The country’s budget deficit will grow to a total of BGN 4 billion by the end of October, according to the Ministry of Finance, based on preliminary data and estimates, the Ministry of Finance reports on its official website. This represents an increase of BGN 1.17 billion compared to September. The expected negative result in the amount of BGN 4 billion on the balance of the consolidated fiscal program (CFP) represents 2 percent of the estimated gross domestic product of the country.
In addition to the regular monthly expenses for staff, maintenance and those in the social sphere (for pensions, benefits and benefits and health insurance payments), in October about BGN 200 million of state aid was paid out under the program “Aid to support the liquidity of farmers to overcome of the negative economic impact of the Russian aggression against Ukraine” and the program “Aid to support the liquidity of farmers, producers of grain and oil crops, to overcome the negative economic impact of the Russian aggression against Ukraine”, as well as about BGN 200 million. for the supply of new railway rolling stock for passenger transportation under the Recovery and Sustainability Plan, and others, the announcement of the Ministry of Finance states.
Main parameters under the CFP based on preliminary data and estimates:
Incomes, benefits and donations under the CFP as of October 2024 are expected to be in the amount of BGN 58.1 billion, which is 77.2 percent of the annual estimates and represents a nominal growth of 8.8 percent compared to the same period of the previous year. And in October, the trend observed from the previous months continued for a moderate increase in receipts in the part of tax and social security revenues, and their implementation by October 2024 is expected to be 81.6 percent of the annual estimates, at 79.0 percent for the same period in 2023
Compared with October 2023, income under the CFP increased by BGN 4.7 billion (8.8 percent), with tax and insurance revenues contributing to this, which increased in nominal terms by BGN 5.3 billion. (12.6 percent) and the receipts in the part of aid and donations (mainly grants under EU programs and funds), which increased by BGN 600 million. Compared to the previous year, non-tax revenues decreased by BGN 1.2 billion (13 percent), which is mainly due to the lower income from dividends and from the sale of quotas for greenhouse gas emissions.
Expenditures under the CFP (including the contribution of the Republic of Bulgaria to the EU budget) as of October 2024 amount to BGN 62.1 billion, which is 76.2 percent of the annual estimates. Compared to the previous year, there was an increase mainly in social costs, as a result of the higher pensions paid, after the increases that came into force in July 2023 and July 2024, as well as in personnel costs, after the increase in the remuneration of teaching staff and in other administrations with the 2023 ZDBRB and the 2024 ZDBRB, and others.
The part of the contribution of the Republic of Bulgaria to the EU budget, paid as of 31.10.2024 from the central budget, amounts to BGN 1.3 billion, which is in compliance with the currently effective legislation in the field of the EU’s own resources.
Interview Transcript: Time.news Editor with Finance Expert
Editor: Welcome to Time.news! Today, we’re diving into Bulgaria’s financial landscape as we approach the end of October. Joining me is Dr. Elena Markova, an economist and financial analyst, to discuss the latest budget deficit projections and what they mean for the Bulgarian economy. Thank you for joining us, Dr. Markova!
Dr. Markova: Thank you for having me!
Editor: Let’s dive right in. According to the Ministry of Finance, Bulgaria’s budget deficit is expected to grow to BGN 4 billion by the end of October. That’s a significant increase from September’s figures. What are the main factors contributing to this rise?
Dr. Markova: The budget deficit is influenced by several factors this month. A large part of the expenditures includes regular costs for staff and social programs, such as pensions and health insurance. Additionally, the government has allocated around BGN 200 million in state aid aimed at supporting farmers affected by the Russian aggression against Ukraine. These emergency funds add substantial pressure to the budget.
Editor: That’s a critical point. The economic impact of international conflicts can ripple through domestic budgets significantly. What does this BGN 4 billion deficit indicate about the overall financial health of Bulgaria?
Dr. Markova: A BGN 4 billion deficit represents about 2% of the GDP, which is within a manageable range but still concerning. It signals that while the country is actively responding to immediate social and economic needs through spending, it also underscores a reliance on borrowing or drawing from reserves if expenses continue to exceed revenue.
Editor: Speaking of revenue, the Ministry also reported that income from taxes and social security is on the rise, with total projected receipts growing by 8.8% compared to last year. How sustainable do you think this growth is?
Dr. Markova: The increase in revenue is encouraging, indicating better economic performance in some sectors. However, we need to be cautious with our optimism. Sustained economic growth requires consistent reforms and investments, particularly in improving the business climate and encouraging innovation. If we do not maintain this trend, the increase could be short-lived, especially if external factors—like geopolitical tensions—continue to impact the economy.
Editor: You mentioned earlier the aid provided to farmers. Considering the ongoing geopolitical tensions, especially with Russia, how vital is this support for the agricultural sector, and what long-term strategies might be needed?
Dr. Markova: The aid is essential right now, as many farmers are struggling to cope with the increased costs and disruptions caused by the conflict. In the long run, however, Bulgaria needs to look at diversifying its agricultural practices, investing in sustainable farming technologies, and perhaps even enhancing trade agreements to buffer against global shocks. Strengthening supply chains and agricultural resilience will be crucial moving forward.
Editor: Great insights, Dr. Markova. what would you suggest as steps that the government could take to improve the fiscal situation and stabilize the economy?
Dr. Markova: First and foremost, a comprehensive review and reform of tax policies could enhance revenue generation. Additionally, careful monitoring and control over public spending, particularly in areas not yielding immediate social returns, is crucial. Lastly, fostering a long-term vision for economic development—balancing immediate needs with future growth—would be beneficial.
Editor: Thank you, Dr. Markova, for sharing your expertise with us today. It’s clear that while Bulgaria faces challenges, there are pathways to strengthen its economy moving forward.
Dr. Markova: Thank you for having me! It’s always a pleasure to discuss the financial future of our country.
Editor: Thank you to our viewers for tuning in to this insightful discussion! Stay tuned for more updates on economic developments and other important stories at Time.news.