IMF Recommends Tighter Spending in Bulgaria’s Next Budget

The International Monetary Fund (IMF) recommends that spending in Bulgaria’s next state budget be tightened, said Fabian Bornhorst, head of the IMF mission to the country, after meeting today, September 19, with members of the parliamentary budget committee. The mission is expected to conclude on 23 September.

According to Bornhorst, budget expenditures should be reduced by 1%, primarily through controlling the growth of public sector wages.

“We recommend that certain payments be linked to the minimum wage in order to reduce the pressure,” the economist explained.

The IMF also supports raising social security contributions as early as next year and has called for an overall reform of the pension system, strengthening its second and third pillars – mandatory and voluntary supplementary insurance.

In addition, the Fund recommends redirecting spending from stimulating consumption towards stimulating investment.

Only after stabilising and improving the efficiency of spending should Bulgaria consider changes to its tax system – moving away from a flat tax towards a progressive model.