01.02.2022

Based on the data from the monthly cash execution reports from first-level spending units, the Consolidated Fiscal Programme (CFP) budget balance on a cash basis for 2021 is negative, amounting to BGN 3,910.4 million, or 3.0% of the projected GDP, and is formed by a national budget deficit of BGN 4,033.5 million and by an excess of revenues over expenditures of BGN 123.1 million under the EU funds. For comparison, the maximum amount of the deficit set in the revised estimates to the 2021 State Budget of the Republic of Bulgaria Law is BGN 4,604.2 million.

CFP revenues, grants and donations for 2021 are expected to be BGN 52,340.1 million, or 103.5% of the revised annual estimates^[1]. Compared to the previous year, proceeds rise by BGN 8.0 million, or by 18.1%. There is growth both in tax revenues and in non-tax revenues and revenues from grants and donations where mostly grants from EU programmes and funds and other grants are received. Compared to the revised CFP estimates to the 2021 State Budget of the Republic of Bulgaria Law, an overperformance of BGN 1.8 billion has been reported since September 2021.

On the national budget revenue side, there is a considerable nominal growth of tax and security contribution revenues compared to the previous year (BGN 5.0 billion). Compared to the revised estimates to the 2021 State Budget of the Republic of Bulgaria Law, there is an excess of the annual plan for most of the major taxes and for the revenues from health insurance contributions.

CFP tax proceeds, including revenues from social security contributions, total BGN 40,876.3 million, which accounts for 103.7% of the tax revenues planned for the year. Proceeds from taxes and social security contributions form 78.1% of the total CFP proceeds for the year.

Direct tax revenues amount to BGN 8,258.4 million, or 107.4 % of those planned for the year. Indirect tax proceeds amount to BGN 18,976.3 million (104.2% of the estimates for the year), with VAT revenues amounting to BGN 12,978.5 million (105.7% of those planned), excise duty revenues amounting to BGN 5,659.8 million (100.3% of the estimates) and customs duty revenues amounting to BGN 289.7 million (120.1 % of the annual estimates). Proceeds from other taxes, including property and other taxes under the Corporate Income Tax Law, amount to BGN 1,411.7 million, or 113.4% of the annual estimates. Revenues from social security and health insurance contributions are BGN 12,229.9 million, which accounts for 99.6% of the estimates for the year.

Non-tax revenues amount to BGN 8,000.4 million, which accounts for 118.4% of the annual estimates and is formed mainly from revenues from state, municipal and judicial charges, revenues from property, concessions, sale of GHG emission quotas, etc. In April 2021 there were one-off revenues of BGN 660 million, inclusive of VAT, which represent the initial concession fee for the state from the Sofia Airport concession. Proceeds from GHG emission quota sales in 2021 amount to BGN 1,629.3 million, growing by BGN 751.4 million, or by 85.6% compared to the previous year.

Grant and donation proceeds amount to BGN 3,463.4 million.

CFP expenditures, including the contribution of the Republic of Bulgaria to the EU budget for 2021, amount to BGN 56,250.5 million, which accounts for 102.0% of the revised estimates for the year. The excess of the estimates to the 2021 State Budget of the Republic of Bulgaria Law is mostly due to the additional expenditures and transfers under the state budget of BGN 1.2 billion as approved by the National Assembly pursuant to Article 26(10) of the Public Finance Law on account of the overperformance of tax revenues.

The considerable growth of expenditures compared to the previous year (17.6 per cent) is linked, on the one hand, to the lower base in 2020 when the reported anti-COVID-19 expenditures were considerably smaller, while in 2021 these expenditures are considerable and are for the whole year, and on the other hand, to the income and social policies and the higher administration costs set in the Law on the 2021 State Budget of the Republic of Bulgaria.

