Budget 2010 – bringing Bulgaria closer to the Euro-zone

published on 11/19/09 9:02 AM

Photo: BGNES

Budget 2010 has been worked out in a hard period for Bulgaria’s economy and is an expression of the policy for overcoming the negative effect of the crisis, said Prime Minister Boyko Borissov upon presenting the new budget in Parliament. It was approved at first reading without much discussion. The most important goals of the Borissov cabinet are: to preserve fiscal stability, to maintain a stable currency board; to forward the country to the Euro-zone.

In the words of Finance Minister Simeon Dyankov “this is the best budget in the EU” and would open the opportunity for a faster entrance in the Euro-zone waiting room – the so-called mechanism ERM2. Due to the economic crisis and the shrinking of finances in the country Minister Dyankov recently called the draft budget for 2010 “a small vegetarian pizza”. That is why priorities had to be selected with special precision. The social sphere is most accentuated, receiving 15% of GDP. Education, environmental protection, transport and communications, healthcare, internal order and securities come next. Additional revenues are expected after reforms in these sectors and reduction of administration by 15%. Government efforts next year would focus on enhancing fiscal discipline in the country, increasing revenue collectibles and improving EU funds absorption. One of the measures of greatest effect for business would be the reduction of the insurance burden by 2%. The major goal of the government is the increase of the purchasing capacity of the Bulgarians, Minister Dyankov said in Parliament, adding that Budget 2010 has been the hardest one to compile in the last 10 years. But still, it would guarantee the incomes of Bulgarian citizens, the currency board and the population’s savings.

What are the basic parameters of Budget 2010?

It has been worked out on the basis of expected drop down of European economy of 4% during the current year and by 0.1% for the next. Unlike European prognoses Bulgaria’s government opts for a down of 2% in 2010. It further envisages a nil trade balance in the national budget, which means that expenses should not exceed revenues. Unemployment would increase by another 2%, reaching 11.4%. Inflation next year would be low – only 2.2% because of shrinking consumption. Despite the weak inflow of direct foreign investments to the country, it is expected that next year they would increase by 1% reaching 10.2% of GDP. The government’s prognosis for next year’s GDP is about EUR 32 billion.

“Endorsing budget 2010 is perhaps Bulgaria’s strongest bid for joining the Euro-zone” was the comment of Vice-premier and Minister of Finances Simeon Dyankov. He was firm that the government would not allow what has happened in other European countries, namely the abrupt reduction of wages and retirement pensions. The prognosis is for a restoration of Bulgaria’s economy as of 2011.

English version: Iva Letnikova

По публикацията работи: Tanya Harizanova

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Budget 2010 – bringing Bulgaria closer to the Euro-zone

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