The government approved the Ministry of Finance draft budget of the country for 2018. It is now up to parliament to vote it and approve the financial law.

No surprises are to be expected, as the ruling coalition – GERB and the nationalists – has a National Assembly majority and usually adopts everything its government submits without murmur or any significant changes. As to the alternative budget submitted by the socialists, which they proudly describe as “social” and “fair”, the chances of its being passed to become law are next to none.

As a matter of fact, the government’s 2018 budget also lays claim to being more social than anything done to date. It is no coincidence that the people who did the budget math have been harping on four highlights in the 2018 budget – education, defence and security, the social sphere and health care, for which an additional 1.6 billion euros is being allocated, compared to this year’s budget. The increase is substantial, in view of the fact that public expenditure as a whole is expected to reach the sum of 20 billion euro. This is made possible by the good shape the Bulgarian economy is in – with its commendable 4 percent growth – a tendency which is likely to continue next year.

A 15 percent rise in secondary school teacher salaries is planned, there will also be more money for the army and the police, health care is another sphere in which a rise in subsidies of around 300 million euro is planned. Pensions will go up by 3.8 percent, the minimum salary will also go up, reaching 260 euro per month. And all this without touching the 10 percent flat tax, valid in all spheres, without taking out new loans on international markets or raising the budget deficit, which is projected at only 1 percent of the GDP. The temptation of the state to distribute a bigger portion of the GDP for public expenditure via the budget has also been avoided, leaving more money in the pockets of the public and of businesses for consumption and for investments. Or, as former Finance Minister Simeon Djankov said, in times that were more difficult – “the budget is a vegetarian pizza”. Now, Deputy Prime Minister Valeri Simeonov is talking of the budget as a “plentiful pizza, a calzone”.

So far, so good, but not everyone is happy. Especially the trade unions, who, in light of the good economic indicators, have been taking advantage of the situation and even organized a protest in front of the Council of Ministers building in Sofia to demand higher salaries. Actually, wages have become a deepening problem spreading to more and more sectors – even the military and the police have been clamouring for more money. A number of economic experts and observers say that the Bulgarian economy has well-nigh reached its limits in terms of growth and could reach “boiling point” so that, barring taking out state loans, money will run dry. Yet this is not on the agenda, nobody is recommending taking such action against the backdrop of the growing expectations of Bulgaria’s being admitted to the Eurozone “waiting room”, where it can prepare, in all minutiae, for the introduction of the euro in the country. Joining the European Exchange Rate Mechanism, ERM II, means imposing certain restrictions on the state financial policy, especially with regard to the budget deficit. It is believed that Bulgaria’s upcoming Presidency of the Council of the EU during the first six months of next year will put the wind in the sails of the Bulgarian government in its aspirations to enter the Eurozone.

Parallel with this rather pleasing financial picture, foreign direct investments in Bulgaria have been dropping drastically, a process few seem to be noticing at all. FDIs are a principal motor of the mechanism of reducing unemployment and increasing GDP, as Bulgarian businesses are, as yet, insufficiently capitalized and are finding it difficult to obtain funding for improving efficiency in various industries and sectors; not forgetting the deepening shortage of quality workers which some businessmen say is the main obstacle to the expansion of their companies. Unemployment in the country is nearing the critical low, and stands at around 6 percent, though nobody has any expectation that businesses could pick competent workers and employees from the ranks of the unemployed, as the only people out of a job are people with no skills or qualification. The skilled and qualified are either working here, in Bulgaria, or have gone abroad.

Hence the conclusion that the 2018 budget is well focused on solving some cardinal national problems. We can only hope that no unexpected or adverse surprises will come from the international markets and the labour market will be stabilized on a higher level – a must for modern technology industries.

English version: Milena Daynova