12.07.2019

“At an extraordinary meeting of the Council of Ministers on Monday we plan to look at the contracts concluded for the F-16 fighters, to propose them to the National Assembly for ratification and at the same time to propose an update of the 2019 State Budget Law with the purpose of increasing the expenditure part and ensuring the required financing for this project”, Finance Minister Vladislav Goranov said the above in an interview for the Focus Radio.

The amount that needs to be paid under the contract for the new armament for the army is significant and the payment which should be made in full as per our talks with the US party is in the amount of approximately USD 1.2 billion which has not been provided for in the Budget Law, he explained. With the update the deficit is expected to be around 2% or slightly more but still below the 3% threshold as per the Maastricht criteria, the Minister added. “Since this is the first transaction between our two countries, at this stage the transaction needs to be paid in full; I think that when we have background in our relations with the US Defence Security Cooperation Agency we will be able to negotiate more flexible payment schemes”, is the opinion of Goranov.

In his answer to the question whether the state has money Minister Goranov said that the level of the fiscal reserve was sufficiently good and we could afford financing the transaction at one time all the more since the prospects of our economy were good and the budget allowed that to happen in 2019. In regard to the question whether a new debt is planned, the Finance Minister commented that the Budget Law contained estimates for a debt of BGN 1 billion in domestic issues but one should not look for a direct link between the transaction and that amount of the debt because those funds would serve in the course of the year to fill the fiscal reserve and to cover maturing payments. “Our intention is to continue implementing the debt strategy as it was voted last autumn”, the Minister summarised.

Minister Goranov also announced the planned amendments to the Excise Duties and Tax Warehouses Law which would additionally limit the possibilities for abuses with excise goods, in particular fuels. “Yesterday we reported the results from our joint work with the law enforcement authorities; since 2014, we have managed to increase revenues by 50% and at the end of this year we expect BGN 14 billion more as compared to end-2014”, Minister Goranov said. He explained that in nominal terms the GDP growth for the period since end-2014 was 40 percent while revenues had risen by 50 percent, with the 10% difference being due entirely to the fight against the grey economy.

On the topic of our membership in the ERM II Minister Goranov reminded: exactly one year ago our country submitted a letter of intent for both close cooperation with the European Central Bank with regard to the banking supervision and application for participation in the ERM II; in terms of the application for participation in the ERM II we have set a number of priorities in view to improving the quality of governance. “For a couple of months now, the ECB has been working with 6 Bulgarian banks and we expect the results from the Bank’s checks soon to become clear; after that the ECB will be ready to provide its position whether close cooperation can be implemented. In addition, we have undertaken a number of legislative changes related to the commitments taken in July last year; a number of legislative amendments are ongoing. When we achieve these legislative changes we will invite the colleagues from the European Commission to assess the progress on our priorities and shortly after that, in the next couple of months, if we have positive assessment by the ECB and the European Commission, we will request a meeting with the Eurogroup to propose Bulgaria’s formal application for membership in the ERM II. I hope that the process will run smoothly and that we will achieve success in the course of the current year”, the Finance Minister explained.

In connection with the current political topic of the contradictions in the United Patriots coalition, the Minister expressed his hope those to be settled. “Each of us realizes that a better format of governance than the one that currently supports the ruling majority and the coalition is impossible within this parliament. I hope that the internal contradictions among the colleagues in the United Patriots coalition will not in any way threaten the general majority that supports the government. We have a coalition agreement until 2021 and I think there is no reason to comment on another coalition format. My projections are that we will continue to fulfil our priorities in the next two years, until the end of the mandate”, Goranov said.

In his answer to a question about a potential coalition with the MRF, the Finance Minister said that he saw no reason to debate another coalition format. According to him, the MRF is a party with clear Euro-Atlantic values, it was the third power in the last elections and on topics related to financial stability, tax system, armed forces modernization the MRF has always taken a position shared by GERB, too. The Minister also said that “in GERB, we have always thanked and relied on their support for state-relevant decisions, with this not giving rise to speculations about collaboration. There are topics on which systemic parties should work together in the interest of the Bulgarian society. Any party that acts out of spite in a debate of general public interest shows non-systemic behaviour. Consistency in politics, especially in systemic parties, is good for the entire political model.”