The risk for Bulgaria's public finances is increasing
Adelina Marini, April 12, 2010
More and more worrying become the analyses of economic experts on the situation with Bulgaria's public finances. According to the data, presented by the Institute for Market Economy and Industry Watch on April 9th, the day when the government announced that it was revising its assessment about the budgetary deficit for 2009, Bulgaria's public finances are under serious threat.
According to Industry Watch by the end of February the fiscal reserve was depleted to the very limit of the bottom line, set in the State Budget Law for 2010, and has reached 6.3 bn levs (3.23 bn euro). This is a decrease of a little less than 1 bn levs (0.51 bn euro), compared to January. The debt of the state is in the same time growing in February - by about 1 bn levs - from 2 bn to 3 bn. "The growth of this indicator is showing an increase of the risk for the public finances" is the conclusion of the analysts from Industry Watch. Measured as a percentage of the GDP, the monthly changes are as follows:
- the fiscal reserve is decreasing from 11.1 to 9 per cent,
- the debt is decreasing slowly from 14.5 to 14.2 per cent.
For the Institute for Market Economy (IME) "the data for the implementation of the budget for the first two months of 2010 are, to put it mildly, worrying". For the economists from the Institute, the risk of an increase of the deficit on the consolidated programme not only for the same period of 2009 but also compared to a month earlier, is fundamental. IME notes, however, a positive trend - spending for January and February is slowing down on an annual basis, compared to the speed of growth in January when it was 31.7%. In February this growth slowed down to 21.8%.
"This turn (we hope it would be a solid turn, and not just a temporary one) is good, especially if accompanied by serious measures to cut spending. The decision of the Constitutional Court from last week should not serve as a justification - there are possibilities that allow spending cuts without violations of the law. The important thing is the planned spending cuts to take place quickly", IME commented.
In an interview for the Bulgarian National Radio the deputy premier and minister of finance Simeon Dyankov announced that he hoped for a zero budgetary deficit in April and that the government already had a plan how to additionally reduce spending without violating the decision of the Constitutional Court that declared article 17 of Budget 2010 Law as illegal, because it gave the government the right to reduce spending without the approval of Parliament. Dyankov assured that as of Tuesday (April 13), when the National Assembly is resuming work after the Easter holidays, the government will start filing bills, related to the anti crisis package. Mr Dyankov was confident that the government would manage to collect 1.6 bn levs (0.82 bn euro), which is the main purpose of the package.