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Bulgaria to Shrink 2011 Budget Deficit, Unable to Pay for Belene NPP

Date: 08.07.2010

The Bulgarian government will shrink the budget deficit to below 3 % from the GDP in 2011, the finance minister has announced.

The statement of the Minister Simeon Djankov came as a response to the European Commission's advise to Bulgaria to decrease its budget deficit to below 3 % by the end of 2011.

“We welcome this recommendation because our intentions are the same,” Djankov said.

He noted that the EC has requested a budget deficit of 2.7-2.8 % of the GDP for 2011 and in his words, the government has prepared even smaller numbers in the macroeconomic framework,which will be announced next week.

The European Commission announced Tuesday its advise to Bulgaria to make the promised reforms in the public administration, health, education and pension systems, in order to decrease its budget deficit.

Other recommendations by the EC are for better clarity in the budget management and a better control over state spendings.

The purpose of the EC recommendations is to help Bulgaria decrease its budget deficit to below 3 % by the end of 2011 “in a credible and sustainable manner”, the EC said.

In order for this to happen, Bulgaria will have to decrease its budget deficit by at least 0.75 % from the GDP in 2011. According to the Bulgarian government, in the end of 2010, the budget deficit will be 4.8 % of GDP on a cash basis and 3.8 % of GDP under EU accounting rules.

Tuesday brought more bad news for the budget deficit, after the Bulgarian finance minister was told by the PM Boyko Borisov that he had to find additional money for the Belene NPP by the middle of September.

“Bulgaria cannot provide this money,” Djankov said as a response to Borisov, who stated Tuesday that Bulgaria will have to pay EUR 280 M more for the first reactor of the Belene nuclear power plant.

After his meeting with the Russian First Deputy Prime Minister, Viktor Zubkov, who is in Sofia to discuss with the Bulgarian PM the fate of high-profile joint energy projects, Borisov said that Bulgaria has already paid EUR 300 M for the same reactor.

“In its present form, the contract with the Russian Atomstroyexport claims that if the reactor is not ready by September, the country will have to pay penalties. However, the Prime Minister is working day and night, in order to change the parameters of this contract because the budget cannot provide this money,” Djankov said.

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