12.08.2014

"This year's budget may not remain within 1.8%, but it is mandatory for it not to exceed 3% of GDP on accrual basis in accordance with Eurostat requirements. We will do everything possible so that the cash deficit remains within those limits as well". This is what caretaker Minister of Finance Rumen Porodzanov says in an interview for BTA. According to him, the key challenge is to maintain public finance stability and to address the problems that have emerged from the bad budgeting and the suspension of EU funds. The Minister also puts the setting of preconditions for ending the year with a normally functioning budgetary system among the mandatory priorities.

He assures that by implementing the caretaker Government's priorities and tasks, the consolidated framework is being assessed in terms of performance of the basic fiscal parameters and their implications for the deficit. "Unfortunately, the data we have received from our colleagues from the different ministries and the Council of Ministers' decrees show that the expenditures incurred in the recent months are far too large. At the same time there is revenue underperformance", says Minister Porodzanov.

The Finance Minister announces that a draft budget review will begin in the middle of September after considering the outcome of the measures taken by the revenue agencies. According to him, it will by that time become clear whether there will be a change in any of the key indicators of the budget forecast for 2015 - 2017 but even if there is a change, it will not be a dramatic one, says the Minister.

The Finance Minister estimates that the current revenue underperformance of taxes and excise duties amounts to BGN 900 million but there are prerequisites and possibilities for reducing this underperformance to more reasonable figures. "The key issue with the revenue is that they have been increased by 11% compared to the those reported last year against an economic growth of 1.8%, i.e. this is impossible to be achieved no matter what measures for better collection are planned", he says. The other factor that puts budget execution at risk is the suspension of payments under OP Environment and under two axes of OP Regional Development. To avoid losing OP funds, the Ministry of Finance will try to transfer funds from the Growth and Sustainable Regional Development Programme to the suspended programmes so as to resume payments, Mr. Porodzanov points out.

"I am convinced that the banking system is stable. As to CCB, legislation provides for a procedure that is to be followed and no one would be allowed to break the law and I do not believe that such cataclysms will happen in the following months", the Minister is explicit. He assures that the Ministry of Finance cooperates fully with the Bulgarian National Banks. The auditors are making a thorough analysis of CCB but at this stage Mr. Rumen Porodzanov is of the opinion that nothing said about this case would be correct as the Ministry does not have the leading role in the entire procedure.