Банкеръ Weekly

Briefs

CABINET REPORTS ON THE BUDGETS TILL 2009

According to projections, gross domestic product (GDP) growth will be 5.8% next year, and 6.2% in 2008. Inflation rate in the Cabinet's programme is 4.4% for 2007, 2.8% for 2008, and 3.1% for 2009. The Government has declared that these fiscal parameters entirely support the priorities, set in the Cabinet's programme for ruling. The target is to make Bulgaria a country with a high quality life, based on a sustainable social and economic development.
The maintenance of the macroeconomic stability in the country and of a stable fiscal policy in the context of Bulgaria's full-fledged EU membership is the main challenge which the budget policy faces in next few years.
Setting aside budget surplus will be used as a buffer against the record high deficit in the current account of the balance of payments in the coming years. That is aimed to reduce the State's debt and increase the fiscal discipline and the stability of public finances.
The Cabinet plans a BGN382.8MN surplus for 2007, or 0.8% of the projected GDP; BGN384.4MN or 0.7% of GDP for 2008, and BGN347.3MN, or 0.6% of GDP for 2009.
The Government expects consolidated revenues to reach BGN21,151MN in 2007, or 41.4% of GDP; BGN23,005.7MN (41.4% of GDP) in 2008, and BGN25,038MN (41.3% of GDP) in 2009.
The budget forecast of the BSP-NMSII-MRF tripartite coalition's Government reads also that achieving a sustainable economic growth and stability of the economy will be the main aim of the tax policy. Measure will be undertaken as well for promotion of the investment process and reduction of the tax burden.
Consolidated expenses (Bulgaria's instalment to the EU included) of BGN20,768.2MN, or 40.7% of GDP are planned for 2007; BGN22,621.3MN (40.7% of GDP) for 2008, and BGN24,690.8MN (40.8% of GDP) for 2009.
The rulers promise to adopt till 2009 the so-called programme budgeting in all stages of the budget process, i.e. planning, drafting, approval, fulfilment, reporting, and control. Another promise is to achieve progress regarding financial decentralization.
The 3-year budget forecast includes also the financial flows under the EU structural and cohesion funds, as well as the money intended for the single agricultural policy. However, the Government should ensure absorption and redirection of resources from the European funds in order to achieve a long-term positive effect for productivity and economic growth and approximation of EU living standards. The main sectors towards which the European funds will be directed are: rehabilitation of roads, power engineering, agriculture, ecology, development of human resources (education included) and science.

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