of the previous government of the Continue the Change-led coalition are retained. Petkov's parliamentary group is afraid that the money saved on capital expenditures might be spent on non-transparent payments to construction companies. 

Yordan Tsonev MP of the Movement for Rights and Freedoms: Cutting the deficit from 6% to 3% of GDP so as to qualify for entry into the eurozone requires telling Bulgarian citizens right now what will be pared. When there are crises and compensation payments have to be made to both businesses and members of the public, when there is inflation which will most probably turn into stagflation, people should be very carefully told what policy is being pursued, what are the benefits and what price will be paid by us all.

Kostadin Kostadinov MP of Vazrazhdane: The numbers reported by the Finance Minister are extremely alarming. The fiscal reserve may drop below BGN 5 billion. In practice, the country may find itself without reserves. A deficit of over BGN 11 billion for the next three years implies that new debt will be incurred to repay an old debt.

Rumen Gechev MP of BSP for Bulgaria: The fiscal rules need to be handled with utmost care. We should follow the EU policy and stay close to the fiscal rules while ensuring Bulgarian economic development and protection of Bulgarian households. The European Commission waived the fiscal rules back when the COVID-19 pandemic and the war in Ukraine broke out. Only Denmark and Luxembourg have budget surpluses. All EU Member States substantially surpass the budget deficit limit, such as Slovakia, Czechia, Hungary, Austria, Greece and France. Even the most developed countries decided against an extreme austerity policy because bailing out business and households proved to be more important. The aspiration to achieve a deficit of 3% of GDP will be for the account of social expenditures. 

Vladislav Panev MP of Democratic Bulgaria: What is needed is a wise and reformist budget with as low as possible budget deficit. This requires awareness of the challenges facing the global economy. A global recession is coming and the world will indeed find itself in stagflation, as a result of which investment costs will rise and cash flows will dry up. That is why it is crucial that the National Assembly pass legislation to unblock investment activity. The policies supporting young married couples with children should be retained. 

Georgi Samandov MP of Bulgarian Rise: Bulgarian citizens are not interested in our participation in world and energy markets. They want to know how they will cope with the difficulties gripping all Europe.