BULGARIA’S BUDGET 2016: MORE MONEY FOR EDUCATION AND DEFENCE

Bulgaria’s draft budget for 2016 projects economic growth to reach 2% and expects the budget deficit to shrink to 2% . The spending for education, social policy and defence are set to increase.

2016 draft budget and the mid-term forecast project increase of minimum wage from January 2016 to 420 BGN and in 2017 - to 460 BGN.

In 2016, pensions will be updated by 2.5%, in 2017 – by 2.7% and in 2018 by 2.8%.

Rate of unemployment is expected to be 9% and the insurance thresholds will go up by 7.5%.

Tax rates will remain unchanged. A new tax, the so called “weekend tax” will be introduced for some companies.

Excise tax on cigarettes and heating fuel is projected to increase.

There will be an increase in the spending for education (3.1 billion BGN) and defence and security (3.3 billion BGN).

Budget 2015 will be updated with additional 880 million BGN government expenses. Bulgaria’s Finance Minister, Vladislav Goranov said the update was inevitable because of the lack of reforms in the law enforcement agencies.

The maximum debt may reach 28.9% of GDP, the equivalent of nearly 27 billlion BGN. A new debt of 5.3 billion BGN is projected, which will be used to cover current debt and to finance deficit.

The draft budget also envisages an increase of the threshold of family and children allowances – from 350 BGN to 400 BGN as of 1st July 2016, which will give opportunities to more people to receive benefits. The size of the lump-sum newborn supplement will also go up: 250 BGN for the first child, 600 BGN for the second child and 300 BGN for the third child.

Update of budget 2015 is necessary because of the funds for indemnities in the Ministry of Interior and finalization of projects under operational programmes, Finance Minister said.

Additional expenses of 880 million BGN are needed, he added. Thus the budget deficit for this year will increase to 3%.

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