15.12.2018

“We are managing to make the budget a bigger instrument for bridging over inequalities”, says Minister of Finance in an interview for the 24 Hours Daily. He highlights that this is due to the economic growth and the better macro indicators and gives as an example the 30% increase in GDP and the 40% increase in tax revenues in 2018 as compared to 2014.

According to him, the budget also reflects the political intentions of the Government what for and how to spend the money collected from the Bulgarian citizens. “This budget may be executed by this Government only. In 2017, we saw for a while how another Cabinet worsened the budget indicators in the short term and fast. I am convinced that we have the political capacity to retain the ruling majority and to hold on to the priorities that are commonly accepted or at least supported by the majority of the Bulgarian citizens”, the Minister is explicit. According to him, education and improving the infrastructure and the administrative services are the key prerequisites for a better quality of life and for a more successful development of the society, and because of that more funds are envisaged for these areas in 2019.

“The budget redistributes from a far bigger economy which results from the positive processes taking place in the last couple of years. Provided we kept our promise not to modify the tax policy parameters in the coming years, this means only one thing, i.e. that the Bulgarian people have produced more”, Minister Goranov says. He underlines that taxes remain unchanged and the increasing social part of the budget expenditures results in a bigger government support: “We have to add here education, increased expenditures for people with disabilities, increased expenditures of the entire PSS. You will also see here half a billion more for healthcare. I.e. the bulk of what is produced goes to bridging over the inequalities without increasing the taxes. This will be the attitude of the present government in the new year.”

As to the wage growth in the public administration, Mr. Goranov pays attention to the fact that for the first time since 2008 there will be a horizontal increase in remuneration. He explains that the goals here are at least two: on the one hand, to make this adequate to the processes in the real economy, and on the other hand, to press the real sector, making it realise that the labour cost cannot be a source of competitiveness. “We have seen in the long years when the low taxes and the low labour cost had been a source of competitiveness that we did not manage to achieve anything else but deepen the inequality and see the huge number of young brains leaving for Europe where the labour cost is higher. Even if later, we must realise that the labour cost is not a productivity factor only”, Mr. Goranov elaborates.

The Minister of Finance assures that the Government is not going to make more expenditures than those approved by the Budget Law. He reminds that the debate about the flexibility of the executive as regards redistribution is endless, tending to limit the powers of the Government. In line with the recent amendments to the Public Finance Law, the Government has been allowed to do this by a public piece of legislation. “We have been criticised that this is more than needed, but first we need to specify that it takes place only within the expenditures endorsed by the Parliament, i.e. in case of overperformance of revenues, they cannot be spent. Second, we need to specify that according to the Constitution it is the Council of Ministers that is responsible for budget execution. It would be a mistake, it would be imbalanced, if the Council of Ministers is not given any room for flexibility regarding budget execution. Because, God forbid, in case of an emergency the flexibility for finding operational solutions is entirely with the executive”, Mr. Vladislav Goranov specifies.