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

The 2022 budget is expected to close at a deficit of 2.9 % of the forecast GDP

04.01.2023

The budget deficit on an accrual basis for 2022 is expected to be around 2.9 % of the forecast GDP

The 2022 deficit, assessed according to the methodology of the European System of National and Regional Accounts (ESA 2010), is expected to be around 2.9 % of GDP, which is pursuant to the criteria of the Stability and Growth Pact and provides a sound outlook for the convergence assessment in the report of the European Commission and the ECB in the course of Bulgaria’s accession to the euro area.

The expectations for a huge overperformance of tax and social security revenues for 2022 as a result of the revised GDP level were not met.

Although the nominal amount of the forecast GDP for 2022 was increased by more than BGN 11 billion compared to forecast under the revised 2022 State Budget of the Republic of Bulgaria Law, the excess of revenues over the level set out in the revised annual estimates from July, if the impact of revenues of an extraordinary one-off nature is eliminated, is 2.1 percent and is mainly related to higher revenues from the sale of greenhouse gas emission allowances under the budget of the Electricity System Security Fund, higher revenues to the budgets of social and health insurance funds and municipal budgets, and to a small extent to tax revenues under the state budget. The parameters of the implementation of CFP revenues are good, but are not due to a lasting change in the economy that would allow budget revenues to grow steadily and sustainably in the coming years.

As of December 2022, CFP revenues, grants and donations are to the amount of BGN 64.7 billion, including BGN 3.8 billion revenues of an extraordinary one-off nature for compensation of high electricity prices on the free market, which have not been included in the estimates to the 2022 State Budget of the Republic of Bulgaria Law. If the impact of the extraordinary one-off revenues is eliminated, for 2022 CFP revenues, grants and donations amount to BGN 60.9 billion which slightly exceeds, by around 2.1 percent, the estimates to the 2022 State Budget of the Republic of Bulgaria Law.

Tax and social security revenues on a comparable basis amount to BGN 46.6 billion, which is by 1.1 percent above the level set out in the estimates to the 2022 State Budget of the Republic of Bulgaria Law and stems from social and health insurance contributions and property taxes.

 The tax revenues to the state budget are BGN 31.6 billion, or by BGN 0.1 billion more than planned in the 2022 State Budget of the Republic of Bulgaria Law. There is overperformance in corporate taxes and personal income tax, while indirect tax revenues are lower than planned for the year. In the case of VAT revenues, the data show that compared to the estimates to the 2022 State Budget of the Republic of Bulgaria Law, the proceeds for the year are expected to be by around BGN 0.67 billion lower than planned.

On a comparable basis, if the impact of extraordinary one-off revenues is eliminated, CFP non-tax revenues for 2022 amount to BGN 8.3 billion, which is an overperformance of the annual estimates by 13.3 percent.

In the part of grants and donations, revenues are expected to be lower than the estimates to the 2022 State Budget of the Republic of Bulgaria Law by around BGN 0.2 billion, which is due to the lower implementation of expenditures under the EU funds accounts and the lower amount of reimbursed expenditures by the European Commission, respectively.

The performance of CFP expenditures for 2022 is 95.6 %

CFP expenditures for 2022 amount to BGN 62.9 billion, if the impact of the extraordinary one-off expenditures of BGN 3.3 billion for compensation to non-domestic electricity consumers is eliminated, or 95.6 % of the estimates to the 2022 State Budget of the Republic of Bulgaria Law.

The absorption of EU funds is low, especially of the projects under the Recovery and Resilience Plan

The most significant delay in the implementation of the planned expenditures is related to the expenditure under the EU funds accounts. The main driver for this is the low implementation of expenditures under the Recovery and Resilience Plan (RRP) and some operational programmes from the 2021-2027 programming period; the expenditures and transfers under the state budget are also lower than planned. The expenditures and transfers under the EU funds accounts are by around BGN 2.7 billion lower than planned in the estimates for the year. In December, Bulgaria received the first tranche under the RRP to the amount of around BGN 2.7 billion; however, data show that the effectively implemented expenditures under the RRP are only BGN 0.1 billion.

The implementation of the investment programme is low

Lower than planned is also the level of implementation of capital expenditures under the state budget. The delay in the implementation of projects and programmes shifts to 2023 and subsequent years a large part of the expenditures planned for 2022, which, on the one hand, improves the cash balance for 2022 but, on the other hand, puts pressure on the 2023 budget.

The huge commitments for permanent current expenditures reduce the possibilities for new policies and predetermine the actions of next governments

According to estimates, for 2022 Bulgaria will have a significant primary structural deficit, which is related to the relatively high growth of nationally funded primary current expenditures, most of which is due to measures with permanent effect.

Based on preliminary data and estimates the budget balance of the CFP on a cash basis for 2022 is expected to be negative, amounting to BGN 1.5 billion (1.0% of forecast GDP), and is formed by a deficit under the national budget of BGN 5.2 million (a deficit of 3.3 % of forecast GDP) and a surplus under EU funds accounts of BGN 3.7 billion  (surplus of 2.3 % of forecast GDP).

As of end-December 2022, the central budget had used BGN 4.1 billion at the expense of the available funds in the other fiscal reserve positions which belong to other budgetary systems

The fiscal reserve includes all balances of bank accounts of budgetary organisations, the assets of the State Fund for Guaranteeing the Stability of the State Pension System, the resources from the European Union Funds, the Recovery and Resilience Plan, as well as the advance payments related to them, accounts for others’ funds and the central budget. The single account system allows for flexible and efficient management of the financial resources of the budget. As of 31.12.2022, the funds available in the fiscal reserve with the BNB and banks are projected to amount to BGN 11.9 billion. As of 31.12.2022, the receivables under EU Funds for certified expenditures, advance payments, etc., are estimated at BGN 1.0 billion.

The statistical data and the Information Bulletin on the execution of the state budget and the key indicators of the Consolidated Fiscal Programme based on data from the monthly reports on the cash performance of the budgets of the first-level spending units for 2022 will be published on the website of the Ministry of Finance at the end of January 2023.

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

Accept Refuse More Information