Finance Minister presented the 2023 state budget draft

The finance minister officially presented his version of the state budget for 2023. It is entirely based on the draft proposed in the spring by the caretaker government, but the ratio between revenues and expenditures has been changed so that the budget deficit will be up to 3%, rather than the originally planned deficit of over 6%.

Last night, the draft was published on the ministry's website.

What does Budget 2023 envisage?

- The proposed draft budget has a deficit of 3 per cent, the deficit on a cash basis is 2.5 per cent. The difference is due to the upcoming second payment under the Recovery and Sustainability Plan. The macro framework of the caretaker cabinet has been retained so that it can quickly enter the National Assembly and have a budget by July, Vassilev said.

The macro framework foresees GDP growth of 1.8%, for 2024-2025 the growth increases to just over 3%. Average annual inflation is calculated at 8.9% and is expected to fall between 3 - 4% over the next two years.

- The current tax rate framework is maintained, with only the gas rate being raised to 20%.

- The 12% increase in pensions under the "Swiss rule", which comes into force on 1 July, is fully secured.

- Teachers' salaries have been secured, all other social programmes have been maintained, and some of them have been increased to take account of inflation and the rise in the minimum wage.

- In the health sector, sufficient funds have been earmarked for hospital care to reach the minimum wages of BGN 1,500 for a nurse and BGN 2,000 for a doctor. More funds have been earmarked for prevention and there are no restrictions on the number of referrals.

- Defence is set to receive a little more - 1.88% this year and 2% for the next two years.

In terms of EU funds, only the second payment is estimated to be received. For the third and fourth, there is a lagging behind and no funds have been calculated.

- Regarding the debt policy - at the end of 2023 the debt is foreseen to be 22% - no significant changes.

- There are additional funds given for education, science, sports, youth sports programmes for children and funds for culture and arts.

- The new budget maintains the minimum wage at BGN 780. However, maternity pay for the second year is increased by BGN 70 as of 1 January.

"It is not normal for the state to adopt a budget in the middle of the year, on the one hand it makes the adoption of the budget easier because we have seen what happened in the first six months, but on the other hand it creates unpredictability for companies and citizens. The new draft state budget is written entirely on the basis of the version presented by the caretaker government. However, expenditure has been reduced and higher revenues have been set.

As for tax revenues, yes - they are tight, but they are feasible. Last year, we also adopted a budget with additional tax revenues, above the estimates that were foreseen, but although difficult, they were fulfilled at the end of the year," Assen Vassilev said.

According to the finance minister, the capital expenditures, although at record level, cannot be implemented by the departments. At least that is what the 2022 budget shows.

"In the short term, this may make a finance minister happy, as there will be less spending, but in the long term it is extremely detrimental for the state, because necessary investments are not being made," he said.

The proposed budget also includes an extra 111 million BGN because of the increase in the poverty line to 504 BGN.

The budget has to be passed by July 31 in order to come into effect on August 1. It was officially opposed by the BSP, which said it would not support it in parliament and would propose an alternative.

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