Bulgaria’s January budget turned out to have a €51 million surplus instead of a €208 million deficit

The Bulgarian state budget ended up with a surplus of 51 million euros in January, according to data released by the Ministry of Finance (MF) more than a month late. The figure differs dramatically from Finance Minister Temenuzhka Petkova's forecast of a 208 million euro deficit for the month.

The department explains the difference between expectations and reality with surprise military funding received from Denmark.

This is mainly due to the unforeseen funds received in the budget for January 2025 under an agreement between the Ministry of Defense of the Republic of Bulgaria and the Ministry of Defense of the Kingdom of Denmark for cooperation in the field of material defense resources in the amount of about 175 million euros. This implementation allowed for the normal financing of the budget systems, including due social payments, personnel costs and others," the Ministry of Finance says.

However, Petkova's forecasts turned out to be misleading when they were first presented, as they were concerned only with the state budget, and not with the consolidated fiscal program (CFP). The difference between the two is that the CFP includes not only the state accounts but also those of the entire public authority and its agencies, including the judiciary, municipalities, universities, social security, public radio and television, etc.

Thus, the CFP data actually show a surplus of 288 million euros, or 0.3% of the estimated GDP, with the largest positive balance of revenue over expenditure being reported in the municipal budgets to the tune of 221 million euros.

Main parameters of the CFP for January 2025

Revenues, grants and donations under the CFP for January 2025 amount to 3.2 billion euros, including 178.23 million euros in one-off revenues under the Ministry of Defense budget. In one year, these have increased by 384.6 million euros (14.4%), with the Ministry of Defense explaining the movement with the growth of tax revenues, which increased by 397.3 million euros.

At the beginning of the year, the older VAT rate for restaurants, bread and flour was restored.

Tax revenues (including income from social security contributions) amount to 2.6 billion euros, while non-tax revenues amount to 372.2 million euros.

The CFP expenditures (including Bulgaria's contribution to the EU budget) for January 2025 amounted to 2.8 billion euros, which is 490.5 million euros more than in January 2024.

There is an increase in expenditure for social payments, including pensions, as well as staff salaries, subsidies, and others," the finance ministry explains.

The amount of the fiscal reserve as of January 31, 2025, is 6 billion euros, including 5.2 billion euros in fiscal reserve deposits at the BNB and other banks and 800 million euros in receivables from European Union funds for certified expenses, advances, and others.

The state balance will return to negative territory in February

In its press release, distributed to the media on Tuesday evening, the Ministry of Finance also presented its forecast for the budget performance in February.

According to it, for the first two months of the year, the CFP balance will be negative in the amount of 500 million euros. However, for February alone, the "gap" in the budget is 800 million euros. This is partially compensated by the CFP surplus for January.

This huge deficit for February comes due to the "transaction for reimbursed expenses from the Regional Development Ministry’s foreign funds account." Eliminating this effect, the budget balance under the CFP as of the end of February 2024 is a deficit of 100 million euros, the Ministry of Finance states.

Based on preliminary data and estimates, revenues, grants and donations under the CFP as of February 2025 are expected to amount to 5.5 billion euros. This means an increase of 500 million euros (10.6 percent) compared to the same data reported for the first two months of 2024. This growth is mainly attributed to tax revenues, which increased by 13% compared to February 2024 (500 million euros in nominal terms), while non-tax revenues and receipts from grants and donations are close to those reported for the same period of 2024.

The expenditures under the consolidated fiscal program (including Bulgaria's contribution to the EU budget) as of February 2025 amount to 6 billion euros. For comparison, the expenditures under the CFP for the first two months of 2024 amounted to 4.5 billion euros.

The Ministry of Finance specifies that according to the cash-based budget methodology, the reimbursed expenses from the Regional Development Ministry’s foreign funds account (600 million euros) were reported as a reduction in the RDM budget expenditures in the capital expenditure section, where an expenditure of the same amount was reported in December 2023. For this reason, in the financial statement from the end of February 2024, the capital expenditures under the CFP are negative in the amount of 400 million euros.

When eliminating this transaction, in order to make the data comparable with 2024, expenditures as of the end of February 2025 have increased by 1 billion euros (18.2%). An increase in expenditures is expected for social payments, including pensions, as well as for staff salaries, subsidies, and others, according to the Ministry of Finance.

Translated by Tzvetozar Vincent Iolov