Financial and business news from Bulgaria

Over BGN 10 billion deficit in the budget for 2 years due to the pandemic

Among the priorities next year are income, education, health, social and pension policy and defence.

Measures to support the economy and people because of the crisis caused by the pandemic will lead to more than 10 billion levs deficit for this year and next. This is clear from the draft budget for 2021, published on the website of the finance ministry.

For this year the planned deficit is 4.4% of GDP or over BGN 5.2 billion. For the next amount is larger and is almost 5.5 billion levs. Experts from Kiril Ananiev's office point out that if the effect of measures related to the COVID-19 pandemic is eliminated, the deficit for 2020amounts to 2% of GDP.

The pledged revenues for next year are BGN 47.645 billion and the costs are 52,532 billion. According to the Finance Ministry's forecasts, the deficit will fall to 1.9% of GDP in 2022 and to 1.8% for 2023. Over the next two years, the acquisition of combat equipment and a new type of combat aircraft had an effect.

Among the priorities of next year's budget are income, education, health, social and pension policy and defence.

From 1 January 2021, the minimum wage is raised from 610 to 650 BGN and the amount is maintained until 2023. More than BGN 410 million are given for salaries of teachers and non-pedagogical staff. Money is also envisaged for a 30% pay rise in administrations tasked with pandemic management activities. Next year are raised by 10% and the remuneration in the remaining administration and judiciary. BGN 474 million is additionally given to become the minimum pension as of 1 January 300 BGN, and another 94 million goes to the bigger ceiling - from 1200 to 1440 BGN 884.2 million will cost lifting all pensions by 5% of the July 1. For the payment of BGN 50 add-ons until March next year, 318 million BGN have been allocated.

For 2021, defence spending amounts to 1.69 per cent of GDP, which is 0.05% more than the national plan. By 2024, money for the army should reach 2% of GDP. Next year, there will be one-off transfers to support municipalities with a population of less than 30,000 residents who do not have access to the general subsidy. These are mainly those where there is a reduction from property tax by more than 5% and from a tourist levy of more than 15%.

Based on assumptions and projected net debt financing in 2021-2023, government debt is expected to reach a level of BGN 38.9 billion at the end of the period. Bulgaria's debt at the end of next year will increase to 28.2% of GDP, vs. 25.6 per cent for this. It foresees consolidated debt to be in the range of 27.5 -29.4% of GDP at the end of 2023.


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