Looking from the perspective of economic elements, there is a considerable growth in the social and health insurance expenditures. As to pension expenditures, almost BGN 1.7 billion have been spent on pension allowance for all retired persons (BGN 50 for January through September and BGN 120 for October through December). Furthermore, implementing a Decision of the National Assembly of 23.12.2021 on the approval of additional expenditures and transfers under the 2021 state budget on account of the overperformance of tax revenues (State Gazette, issue 110 of 24 December 2021), BGN 750 million were secured for pension allowance of BGN 60 for the first semester of 2022 for all retired persons. Along with that, pension expenditures were also influenced by the increased amount of the minimum length-of-service and old-age pension, of the maximum pension as from the start of the year, the baseline effect of the pension increase in July 2020, as well as the increase in July 2021. In connection with the above factors, pension expenditures register a nominal growth of BGN 3.1 billion compared to 2020.

There is an increase in the health insurance expenditures by BGN 0.6 billion related to the higher expenses for tackling the pandemic and the arrangements for financing health establishments in the context of the emergency epidemic situation: expenses for medicines, tests, consumables and protective equipment, expenditures supporting front-line staff in the fight against COVID-19 (supplementary monthly remuneration of BGN 1,000), payment to medical staff for vaccination of the population against COVID-19, monthly allowance of BGN 600 for doctors, BGN 360 for nurses and midwives and BGN 120 for hospital attendants, etc.

There is a considerable nominal growth of almost BGN 2.7 billion in the expenditures for subsidising non-financial enterprises due to the payments under the Programme for Offsetting Non-Household Electricity End-Users, the expenses of the Security of the Electricity System Fund, the payments under the 60/40 measure, the 80/20 measure, the Keep Me measure, the Turnover Support for SMEs Affected by the Temporary Anti-Epidemic Measures measure administered by the NRA, etc. The Programme for Offsetting Non-Household Electricity End-Users approved by Council of Ministers' Decree No 739 of 2021, amended by Council of Ministers' Decrees No 771 and 885 of 2021, and the Programme for Offsetting the Costs of Electricity Transmission and Distribution System Operators for Purchasing the Electricity Used for Technological Costs as approved by Council of Ministers' Decree No 893 of 2021 have been implemented in 2021 and are planned to be implemented until March 2022. It is possible for the programmes to be revised and supplemented. In this regard, the funds secured for compensating non-household electricity users to tackle the consequences from the considerable unfavourable fluctuations of electricity prices by the end of 2021 total BGN 1.3 billion, including BGN 0.45 billion, implementing the Decision of the National Assembly on Approval of Additional Expenditures and Transfers under the State Budget for 2021 on Account of the Overperformance of Tax Revenues for 2021, for payments in the first quarter of 2022.

The subsidies for hospital care, where expenditures grow by BGN 0.2 billion, also rise in comparison to 2020.

Non-interest expenditures in 2021 amount to BGN 53,941.0 million, which accounts for 101.9% of the annual estimates. Non-interest current expenditures amount to BGN 50,028.8 million. Capital expenditures (including net increment of state reserve) amount to BGN 3,866.3 million. The current and capital transfers to other countries amount to BGN 45.9 million. Interest payments amount to BGN 628.5 million, or 95.6% of those planned for 2021.

The part of Bulgaria’s contribution to the EU budget, as paid from the central budget as of 31.12.2021, amounts to BGN 1,681.0 million, which complies with the existing legislation in the area of EU own resources.

The fiscal reserve as of 31.12.2021 is BGN 10.7 billion, including BGN 9.7 billion of deposits in the BNB and in banks and BGN 1.0 billion of receivables under the EU Funds for certified expenditures, advance payments, etc.

The Consolidated Fiscal Programme implementation data as of 31 December 2021 are published on the website of the Ministry of Finance, in Statistics section. The statistics is accompanied by an Information Bulletin on the Execution of the State Budget and the Main Indicators of the Consolidated Fiscal Programme, which represents a short analysis of the performance of the key budget parameters on a consolidated level and by constituent budgets.

^[1]  Estimates to the 2021 State Budget of the Republic of Bulgaria Law (promulgated in the State Gazette, issue 104 of 08.12.2020, amended, issue 77 of 16.09.2021).