Cause and Effect in European Politics and Law

Brussels: reduce the deficit by 2011 and avoid deterioration in 2010

Adelina Marini, July 7, 2010

The European Commission announced Bulgaria had an excessive budgetary deficit for 2009 and moved forward to the next phase of the excessive deficit procedure. The assessment is based upon the data provided by the Bulgarian authorities in April 2010 and verified later by Eurostat. According to the assessment, the general government deficit was 3.9% of GDP for last year which is not close to the referent value of 3% as the Stability and Growth Pact stipulates. This is why the Commission called upon the Ecofin to decide in the same spirit and recommended Bulgaria to correct its budgetary deficit.

The recommendation of the Commission toward the Bulgarian authorities is to reduce the general government deficit to below 3% of GDP in a reliable and sustainable way by 2011 at the latest. In the same time Bulgaria should undertake necessary measures to avoid deterioration of fiscal deficit for 2010 above the 3.8% planned this year and to also try and not go beyond 0.75% deficit in 2011.

Furthermore, another recommendation to Bulgaria is, in order to limit the adjustment risks, the country to enhance fiscal management and transparency through increasing Ministry of Finance's spending control, enhancing the binding nature of the mid-term budgetary framework, as well as improving monitoring over budget implementation throughout the year. The Bulgarian authorities are also expected to report progress on these recommendations in a separate chapter to the updates of the convergence programme until the excessive deficit procedure is over.

Separately, Bulgaria is invited to improve public spending efficiency by applying entirely the planned structural reforms in the area of public administration, healthcare, education and pensions.

Translated from the Brussels language, these recommendations mean that the Bulgarian government does not have a useful move right now but to stop suggesting to the society whether there is deficit or not and whether Brussels will be angry with the deficit, to report on a monthly basis surpluses as well as to explain to Brussels that it is not right. And in case these recommendations are not made painfully clear to the government, the European Commission has prepared another measure which will for sure surprise everyone - it will include the Bulgarian statistical data in the annual report on the Control and Verification Mechanism in the area of justice and home affairs, expected to be published this summer.

And the calls for transparency are probably related to the difficulties the Commission encountered in its attempt to understand why the government decided to update this year's budget and before that it revised several times its data about the budgetary deficit for 2009, and in the end it reduced to "expected" the threat for an extraordinary mission of Eurostat in Bulgaria.