01.12.2022

Based on data from the monthly reports on the cash performance of the budgets of first-level spending units for October, there was a significant excess of expenditures over revenues under the Consolidated Fiscal Programme (CFP) for the month, with the deficit on a monthly basis being BGN 981.4 million. The reasons for the excess of expenditures over revenues are the higher expenditures compared to the annual estimates, as well as the higher amount of the VAT refunded to businesses. In October there was an increase in social expenditures (including because of the second stage of the recalculation of pensions approved in the summer), capital expenditures, maintenance expenditures, etc.

The level of the budget balance of the CFP on a cash basis for the first ten months of 2022 is close to balanced (minimum excess of revenues over expenditures of BGN 4.8 million) and is formed by a national budget deficit of BGN 480.3 million and an excess of revenues over expenditures under EU funds of BGN 485.1 million. 

The CFP revenues, grants and donations as of October 2022 are to the amount of BGN 50,240.1 million, or 84.2 % of the revised annual estimates^[1]. Proceeds have increased by BGN 8,106.5 million (19.2 %) compared to those reported as of October 2021. Tax and social security revenues under the CFP have increased in nominal terms compared to the same period of the previous year by BGN 4.6 billion (14.0 %), non-tax revenues – by nearly BGN 3.5 billion or 50.9 % (mainly due to the extraordinary proceeds from state electricity producers’ contributions to the budget of the Electricity System Security Fund, which were not paid in 2021), while the proceeds in the part of grants and donations (mainly grants under EU programmes and funds) are close to those reported for the same period of the previous year.

Tax proceeds under CFP, including revenues from social security and health insurance contributions, total BGN 37,721.3 million, which is 81.8 % of the annual plans. Proceeds from taxes and social security and health insurance contributions form 75.1 % of total CFP proceeds for the period.

Revenues from direct taxes amount to BGN 7,138.5 million, or 78.9 % of the annual estimates. Indirect tax revenues amount to BGN 18,051.3 million (81.0 % of the annual estimates), with VAT revenues amounting to BGN 12,791.1 million (79,8 % of the plans), excise duty revenues – to BGN 4,832.0 million (83.0 % of the estimates), and customs duty revenues – to BGN 378.9 million (99.7 % of the annual estimates). Proceeds from other taxes, including property taxes and other taxes under the Corporate Income Tax Law, amount to BGN 1,324.9 million, or 94.5 % performance of the annual estimates. Revenues from social security and health insurance contributions are BGN 11,206.6 million, or 83.7 % of those planned for the year.

Non-tax revenues amount to BGN 10,221.8 million (growth of BGN 3,449.8 million compared to the same period of the previous year) and are mostly formed by revenues from state, municipal and legal fees, revenues from rents, including contributions from revenues from state and municipal enterprises, concession revenues, greenhouse gas emission allowance revenues, etc. It should be noted that, pursuant to §24 of the Transitional and Final Provisions of the 2022 State Budget of the Republic of Bulgaria Law, as from July public enterprises in the energy sector pay contributions to the budget of the Electricity System Security Fund which are used to cover the expenditures under Article 36b(1)(4) of the Energy Law. For this reason, non-tax revenues report a growth as no such payments were made in 2021. Similarly, in terms of the expenditures on subsidies under the budget of the Electricity System Security Fund, pursuant to §23 of the Transitional and Final Provisions of the 2022 State Budget of the Republic of Bulgaria Law compensations are paid to end non-domestic consumers of electricity outside the regulated market which should also be taken into account when comparing expenditures with the same period of the previous year.

Proceeds from grants and donations amount to BGN 2,297.1 million.

The expenditures under the CFP, including the contribution of the Republic of Bulgaria to the EU budget, amount to BGN 50,235.4 million as of October 2022, which is 76.2 % of the annual estimates. For comparison, the expenditures under the CFP as of end-October 2021 amounted to BGN 41,406.0 million.

Compared to the same period of the previous year, CFP expenditures increase in nominal terms by 21.3 %, or BGN 8.8 billion, which is mainly due to the higher amount of expenditures under the national budget. A major driver to the increase in expenditures are the programmes for payment of compensations to non-domestic electricity consumers due to the high electricity prices. Considered by economic elements, the most significant increase is reported in the expenditures on subsidies (BGN 3.7 billion, or 83.3 %) which include, in addition to the traditional expenditures on subsidies to non-financial enterprises in 2022, the expenditures under the programmes for the payment of compensations for the high electricity prices through the budget of the Electricity System Security Fund. Social and health insurance expenditures also reported growth (BGN 2.2 billion, or 12.4 %), mainly in the part of expenditures on pensions (BGN 1.7 billion, or 15.1 %). Another element of the expenditures, which reported a significant increase compared to the same period of the previous year (by BGN 1.1 billion, or 27.1 %), are the maintenance expenditures, where the main driver are the liabilities from previous years paid to road construction and maintenance companies under contracts for ongoing repair and maintenance. Capital, staff and interest expenditure also recorded a nominal increase compared to October 2021 (27.2 %, 9.7 % and 4.9 %, respectively).

As of October 2022, non-interest expenditures amount to BGN 48,289.4 million, which is 76.5% of the annual plan. Non-interest current expenditures amount to BGN 45,032.4 million. Capital expenditures (including net increment of state reserve) amount to BGN 3,227.9 million. The current and capital transfers to other countries amount to BGN 29.2 million. Interest payments amount to BGN 591.2 million, or 89.0 % of those planned for 2022.

The part of Republic of Bulgaria's contribution to the EU budget, paid from the central budget as of 31 October 2022, amounts to BGN 1,354.7 million, which complies with the current legislation in the area of EU own resources.

Fiscal reserve as of 31.10.2022 is BGN 12.938 billion, including BGN 12.555 billion fiscal reserve deposits in BNB and banks and BGN 0.383 billion receivables under the EU Funds for certified expenditure, advance payments, etc.

The Consolidated Fiscal Programme performance data as of 31 October 2022 are published on the website of the Ministry of Finance in Statistics section. The statistical data are accompanied by an Information Bulletin on the Execution of the State Budget and the main indicators of the consolidated fiscal programme, which presents a short analysis of the performance of the key budget parameters on a consolidated level and by constituent budgets.

[1] Estimates to the 2022 State Budget of the Republic of Bulgaria Law (prom., SG No 18 of 04.03.2022; amended and supplemented, SG No 52 of 05.07.2022).