Банкеръ Weekly

Briefs

IMF PRESENTED CABINET WITH A BELT WITH LESS HOLES

Bulgargaz and NEC - the biggest tax-payers in Bulgaria, are not allowed to increase the amount of their bad debts. This is one of the explicit demands included in the two-year agreement with the IMF, which our government should comply with for to receive without any problems money from the fund. The agreement was signed in February, 2002. A couple of terms and engagements, included in it, expire in September and the following months till the end of the year. The condition results from the fact that the two above mentioned companies and BTC are the pillars supporting financialy the country. They provide more than a third of all tax incomes in the state coffers. If their revenues drop, the government will be forced either to increase the budget gap, or to lower its spendings, which are too insufficient even at present. The execution of the IMF's demand for NEC and Bulgargaz, however, will have a crutial impact on both individuals and companies. The monopolistic status of the two companies in Bulgaria and the high prices of their products had turned many households and firms in irregular payers. Their number will increase in winter when citizens should have to pay the newly calculated prices of heat and power energy, which since July 1, are respectively by 12% and 15% higher. The unserved debts, especially those of the power energy consumers, will go up and NEC should have to press them for to show its activity before IMF. NEC and Bulgargaz have no choice - they should have to broadly and unconditionally fill claims against their irregular clients. That, in turn, will cause firm bankruptcies, higher unemployment and more Bulgarians living in poverty. Another IMF condition, which supposes financial belt tightening, is that the government has to include all off-budget Bulgarian Lev accounts in its united BNB account till end-September. The idea is a more strict control to be imposed on the budget funds spending and a more efficient money management, which gives a chance for saving public funds. IMF urges the cabinet to choose an information system provider untill the end of September, which will serve the National Agency for Revenues. This state structure was created in the beginning of 2003 for improving the tax and health and social insurance payments collection. Up to the moment the government managed to approve regulations for the agency structure, to appoint its management and to borrow EUR31.9MN from the World Bank to finance its creation. Part of that money will be used for byuing the information system in question. The agreement also determined the ceiling of the total salaries which could be distributed in 60 overdebted or registered financial losess state enterprices like Bulgartabak-Dupnitsa, Radiotelecomunication, Hemus Air and Information Services, Zdravets Mine, Balkancar-Danub, Terem, etc. The total amount which could be spent for rewarding employees in these 60 firms shold not exceed BGN150.1MN. The so far described measures, which the IMF insists on, aim to guarantee a minimum gap of the consolidated budget (which includes the republican budget, municipality budgets and the budgets of the National Insurance Institute and the legal authority). According to the two-year stand-by agreement the deficit must not exceed BGN100.5MN at the end of June and BGN75.7MN at the end of September. The agreed with the IMF budget gap for 2003 should not top BGN262.8MN. Till now the cabinet comply rather well with that demand of the fund. According to the last figures of the Ministry of Finance the consolidated budget as of May 31, had a surplus of BGN609.72MN. However, it will be swallowed till end-September because of the future foreign debt payments and spendings on pensions, jobless claims, hospital and school maintenance. At the same time incomes from direct taxes - on profit, personal incomes and dividents, in the second half of the year will be more modest than in the first six months of 2003.

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