Budget Update Is Premature
The budget update is a bit hasty because the budget has not run out of resources yet. The only reason this is being done so quickly is because of the debt ceiling. The government is trying to give itself flexibility, financier and Fiscal Council member Lyubomir Datsov told Banker over changes to the state budget law, tabled in Parliament by Finance Minister Vladislav Goranov.
According to the expert, it is apparent that this will not be the last budget update. In his opinion, in a not so hasty update, there should have been a 10 percent increase in costs: "For everything else, it's relatively early, and whatever is said will be rash"
"There should have been measures to restructure the spending part - the subsidies, the transfers, the capital program. There is no point in updating just because of the Unemployment Fund and the debt ceiling, "Datsov said.
He said he understands the reason to increase the debt ceiling since the conditions for taking on new debt are currently good. "In a few months they will not be good. It is better that the Finance Minister now enters into a framework agreement and takes the debt if he needs it. His critics have not managed a crisis," he said.
Lubomir Datsov also stressed that everyone in Europe has thrown massive funds into the market to keep jobs, while our government has done the opposite - remaining conservative.
"The funds now available will not be enough. They will have to add more resources. It may even be in two or four weeks, but the situation is so dynamic that business and people need these funds now, "the financier summarized.
As The Banker announced, the parliamentary Committee on Budget and Finance will consider the cabinet's proposals as early as Wednesday (April 1st). Goranov said in advance that he had already spoken with the parliamentary groups of the ruling majority - the GERB and the United Patriots and had received support for updating the state budget.
In an update, approved by the government, Vladislav Goranov wants a mandate to increase the limit for taking on new government debt from the current BGN 2.2 billion to BGN 10 billion. The most negative scenario the government is considering is a 3% decline in the economy and a budget deficit of BGN 3.5 billion. In a first stage the state will assume a new debt of BGN 4.2 billion. The funds will cover the expected budget deficit, as well as the amount of BGN 700 million, which will increase the capital of the Bulgarian Development Bank.