20.12.2013

"The main objective of the Ministry of Finance in the past six months has been to restore the connection between ensuring the liquidity of the businesses and maintaining financial discipline", Minister Petar Chobanov stated at a press conference dedicated to the report on what the MoF had performed as to the priorities in the Government Programme. Minister Chobanov reminded the most substantial management measures and changes which the MoF management team implemented to overcome some of the bad practices such as delaying VAT refunds. He also commented on the legislative changes to improve revenue collection such as the improvements to the single account for payments to the budget, the reverse VAT charge mechanism, the VAT cash accounting mechanism for small enterprises and last but not least the improved communication between the businesses and the revenue agency. Minister Chobanov emphasized that all that was subject to an overall change of the approach to fiscal policy and its connection with the real economy development.

Minister Chobanov announced that in the past 6 months BGN 2.2 billion had been paid under the Operational Programmes and that the provision of those funds was already giving results - recent data showed an increase of corporation tax revenues. "Until yesterday payments have been made under all Operational Programmes and there has been not termination of the payments on the part of the MoF. On the contrary the payments from the National Fund have been accelerated and the results are better than expected. We have been aware that the EU will not reimburse the payments made by the end of the year and that required a revision of the extra budgetary account of the National Fund so as to avoid a negative impact on the businesses", Chobanov commented.

The Finance Minister said that based on recent seasonally not adjusted GDP data the growth for the nine months y.o.y was 1.5%. He stressed that that gave a positive signal for the economic development and for an expected higher growth in 2014, but at the same time he forewarned that we should not be too optimistic for a huge jump of the economy.

Minister Chobanov made also a brief overview of the main priorities of the 2014 budget with a view to counter speculative public talk that was not grounded on actual facts. For example the funds under the Growth and Development of the Regions Programme would not be only for the ministries and the regions will not be harmed. Around BGN 80 million will be allocated to ministries while the remaining more substantial part of that resource will be for projects of local governments the aim being to reduce the regional divergences in economic development.

Regarding the subject of debt and its linking with the Currency Board Arrangement, Chobanov forewarned that such speculations would bring political benefits to no one. "The Bulgarian Currency Board Arrangement is stable and unshakable and it would be the currency regime with which the country will join the Euro zone", the Finance Minister was adamant. "The Currency Board Arrangement is a stable framework with safeguard mechanisms and it has survived during the terms of office of several governments for already 16 years", Chobanov added. He emphasized that debt financing next year in its greater part was to cover the maturing debt in 2014 and the beginning of 2015 and only BGN 1.4 million was to cover the budget deficit. "We remain well beyond the "achievement" every year to cost us BGN 2 billion and that in the course of 4 years", Minister Chobanov stated.