Callendar

  • 2024
  • OCT
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
Tags

Ministry of Finance Expects Improved Budget Balance for 2020 Compared to Revised Estimates to 2020 State Budget Law

04.01.2021

Based on the preliminary data and estimates, the Consolidated Fiscal Programme balance for 2020 is expected to be negative, amounting to BGN 3.6 billion (3.0% of the projected GDP). The direct fiscal stimuli from the national budget in 2020, including the social and economic measures aimed at addressing the negative implications of the pandemic and the funds and the resources for front line units, total around BGN 2.8 billion. They have also been reinforced and supplemented by the resources from the EU programmes and funds reallocated for programmes and measures fighting the COVID-19 pandemic which amount to around BGN 0.8 billion, or a total of BGN 3.6 billion, which accounts for 3 per cent of the projected GDP. Taking account of these resources which were mobilised in the course of the unprecedented pandemic situation, it could be said that we maintained a good fiscal policy and, assuming there had not been a pandemic, we would have reached a balanced budget balance, i.e. what was initially set in the 2020 State Budget Law, as submitted by the Government and approved by the Parliament.

In addition to the budget incentives and the EU fund resources, some financial instruments were elaborated for financing through the Bulgarian Development Bank (BGN 0.7 billion) – guarantee credit schemes for SMEs hit by the pandemic-caused limitations, as well as commercial bank guarantees for granting interest-free loans to persons on unpaid leave or self-employed persons. A further public resource of BGN 0.2 billion was raised through financial instruments of the Fund of Funds.

As of end-December 2020 there is a nominal improvement in the Consolidated Fiscal Programme budget balance by around BGN 1.6 billion, as compared to the revised estimates to the 2020 State Budget of the Republic of Bulgaria Law.  The factors contributing thereto are the good revenue execution, on the one hand, and the lower-than-planned expenditures and contribution of the Republic of Bulgaria to the general EU budget, on the other hand. The lower-than-planned deficit for 2020 will enable a liquidity buffer to remain available in the fiscal reserve, which offers a shield to potential liquidity risks in the short term in the current context of great uncertainty of the future development of the pandemic situation in Bulgaria and around the world.

On the revenue side, an overperformance of the annual estimates is observed for most of the major taxes, as well as for the revenues from social security contributions. Despite the negative impact of the pandemic on the macroeconomic perspectives as regards the domestic and external environment and the growth, tax and social security revenues report a nominal growth of 1.5 per cent as against the pre-crisis 2019.

Following a period of a pronounced drop of VAT proceeds in Q2, there were months of gradual recovery and this slow-down was compensated for the year as a whole and now the revenues exceed the annual plan. The tax base for VAT from intra-Community acquisitions reports a growth on an annual basis, with the amount of effectively paid VAT increasing as compared to the previous year. Excise duty revenues are close to those planned for the year. As regards direct taxes, PITL proceeds were less affected by the negative impact of the pandemic, with some growth being reported as of the end of the year in comparison to 2019. The 60/40 measure for subsidised employment, which was implemented immediately after the break of the pandemic and which helped the employers that made use of it to retain their employees and workers, also contributed positively to the proceeds from these taxes. The execution of the CITL taxes is also good and even exceeds the 2019 proceeds. The overperformance of CIT, VAT, income and social security contribution taxes as compared to those in 2019 and to the 2020 revised estimates are an indicator for the adequate response of the state with measures and actions in support of businesses.

Key CFP parameters based on preliminary data and estimates:

CFP revenues, grants and donations for 2020 are expected to be BGN 44.2 billion, with the estimates being for BGN 43.5 billion, which accounts for an execution of 101.5% as against the annual estimates. The execution of tax proceeds is 102.5%. Compared to 2019, CFP revenues grow by BGN 0.1 billion, with some growth being registered mostly for tax revenues and for proceeds from grants and donations where EU programme and fund grants are mainly received.

As regards national budget revenues, tax proceeds increase most considerably (by BGN 0.5 billion). Compared to the estimates to the 2020 State Budget of the Republic of Bulgaria Law, there is an excess of the annual plan for some of the major taxes and for the revenues from social security contributions.

The Consolidated Fiscal Programme expenditures for 2020, including the contribution of the Republic of Bulgaria to the EU budget, amount to BGN 47.8 billion, which accounts for 98.0% of the annual estimates. For comparison, the 2019 CFP expenditures amount to BGN 45.2 billion. The higher expenditures this year are related mostly to some socio-economic measures aimed at minimising the crisis implications, including payments under the 60/40 measure, a monthly pension allowance of BGN 50 for all retired persons in the period from August to December, payments for farmers, as well as other expenditures under the measures approved. Comparing the capital expenditures with those in the same period of the previous year, one should take into account the impact in 2019 of the one-off expenditures incurred for the project for the acquisition of a new type of military aircraft for the Bulgarian Air Forces. Compared to the same period of the previous year, there is a nominal increase in social payments, staff costs, subsidy costs, etc. which take account of the majority of expenditures related to the socio-economic measures aimed at tackling the pandemic. 

Bulgaria’s contribution to the EU budget, which complies with the existing legislation in the area of EU own resources, amounts to BGN 1,3 billion, which is by BGN 0.1 billion less than the one planned in the 2020 State Budget of the Republic of Bulgaria Law.

The statistical data and the Information Bulletin on the Execution of the State Budget and the key Consolidate Fiscal Programme indicators based on the monthly reports on cash execution of first-level spending units' budgets for 2020 will be published on the website of the Ministry of Finance at the end of January 2021.

This website uses cookies. By accepting cookies you can optimise your browsing experience.

Accept Refuse More Information