The BDB was activated to curb the growing deficit

The Bulgarian Development Bank (BDB) undoubtedly plays an important role in Finance Minister Temenuzhka Petkova's plans to keep the deficit within the 3% limit.

In addition to the bank being "supported" with BGN 4 billion in state debt, another BGN 900 million will pass through it for the implementation of the municipalities' investment program. On Thursday, the parliamentary Budget and Finance Committee further expanded the municipal projects, which jumped from 3,066 to 3,742, according to the Bulgarian Telegraph Agency.

The mayors have submitted proposals for changes, deletions, and new projects, as they are entitled to do every three months. Data from the Ministry of Finance show that 2,405 projects will remain, the parameters of 503 projects will be changed, another 158 will be dropped, and 564 new ones will be added.

With the changes made, the municipal investment program for the period 2024-2027 reaches BGN 8.1 billion, of which:

• for 2025 - BGN 3.879 billion;
• for 2026-2027 - BGN 4.305 billion.

The State Budget Act stipulates that by the end of 2025, BGN 1.6 billion must be paid out under the program. Of this amount, BGN 750 million will go to municipal projects that have been started but not paid for, as well as to projects started this year. The remaining BGN 900 million will go through the BBR. This is effectively a quasi-deficit, which will not be reported on paper at the end of the year, but taxpayers will pay the loans for it.

According to data provided by Deputy Finance Minister Kiril Ananiev, only BGN 644 million has been paid out so far, which means that the bulk of the spending is still to come in the coming months – or at the end of the year, as is usually the case. If the programme's expenditure is not met, as was the case last year, the deficit could be reduced by this amount.

Statistics for May show that the deficit is already BGN 2.6 billion (1.2% of GDP) with a ceiling of BGN 6.4 billion for the year, which has triggered a new wave of criticism of the Ministry of Finance for poor budget planning.

Background

The Council of Ministers (CM) approved a decision to update the state budget for this year precisely because of the investment program for municipal projects financed from the budget. Municipalities can propose changes three times a year. The last update was made last year, when the program reached BGN 7.3 billion.

Now, again within the specified deadlines, the municipalities have expressed their desire for changes, with only the municipality of Treklyano failing to submit its projects. Based on the proposed changes, the Ministry of Finance has prepared a draft budget update.

Translated with DeepL.