03.01.2024

Based on preliminary data and estimates, the general government budget balance for 2023 is expected to be a deficit of around 2.2% of the projected GDP as estimated according to the European System of National and Regional Accounts (ESA 2010) methodology. Preliminary estimates show that an improvement has been achieved compared to the target level of the indicator for 2023 set in the grounds to the Law on the 2023 State Budget Law of the Republic of Bulgaria (a deficit of 3% of the projected GDP).

The improved CFP deficit achieved for 2023 enabled the government to approve BGN 1.2 billion of the Ministry of Regional Development and Public Works for the disbursement of municipal projects. This gives confidence and predictability that the state stands behind its commitments to invest in all municipalities in Bulgaria in 2024, with investments in infrastructure and improving the business and living environment at the local level expected to contribute to accelerating economic growth in the medium term.  Deducting the expenditure of BGN 1.2 billion on advance payments for municipal projects, the expected deficit on a cash basis under the consolidated fiscal programme (CFP) is 2.8% of the projected GDP.

Key CFP parameters based on preliminary data and estimates:

CFP revenues, grants and donations as of December 2023 amount to BGN 67.1 billion, and compared to 2022, CFP revenues increase by BGN 2.3 billion, although the second payment under the Recovery and Resilience Plan is postponed to early 2024. Tax revenues are the most significant contributor to this growth, registering an 11.9 percent (BGN 5.6 billion) nominal increase compared to 2022. The improvement registered in the previous months in the VAT on intra-Community acquisitions continued in December as well, which largely compensated for the shortfall in the indirect tax revenues from the first half of the year (VAT on domestic transactions was collected more than 99% of the planned amount). The parameters for the implementation of the personal income tax and of revenues from social security and health insurance contributions and other taxes increase by about 14% compared to 2022 and also record a performance above 99%. The lag in VAT from imports registered in the first half of 2023 was not fully offset. The revenues collected by the Customs Agency in 2023 are expected to be about BGN 650 million less than those planned for 2023. Non-tax revenues and proceeds in the part of grants and donations (mainly grants under EU programmes and funds) are lower than those reported for 2022 by about BGN 3.3 billion. This is mainly due to the baseline effect from a change in legislation regarding the earmarked contributions under the budget of the Electricity System Security Fund to finance the payment of compensation to non-household electricity consumers under §24 of the Transitional and Final Provisions of the Law on the 2022 State Budget of the Republic of Bulgaria which were received in the part of non-tax receipts in 2022, as well as to the first tranche of the Recovery and Resilience Plan disbursed in December 2022.

As of December 2023, the Consolidated Fiscal Programme expenditures, including the contribution of the Republic of Bulgaria to the EU budget, amount to BGN 72.5 billion (97.9% of the annual estimates), increasing by 9.6 per cent compared to the same period of the previous year. Per the individual expenditure indicators, the most significant increase is registered with capital and social expenditures, as well as in the personnel expenditure component.

The part of the Republic of Bulgaria’s contribution to the EU budget paid from the central budget as of 31.12.2023 amounts to BGN 1.85 billion, which complies with the existing legislation in the area of EU own resources.

The statistical data and the Information Bulletin on the Execution of the State Budget and the key Consolidate Fiscal Programme indicators based on the monthly data on cash execution of first-level spending units as of December 2023 will be published on the website of the Ministry of Finance at the end of January 2024.