26.11.2014

The 2015 budget framework is prepared on the basis of conservative forecast for the key macroeconomic indicators, realistic revenue estimate and restrictive expenditure planning.

The parameters provided for in the consolidated fiscal programme (CFP) for 2015 are consistent with the changed macroeconomic environment and the underlying basic assumptions. The effects of the urgent 2014 budget revision tabled in the National Assembly by the Government have also been taken into account.

The fiscal targets of the Government for the period 2015-2017 correspond to the set as priority policy of guaranteeing financial stability. The estimates and measures taken to curb the budget deficit presume elimination of the factors that have caused the worsened budget position in 2014 and bringing already in 2015 this indicator within 3% of GDP.

In the medium term, the plan is to step down the deficit by 0.5% every year. This will be a good signal of the Government's intentions to mitigate the negative effect of the one-off loosening of the deficit in 2014 and to demonstrate a sustainable trend of improving the budget position.

The CFP balance in the period 2015-2017 is a deficit of 3% of GDP in 2015, 2.5% of GDP in 2016 and 2% of GDP in 2017 respectively.

The tax and social security policy will be oriented towards supporting economic growth, improving the business environment, limiting tax fraud and enhancing fiscal sustainability in the long term. The 2015 budget provides for an increase of the tax rate on interest earnings from 8% to 10% and an expansion of the taxable base. A revocation of the tax relief for income not exceeding 12 monthly minimum wages and the introduction of two new reliefs for children are foreseen.

The achievement of the minimum levels of Community excise duty rates in line with the agreed transition period is also among the priorities; planning to increase excise duty on cigarettes in the period 2015-2017.

For 2015, in respect of social security and health insurance contributions it is foreseen to preserve the amounts and proportions of the contributions to the PSS and the state participation in the Pension Fund through a transfer at the 2014 levels, and the health insurance contribution at its 2014 level.

The maximum contributory income for 2015 for all socially insured individuals is set at BGN 2,600, planning to maintain this figure until 2017 inclusive.

An increase of the minimum contributory income for agricultural producers to the amount of that income for the rest of the self-insured individuals is foreseen as from 1 January 2015 - from BGN 240 to BGN 420.

The updated medium term budget forecast provides for an increase of the minimum salary as from 1 January 2016 to BGN 360 and as from 1 January 2017 to BGN 380.

Limiting personnel costs, delegated budgets excluded, by 10% in the budget sphere is foreseen, this being linked with a review of the administrative structures and their streamlining.

The 2015 CFP revenues are planned at 36.8% of GDP. Because of the need to maintain fiscal stability the fiscal consolidation measures on the revenue side are focused on establishing better organisation of and coordination between the revenue administrations, administering the tax and social security revenues, expanding the taxable base while preserving the flat rate taxation of natural persons' income, establishing conditions for better revenue collection while maintaining the low taxation levels.

The estimated CFP expenditure level is 39.8% of GDP for 2015, while preserving the tax policy of low tax rates, and a realistic estimate of the implementation of programmes co-financed by EU and other donors and the relevant budget balance fiscal targets. The main contributor to the fiscal consolidation is expenditure, whose relative share for 2015 compared to the estimated performance for 2014 drops by 0.6% of GDP.

The pension policy for 2015 foresees to continue with the application of the so called "Swiss rule" or an indexation of pensions as from 1 July 2015 by a percentage equal to the sum of 50% of the increase of the contributory income and 50% of CPI in the previous calendar year. This percentage for 2015 is 1.9%. After the one-year transit period in 2014 for the age required for retirement and the length of service needed for acquiring entitlement to pension, from 2015 they will increase by 4 months each year in the period 2015-2017.

The successful implementation of the EU co-financed operational programmes will also have key importance for the realisation of individual sector policy priorities. In 2015 all operational programmes co-financed by the EU 2007-2013 Cohesion and structural funds enter into the final stage of the implementation of the financed under them projects, therefore in 2015 intensive payments under the programmes are expected.

The government debt is expected to increase to BGN 24.5 billion at the end of 2015, the government debt to GDP ratio being 29.7%. In 2015 the issuing of new government debt to the amount of BGN 8.1 billion is planned.

The policies in the budget concerning municipalities are focused on enhancing the possibilities for their sustainable and balanced development. The activities to bridge the internal disproportions between regions will continue. In 2015 the implementation of operational projects focused on generating employment and income in the regions will continue.