PETAR CHOBANOV: THE REVISION IS AIMED ONLY AT ENSURING FLEXIBILITY AND POSSIBILITY FOR THE CARETAKER GOVERNMENT TO WORK IN A NORMAL WAY IN THE ABSENCE OF A PARLIAMENT
16.07.2014
"The proposed revision of the 2014 State Budget of the Republic of Bulgaria Law (SBRBL) and the NHIF 2014 Budget has no analogy so far, as there has not been a case where a leaving government to take a responsible position and to make such a revision in order to ensure flexibility and a reliable buffer for the governments coming after it", Minister of Finance Petar Chobanov stated at a press conference after the Council of Ministers meeting where the proposals to amend the State Budget and the NHIF Budget had been approved.
Minister Chobanov announced that the revision was motivated by the political decision based on the agreement reached between the political forces during the consultations with the President. It is required in order to guarantee the country's financial stability because the situation requires such decisions, the Finance Minister stated. "The revision of the budget aims at strengthening the fiscal buffers to be available to the governments in view of guaranteeing financial stability", Chobanov further said. He added that this would ensure flexibility in the current unstable political situation and the imperiousness of the measure was determined by the limited life of the 42nd National Assembly.
"The public confidence that we will ensure through the possibility the next governments to guarantee stability is a key condition for the country's financial stability itself", Minister Chobanov said. The provision of fiscal buffers gives a clear signal that the country has the necessary instruments and will take the necessary actions to achieve the target set. "The revision is aimed only at ensuring flexibility and possibility for the caretaker government to work in a normal way in the absence of a working parliament", the Minister further commented.
The proposed revision of SBRBL provides for increasing the deficit by BGN 725 million, being 0.9% of forecasted GDP, thus the deficit is increased to 2.7% of GDP. This means an increase of BGN 225 million for the NHIF Budget and a decrease of BGN 500 million for the planned revenues. It also proposes an increase of the debt by BGN 3.4 million - this is yet another buffer for the governments. The debt is to finance BGN 725 million increase of the deficit and BGN 2.7 billion to provide possibilities to take measures to ensure the stability of the economy and the financial system. "Thus we show that the State supports the stability of the financial system and will continue to do so even in the case of change of governments", Minister Petar Chobanov stated.
An increase by BGN 2 billion of the maximum amount of the new government guarantees that could be issued during the year in favour of the Bank Deposit Insurance Fund is also foreseen. "This is done so as the Fund to be more flexible in respect of the instruments available", Chobanov specified. It is also provided for that the Fund itself could issue debt in order to ensure fiscal buffers and, if necessary, to use them.
Minister Petar Chobanov explained that in case the revenues perform well the deficit will be reduced and it would be possible to even fulfil the present target. He explicitly emphasised that in the motives for amending the NHIF Budget it would be specified and required to take disciplining measures to be implemented by the NHIF Supervisory Board. Chobanov specified that the funds for revision of the NHIF Budget would be for the following expenditure - BGN 200 million for hospital care and BGN 25 million for ensuring the treatment of patients with cancer. The Minister announced that the revenue decrease by BGN 500 million is on the account of VAT revenues, mainly from imports.
Regarding revenue performance Chobanov commented that in July the estimates would be exceeded by BGN 100 million. He specified that in the second half of the year there would be more revenues and the fall-back would be compensated as was the case last year.
The Finance Minister again noted that "the budget has been made for a normal political situation and not for a year with two elections and three government changes".
Petar Chobanov also commented that "the proposed changes in the revenue and expenditure parameters of the State and NHIF budgets are not the only possible solution, as there are possibilities to fulfil the 2014 State Budget at its current parameters if the measures for revenue collection and tightening expenditure are implemented. The same is valid for the fulfilment of the 2014 NHIF Budget, where there are a number of reserves related to possibilities to optimise the activity and strengthen the control over spending. However, in order to ensure sufficient possibilities for manoeuvres, flexibility and response to eventual challenges and fiscal risks in the process of budget implementation until the end of 2014 the proposed legislative changes provide an opportunity for actions by any next government, if necessary".