The Bulgarian state budget is heading for its worst year in a decade

An old saying goes that some things are better late than never. This was the case in the last three years when it came to compiling the Bulgarian government budget - in two of them, the previous Finance Minister Assen Vassilev was terribly late in doing the job. The financial framework of the state for 2024 was adopted only a few days before Christmas. Even worse, the budget for 2023 – was adopted in July of that same year, meaning that half of the fiscal year had passed before Vassilev could finish his work.

Whether because of wrong planning, or because of the unrelenting political crisis that has gripped the country, the interim finance ministers (both this and last year) warned of a budget deficit exceeding 3% and threatening Bulgaria's entry into the Eurozone. In 2023, Rositsa Velkova had a gloomy forecast, but in the end, Assen Vassilev and the government coalition partners from PP, DB, DPS and GERB adopted their budget. The financial calculations turned out to be wrong, but, as usual, the bloated capital program managed to compensate for the poor budgeting.

Two weeks ago, the current interim finance minister Lyudmila Petkova made another grim forecast for the state of public finances and called on politicians to meet for urgent talks and search for a solution. There is no such thing on the horizon for now, but Petkova reassured that the budget deficit would come within 3%, probably once again using the capital expenditure program - that is the money for infrastructure.

What do the numbers say?

A report by Economic.bg shows that the state of the budget in 2024 is the worst in the last decade, even when compared to the pandemic 2020, when the Bulgarian government poured billions into support for people, businesses and the healthcare system.

The deficit started very early on in 2024, even though traditionally it’s in the last two months of the year that the largest expenses are made - sometimes exceeding 5 billion euros in December.

By the end of September, the "gap" in the budget exceeds 1.4 billion euros and is growing faster than in the previous few months. Lyudmila Petkova's promise is that at the end of the year the budget deficit will be a maximum of 3.1 billion euros and that Bulgaria will fulfill the Maastricht criterion. And since we do not have data on the expected implementation of the budget in this and the next two months, we assume that the deficit in each of the three months will be the same (about 550 million euros) in order to obtain the final balance announced by Petkova.

Translated by Tzvetozar Vincent Iolov