29.08.2014

"The expected additional deficit, which at the moment is around 1.8% or BGN 1.480 billion, will maybe reach on a cash basis between 2.5% and 2.7% of GDP or this is a bit less than BGN 1 billion", Minister of Finance Rumen Porodzanov forecasted in an interview for bTV. Minister Porodzanov further stated that the budget would be proposed for revision to the new National Assembly and according to his words the main problems related to the overestimated revenues and the additional expenditure. "The tax revenues are by BGN 1.7 billion more than those reported for the last year. This is almost 11% while the planned economic growth is 1.8%. There is no way for this to happen. The overestimated revenues create the possibility for more spending, which our colleagues from the previous government have done". The Minister of Finance commented that the additional expenditure exceeded BGN 800 million only in the budget organisations and around BGN 290 million - more than BGN 300 million to the municipalities, and these calculations include the Public Investment Programme "Growth and Sustainable Development of the Regions". Rumen Porodzanov expressed his concerns that deflation was creating problems not only for the economy, but also for the public finances "because the planned GDP, which is around BGN 81.6 billion at the moment, after taking account of the deflator we expect it to drop to BGN 89 billion at the end of the year".

In relation to the working meeting with representatives of the European Commission Minister Porodzanov specified: "The delegation was invited by me at the very beginning of my assumption of office, because there definitely had been poor communication with the directorates in Brussels given that in the past two months meetings on public finances and banking system problems had been refused". The liquidity support granted to the banking system was also discussed at the meeting.

To a question whether if the CCB does not open an excessive deficit would be reached Porodzanov replied that "on both cash and accrual basis we will remain below the three per cent", but specified that that would be the case if public finances were not required to support the banking system. "The moment public support for the banking system is required expenditure will exceed 3%", the Minister of Finance commented and added that such financial operations did not trigger an excessive deficit procedure when the 3% ceiling was exceeded.

Possibilities are being sought at the moment to grant partial access to the people's deposits within the liquidity accumulated by the bank in its present regime. He added that discussions were being held at the moment to find solutions for partial access to the deposits and the main issue was to calculate to what amount, for example between BGN 500 and BGN 2,000 for all deposits, in this case both guaranteed and not guaranteed, so that the people with low means to be able to get access to them. Minister Porodzanov again underlined that the decision on the CCB case was entirely within the powers and responsibilities of BNB and the position of the Government was that a solution for rehabilitating the bank should be sought by applying market instruments. "We wish the bank to begin to work and not reach the situation to pay deposits, and companies and state structures, which have deposits in the bank, to lose money", Porodzanov added.