01.07.2016

Based on preliminary data and estimates the balance of the Consolidated Fiscal Programme (CFP) on a cash basis as of end-June 2016 is expected to be positive, amounting to BGN 3,085.9 million (3.5% of forecast GDP). For comparison, a CFP surplus of BGN 889.5 million (1.0% of GDP) was reported in the same period of 2015, which means that, as a relative share of GDP, the budget stance has improved by 2.5 percentage points.

Key factors for the improvement of the budget stance

When analysing the budget stance under the Consolidated Fiscal Programme for the first half of 2016, one should take into account certain factors and specificities that influence the ongoing budget implementation during that period.

First of all, it is important to note that, given the tax calendar, revenues are higher in the first half of the year, with the most significant tax receipts being concentrated in the months of March and April. For this period the parameters of tax revenue performance are also influenced by improved collection. Revenue growth rate outpaces economic growth and the significant increase in excise duties revenues is an indicator that the measures to combat smuggling and the informal economy are having an effect. We should also highlight another specificity this year, which clearly stands out in the budget parameters analysis. At the beginning of 2016 there was a concentration of receipts under EU funds accounts due mainly to the reimbursement by the European Commission of certified expenditure for the previous programming period 2007-2013 (actually made at the end of 2015) and to a lesser extent - to received advance payments under the Operational Programmes for the new programming period 2014-2020. These two factors resulted in substantial inflows of EU funds. The positive development of revenues is one of the key factors for the reported improvement of the budget stance in the first half of 2016.

At the same time, the rate of utilisation of investment expenditures for the first half of the year is traditionally low due to technological and procedural factors, which results in shifting of significant amounts of expenditures to the second half of the year, in particular to the last quarter. The implementation of expenditures under EU funds accounts is also low due to the fact that the projects under the Operational Programmes and EU funds for the new programming period 2014-2020 are still at an initial phase. Due to the significant receipts from the Commission in the period and the relatively low expenditures, the current excess of revenues over expenditures under EU funds accounts for the first half of 2016 amounts to 1.6 percent of the forecast GDP and has the greatest impact on the current budget balance under CFP from all budgets.

It is clear from the above that due to the specificity of the tax calendar and as a result of the shifting of a significant proportion of the investment expenditures to the second half of the year, the forecast level of the budget surplus for the first half of the year should be taken as an indication that the projected budget balance for the year will be respected. All other things being equal, the improvement of the balance of EU funds accounts as compared to the annual plan will, respectively, improve the annual CFP deficit on a cash basis, which does not influence the approved estimates for the other budgets in CFP (state budget, municipal budgets and other autonomous budgets).

Key CFP parameters on the basis of preliminary data and estimates:

For the first half of 2016, CFP revenues and grants are expected to be BGN 17,688.0 million (53.6% of the annual estimate), registering a growth by BGN 1,384.4 million as against the same period of 2015. The growth as compared to the previous year is due to the higher tax and non-tax revenues which increased by BGN 1,470.7 million. The performance of the receipts in terms of grants is 75.2% of the annual estimate. 

The Consolidated Fiscal Programme expenditures, including the contribution of the Republic of Bulgaria to the EU budget, as of June 2016 are expected to amount to BGN 14,602.1 million, which accounts for 41.9% of the annual estimates. The expenditures for the same period of the previous year are to the amount of BGN 15,414.0 million.

The part of Bulgaria's contribution to the EU budget, as paid from the central budget as of June 2016, amounts to BGN 397.4 million, which complies with the existing legislation in the area of EU own resources, Council Decision 2007/436/EC, Euratom on the system of the Communities' own resources and Council Regulation No 1150/2000, as amended by Regulation No 2018/2004, Regulation No 105/2009 and Regulation No 1377/2014, implementing Decision 2007/436/EC.

The statistical data and the Information Bulletin on the execution of the state budget and the key indicators of the Consolidated Fiscal Programme based on data from the monthly reports on the cash performance of the budgets of the first-level spending units will be published on the website of the Ministry of Finance at the end of July 2016.