The budget deficit on an accrual basis for 2022 is expected to be around 2.9 percent of the estimated gross domestic product (GDP), the Ministry of Finance (MOF) reports.

The 2022 deficit

, estimated using the methodology of the European System of National and Regional Accounts (ESA 2010), is expected to be around 2.9 percent of GDP, which is within the Stability and Growth Pact criteria and gives a stable perspective in the assessment of convergence in the report of the European Commission (EC) and the European Central Bank (ECB) in the course of the accession process of Bulgaria to the Eurozone.

The expectations of a huge overperformance in the tax and insurance revenues for 2022 from the revised amount of GDP were not met, the Ministry of Finance says.

Will Bulgaria go into even more debt because of the big deficits?

Although the nominal size of the estimated GDP for 2022 was increased by more than BGN 11 billion compared to the forecast for the update of the State Budget for 2022, the excess of revenues over the forecast in the updated annual estimates from July, when eliminating revenues of a one-time extraordinary nature is in the amount of 2.1 percent, and is mainly related to higher revenues from the sale of greenhouse gas quotas under the budget of the "Security of the Electric Power System" Fund, higher revenues under the budgets of the social and health insurance funds and municipal budgets, and to a lesser extent, tax revenues under the state budget.

The performance parameters of the CFP revenues are good, but they are not due to a permanent change in the economy that would allow budget revenues to grow permanently and sustainably in the coming years.

Revenues, benefits and donations under the

(CFP) as of December 2022 amount to BGN 64.7 billion, incl.

BGN 3.8 billion in one-time extraordinary revenues to compensate for high electricity prices on the free market, which are not included in the estimates for the budget for 2022. When eliminating the impact of one-time extraordinary revenues, i.e. revenues, subsidies and donations The CFP for 2022 is in the amount of BGN 60.9 billion, which represents a minimal excess of the estimates under the Law on the State Budget for 2022 by about 2.1 percent.

Tax and social security revenues on a comparable basis amount to BGN 46.6 billion, which is 1.1 percent more than what was included in the estimates of the State Budget Act for 2022, which derives from social and health insurance contributions and property taxes.

Tax revenues from the state budget

amount to BGN 31.6 billion, or BGN 0.1 billion more than planned by the State Budget Act for 2022. There is over-implementation in corporate taxes and the Personal Income Tax, and revenues from indirect taxes are lower than planned for the year.

Regarding VAT revenues, the data show that, compared to the estimates for the State Budget Act for 2022, the receipts for the year are expected to be about BGN 0.67 billion lower than planned. 

On a comparable basis, when eliminating the impact of one-time extraordinary revenues, the non-tax revenues under the CFP for 2022 amount to BGN 8.3 billion, which represents an overperformance of the annual estimate by 13.3 percent. 

In the part of aid and donations, the revenues are expected to be lower than those calculated by the Law on the State Budget for 2022, by about BGN 0.2 billion, which is due to the lower absorption of expenses on the funds accounts from the EU, respectively the lower amount of costs reimbursed by the EC.

Expenditures under the Consolidated Fiscal Program (CFP) for 2022 have been implemented at 95.6 percent.

Expenditures under the CFP for 2022 are in the amount of BGN 62.9 billion, eliminating BGN 3.3 billion of one-time extraordinary costs for compensation to non-domestic consumers of electricity and represent 95.6 percent of estimates to the Law on the State Budget for 2022 

The absorption of the European funds is weak, especially of the projects under the Recovery and Sustainability Plan, according to the Ministry of Finance.

The most significant delay in the absorption of the planned expenses is in the expenses on the accounts for funds from the EU.

The main contribution to this is the low absorption of costs under the Recovery and Sustainability Plan (RPP) and some operational programs from the program period 2021-2027, as the costs and the transfers provided under the state budget are also lower than planned.

Expenditures and provided transfers on the accounts for funds from the EU are about BGN 2.7 billion lower than planned with the estimates for the year.

In the month of December, the first tranche of the PVA for Bulgaria arrived in the amount of about BGN 2.7 billion, but the data show that the effectively absorbed costs under the PVA are only BGN 0.1 billion. 

The implementation of the investment program

is weak, the department also reports.

The utilization of capital expenditures in the state budget is also lower than planned.

The delay in the implementation of projects and programs shifts a large part of the expenditure planned for 2022 to 2023 and subsequent years, which on the one hand improves the cash balance for 2022, but on the other hand leads to pressure on the 2023 budget.

Huge ongoing spending commitments reduce the scope for new policies and pre-empt the actions of subsequent governments, the department said.

Estimates indicate that in 2022, Bulgaria will form a significant

, which is related to the relatively high growth of nationally financed primary current expenses, the majority of which is due to measures with permanent effect.

Based on preliminary data and estimates,

for 2022 is expected to be negative in the amount of BGN 1.5 billion (1.0 percent of the estimated GDP), and is formed by a deficit of the national budget in the amount of BGN 5.2 billion (deficit in the amount of 3.3 percent of the estimated GDP) and a surplus in the accounts for EU funds in the amount of BGN 3.7 billion (a surplus in the amount of 2 .3 percent of estimated GDP).

As of the end of December 2022, the central budget has used BGN 4.1 billion at the expense of the balances in the remaining positions in the fiscal reserve, which are in other budget systems.

The fiscal reserve includes all bank account balances of budgetary organizations, the assets of the State Fund for Guaranteeing the Sustainability of the State Pension System, the funds from the European Union funds, the recovery and sustainability plan, as well as the advances on them, accounts for foreign funds and the central budget .

The single account system enables flexible and efficient management of the budget's financial resources.

The MPs raised the ceiling for next year's loan: It is now BGN 12 billion.

The availability of the

at the end of 2022 in the BNB and banks is forecast to be in the amount of BGN 11.9 billion. The assessment of receivables from EU funds for certified expenses, advances and others at the end of the year is in the amount of one billion leva.

GDP

budget deficit