Bulgaria Govt Approves Austerity Budget Draft for 2012

Bulgaria Govt Approves Austerity Budget Draft for 2012

Bulgaria's government approved on Monday the draft budget for 2012, which aims at a budget deficit of 1,35% of gross domestic product, a growth of 2,9% and inflation of 2%.

"It's going to be a difficult year in financial terms," Finance Minister Simeon Djankov told reporters. "The budget is drafted in such a way that it will make sense even if economic growth is slower than the macro-economic forecast, down to 1 or 2%."

The government hopes that bringing down the budget deficit will shield the economy from the blows of the European debt crisis.

Spending is forecast at 35.4% of GDP, or BGN 29 B, while revenues are expected to total BGN 28.7 B, or 35.2 percent of GDP, according to the draft budget.

The government may sell up to EUR 1.0 B in bonds on the international markets next year to finance a bond that matures in early 2013.

It plans to issue BGN 1.2 B on the domestic market.

The government decided to increase the minimum monthly wage from BGN 270 to BGN 290 by the second quarter of next year.

There are also plans to redirect significant funds from the security sector to education and culture. More money has been allotted for science and justice, while the budget for security agencies have been cut.

The complete package of tax and budget policies of the cabinet of the ruling, center-right Citizens for European Development of Bulgaria party (GERB) were discussed last Friday during an emergency meeting of the so-called Three-Way Council between the government, the trade unions, and the business.

The trade unions demand an increase of the minimum monthly wage by BGN 20 to become effective on January 1, 2012, while the business is backing the April 1 deadline, proposed by the cabinet. In addition, employers want an increase of only minimum retirement pensions while the trade unions ask for the increase of all pensions. (Source: Sofia News Agency)

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