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Bulgaria Ingenious in Tackling 2010 Budget Deficit

Date: 26.04.2010

Bulgaria’s government has pinned its hopes on a surplus in health insurance funds to make up for the budget deficit this year.

This emerges from letters exchanged between the country’s center-right cabinet and the European Union's official statistics agency.

The news comes days after Eurostat announced that the Bulgarian budget deficit in 2009 was wider than the government had estimated – BGN 2.569 M or 3.9 % of the gross domestic product (GDP).

Bulgaria’s state budget deficit for 2010 is expected to come close to that figure – BGN 2.130 M, but it will be compensated by the surplus of the national health insurance fund, which is envisaged to be BGN 806 M.

This is why Bulgaria’s consolidated budget deficit, which includes the state budget, the municipal budgets and those of the insurance institutions) will stand at BGN 1.354 M or nearly 2 % of GDP at the end of the year.

In the first of its twice-yearly reviews of government finances in the 27-member bloc, released last week, Eurostat said the Bulgarian government's budget deficit was 3.9 % of gross domestic product last year, which is up by 0.2 % over the government's revised figure.

Bulgaria's center-right government announced earlier in April a larger than expected 2009 deficit caused by unaccounted procurement deals, signed by the previous Socialist-led cabinet. The previously undiscovered expenses have increased the 2009 gap to 3.7 % of gross domestic product (GDP) from an initial 1.9 % under the EU rules, the cabinet said.

Prime Minister Boyko Borisov blamed the increase on extra spending due to annexes to public procurement deals the previous government had signed with some 150 contractors at the end of its term. Borisov said his ministers were kept in the dark about the additional costs to the treasury.

He assured that the European Commission will not undertake punitive measures against Bulgaria even though it has targeted it with an excessive deficit procedure.

Representatives of the European Commission are expected to pay a visit to Bulgaria to hammer out together with the local experts measures that will help reduce the fiscal gap.

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