Bloomberg News

Bulgaria to Cut 2012 Budget Gap to 1.35% of Economic Output

October 24, 2011

(Updates with comment, details from second paragraph.)

Oct. 24 (Bloomberg) -- Bulgaria will narrow next year’s budget deficit to contain the impact of the euro area’s sovereign-debt crisis as the Balkan nation’s economic recovery slows.

The 2012 budget plan discussed by the Cabinet earlier today forecasts economic growth of 2.9 percent with a gap of 1.35 percent of gross domestic product and inflation of 2 percent, the government in Sofia said in an e-mailed statement. This year’s growth is estimated at 2.8 percent and the budget deficit at 2 percent of GDP.

“In nominal terms, the 2012 budget is the same as the 2011 budget,” Finance Minister Simeon Djankov told reporters. “We tried to reallocate more funds for science and justice, while cutting some resources from security agencies.” The Cabinet will discuss the budget with trade unions later this week and should approve it Oct. 31, he said.

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 from 3.9 percent of GDP in 2010.

Bulgaria’s economic recovery faltered in the April-June period, with growth slowing to the weakest in three quarters, as Europe’s sovereign-debt crisis damped demand in its main trading partners, which buy about 60 percent of the eastern European country’s exports.

Second-quarter gross domestic product rose 1.9 percent from a year earlier after a 3.4 percent expansion in the previous three-month period.

Djankov revised next year’s growth forecast on Oct. 11 to 2.5 percent from an April estimate of 3.6 percent. The European Bank for Reconstruction and Development changed its growth forecast on Oct. 18 to 2.3 percent in 2012 from 3.7 percent. The Institute of International Finance said on Oct. 17 its 2012 growth outlook for Bulgaria was 2.2 percent, up from this year’s estimate of 1.9 percent.

--Editors: Alan Crosby, Douglas Lytle

To contact the reporter responsible for this story: Elizabeth Konstantinova at ekonstantino@bloomberg.net

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


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