Банкеръ Weekly


Parliament Passes Updated State Balance Sheet 2014

The new, updated state budget of Bulgaria for this year was adopted Wednesday, November 26. Since it was submitted by the government, it has passed through two readings in the budget committee and two votes in plenary sessions, but the project has not undergone any changes. All proposals of the opposition remained outside the renovated state balance. Valid remain the initial key figures proposed - a deficit of 3.7% and new debt of 4.5 billion levs.

The decision of the Parliament greenlights the Council of Ministers to take actions to prepare the expansion of the external debt, including through issuing government securities in international markets, as well as medium-term programme of debt issuance in international capital markets, subject to ratification in 2015.

The Council of Ministers will be able to provide the Guarantee Fund for deposits in banks with loans from the central budget of up to 2 billion levs, guaranteed by assets of the Fund, including its future receivables from banks in the amount of their annual premiums.

For banks declared bankrupt, the funds available at the date of bankruptcy on the accounts and deposits of budget organizations, subject to security under the Public Finance Act, are transformed into a debt of the Treasury and are reimbursed to the budget organizations in BGN on the account of the central budget in the national Bank. The funds will be reimbursed to the budget organizations at the expense of the central budget by the respective primary budget operators.

If the money of a budget organization were kept in separate bank accounts for the EU funds, the amounts recovered in the budget of the budget organization are transferred to the servicing banks in the respective accounts of EU funds.

With the amendments to the state budget the Parliament provided additional funds to some ministries and departments. By the end of the year the Interior Ministry will receive up to 125.7 million levs, the Ministry of Labour and Social Policy – up to 50 million levs, the Ministry of Healthcare - to 24.2 million levs, the Ministry of Regional Development – up to 16.4 million levs; the Ministry of Agriculture and Food – up to 16.4 million, the Supreme Judicial Council – up to 10 million levs, the Ministry of Justice – up to 5 million levs, Ministry of Foreign Affairs - up to 3 million levs and the State Agriculture Fund – up to 70 million levs. The calculations have included also up to 77 million levs for funding of European projects and other expenses.

The update of the budget for 2014 shows that there is uncollected revenue of 1.0618 billion levs (1.3% of projected GDP).

The main taxes that expected lower revenues than planned are VAT on imports, excise taxes, corporate taxes, and also the increase in certain costs. The deficit on a cash basis in the consolidated fiscal programme will reach 3.7% of projected GDP. Parliament did not accept the proposal of MPs from the new ABC party the funds earmarked for Christmas bonuses for pensioners with low incomes, to be raised from 50 million to 110 million levs.

MPs rejected the proposal of the socialists (BSP) to increase by 337 million levs the expected revenue and so the deficit to stay within 3 percent.
Kiril Tzotchev of ABC said during the debate that the budget for 2015 must firmly set Christmas bonuses for all pensioners. Yordan Tsonev of the ethnic Turk Movement for Rights and Freedoms noted that MPs of his party will refrain from support of the update in the budget because they believe that the approach should be different.

Through the bill amending the Law on State Budget for this year lawmakers made changes in the Bank Insolvency Act relating to transactions of set-offs of sums in the Corporate Commercial Bank (CCB). According to them, any set-off is invalid with respect to the bankruptcy creditors except for the part that each of them would have received in the distribution of liquidated property.

Chavdar Georgiev of the socialist party said that this is actually a case of rearrangement of already concluded deals. Martin Dimitrov of the rightists Reformist Bloc answered that because of the cessions with good credits what was paid was first unsecured deposits before the guaranteed deposits. He noted that in this case the move is to protect the public interest.

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