“There is potential”: Bulgarian government bets on transparent economy and Schengen membership to fill the budget gap

There is potential for increasing budget revenues. This can be done by putting the spotlight on the shadow economy in Bulgaria. This was stated this morning in parliament by Prime Minister Rosen Zhelyazkov in response to a question regarding the state of public finances.

The potential for increasing budget revenues exists. This potential comes from shedding light on the shadow economy in Bulgaria and through new sources, which will be made possible by the Schengen area membership, as well as the better work of regulators and other bodies," Zhelyazkov told the MPs.

This is not the first time that the new government has expressed its willingness to fill the "gap" in the budget through revenues stemming from expected economic recovery.

Two of the possible measures that will be proposed in this area were first announced some time ago by Delyan Dobrev, a GERB-SDS MP and chairman of the parliamentary budget committee. He explained that one of the measures under discussion is to install GPS devices on all trucks weighing over 3.5 tons, which will be subject to inspection "by something like traffic police."

Another proposed measure is to record the license plates of cars that fill up with fuel at gas stations. This is expected to bring in about 125 million euros to the coffers.

However, several economists have already criticized these measures. Even Dobrev commented that he was "extremely skeptical" about the effect of such measures.

The rumored measures will simply aggravate the business environment and will have a negative long-term effect on growth, and no one wants to live in a country where you’re being watched and know where you are," financial expert Lyubomir Datsov told Economic.bg.

According to data reported by former acting Finance Minister Lyudmila Petkova, the share of the shadow economy in Bulgaria was 32% in 2022. With the country's GDP of over 100 billion euros, this represents 30-33 billion euros, which translates to tax avoidance worth 12 billion euros.

It is important for the newly elected government what budget it will propose and defend, and if it manages to gather the support of parliament, how it will guarantee its implementation," Zhelyazkov said in the National Assembly.

He added that a clearer picture of the state of public finances will be available when the data for the last quarter of last year is published, which will also be used in the 2025 Budget draft.

Translated by Tzvetozar Vincent Iolov