Bloomberg News

Djankov Sees Bulgaria’s 2011 Budget Gap Lower Than Planned

October 14, 2011

(Updates with comments from third paragraph.)

Oct. 14 (Bloomberg) -- Bulgaria’s budget deficit for this year will be narrower than planned, making next year’s budget planning “easier” and enabling the government to achieve a balanced budget in 2013.

The 2011 gap will be lower than the government’s earlier 2.5 percent estimate, while the 2012 shortfall will fall below 1.5 percent of gross domestic product, Deputy Prime Minister Simeon Djankov told reporters in Sofia today.

“Our budget deficit this year will be lower than planned which will make next year’s planning easier,” Djankov, who is also the Finance Minister, said. “Next year’s budget deficit will be even lower. The exact figures will revealed in 10 days.”

Bulgaria, the European Union’s poorest country in terms of economic output per capita, weathered the global crisis without borrowing from international lenders. The country narrowed this year’s budget gap, after exceeding the EU’s limit last year with nearly a 5 percent gap, for which it was briefly placed under scrutiny by the EU.

Bulgaria is among the few well-performing countries in fiscal terms in the 27-nation bloc amid the euro area’s debt crisis, EU Budget Commissioner Janusz Lewandowski said at the same briefing.

“Bulgaria is on track observing financial discipline,” Lewandowski said. “Bulgaria is improving in budget terms. It is within the debt limit and is decreasing the budget deficit. The economic forecast for Bulgaria is quite decent.”

Convergence Compliance

Bulgaria’s budget frame figures are slightly behind, though still in compliance with, the three-year convergence program presented to the EU earlier in the year, Lewandowski said. He gave no figures.

The initial plan submitted in April envisaged economic growth of 4.1 percent in 2012, 4.4 percent in 2013 and 4.2 percent in 2014. The government cut next year’s forecast on Oct. 11 to 2.5 percent because the expansion is slowing in western Europe, which buys some 60 percent of Bulgaria’s exports. This year’s growth is estimated at 3.6 percent. Second-quarter GDP growth slowed to 2 percent from 3.3 percent in the previous three months.

Lewandowski defended a European Commission proposal to impose a Financial Transaction Tax across the union in effort to raise additional revenue needed for bailout loans.

The proposal “is much less troublesome for Bulgaria than some of the other options that were” presented, he said. Bulgaria opposes the plan, which has to be approved unanimously.

The country has the lowest personal and corporate income tax rate in the bloc, at 10 percent, to curb tax evasion, attract investment and boost growth.

--Editors: James M. Gomez, Alan Crosby

To contact the reporter on this story: Elizabeth Konstantinova in Sofia at ekonstantino@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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