02.02.2015

The first level spending units' monthly reports show that the consolidated fiscal programme (CFP) balance for 2014 is negative to the amount of BGN 3,048.2 million (3.7 % of forecasted GDP). The budget position of the country as of the end of 2014 is consistent with the objectives set in the amended budget programme for the year. The forecasts and the estimates for the deficit amount of the General Government under the European System of Accounts'2010 methodology show that it will register an improvement compared to the target set of 3.5% of the forecasted GDP, the expectations at the moment are for 3.3% of the forecasted GDP. This limits the size of the one-off deviation from the reference value under the Stability and Growth Pact which on its side is an indicator in the analysis and the ultimate decision making for initiating an excessive deficit procedure for Bulgaria.

Consolidated revenues and grants under CFP for 2014 stand at BGN 29,406.8 million, or 98.1% of the plans under the Law amending the 2014 Annual Budget Law[1].

For 2014 tax proceeds, including revenues from social security contributions, total BGN 23,028.2 million, which is 98.8 % of the amended 2014 plans. In structural terms the revenues from social security and health insurance contributions exceed the plan for the year and to a great extent compensate the underperformance of VAT revenues whereby tax revenues under the CFP are close to the amended annual plans. Compared to the previous year tax revenues under the CFP have risen by 2.9 % (BGN 657.9 million) in nominal terms.

Revenues from direct taxes amount to BGN 4,275.8 million, or 99.9 % of the amended annual plans, and are by BGN 374.3 million higher than the previous year (9.6 %). Personal income tax revenues report growth of 10.6 % (BGN 248.0 million). Increase for 2014 is also reported in the corporation tax revenues - by BGN 126.3 million or 8.1 % more than for the last year.

Revenues from indirect taxes amount to BGN 11,480.8 million, or 96.2 % of the amended annual programme. VAT revenues amount to BGN 7,264.4 million or 94.4 % of the annual plan. Compared to the last year VAT revenues are lower by BGN 102.1 million, due mainly to the higher amount of VAT refunded to the companies. At the end of 2014 the non-refunded VAT amounts to BGN 105 million, which is the lowest level for the past 10 years and is considerably lower than the reported at the end of 2013 (BGN 240 million). Another factor that has to be taken into account in the comparison with the previous year is the basic effect of one-off tax arrears to the amount of BGN 65 million received in February 2013.. Excise duty revenues amount to BGN 4,038.7 million or 99.5 % of the annual plan. Compared to the previous year excise duty revenues are lower by BGN 17.1 million in nominal terms (0.4 %). Custom duties revenues are BGN 153.1 million or 102.5 % of the annual plan. Proceeds from other taxes, including property taxes and other taxes under the Corporate Income Tax Law, amount to BGN 822.4 million, or 101.5 % of the amended plans for 2014. Revenues from social security and health insurance contributions are BGN 6,449.2 million, or 102.7 % of those planned for the year. Compared to the previous year these revenues have risen by 6.4 % (BGN 389.0 million) in nominal terms.

Non-tax revenues amount to BGN 3,457.0 million or 100.7 % of the amended annual plans. This is by BGN 493.5 million less than the previous year which is due to the basic effect of one-off revenues in 2013 from dividends for the state and a sum awarded to the state under an arbitration case.

Grants (including grants from EU Funds) amount to BGN 2,921.6 million or 90.3 % of the annual plan.

The expenditures under the consolidated fiscal programme, including the contribution of the Republic of Bulgaria to the EU budget, for 2014 amount to BGN 32,455.0 million, which is 98.4 % of the amended annual plans. Compared to 2013 expenditure under the CFP have risen by BGN 2,037.1 million (6.7 %), mainly due to the accelerated absorption under European programmes and funds, and to social and health insurance payments growth. Expenditure under the EU funds accounts (including national co-financing) have risen by 23.6 % (BGN 870.6 million) compared to 2013, and expenditure under the national budget - by 7.5 % (BGN 942.8 million) compared to the 2013 reported figures.

Non-interest expenditures amount to BGN 30,920.4 million or 103.2 % of the amended annual plans. Current non-interest expenditure for 2014 amount to BGN 26,025.0 million, or 104.5 % of the plans, capital expenditures (including net gain of state reserve) amount to BGN 4,895.4 million, or 96.5 % of the amended plans for 2014. Interest payments amount to BGN 579.8 million, or 86.6 % of the plans for 2014.

The part of Bulgaria's contribution to the EU budget, paid as of 31.12.2014 from the central budget, amounts to BGN 954.9 million, which complies with Council Regulation 1150/2000 of 22 May 2000 implementing Decision 94/728/EC, Euratom on the system of the Communities' own resources.

The budget balance on a cash basis under the Consolidated Fiscal Programme (CFP) for 2014 is negative, amounting to BGN 3,048.2 million and is formed by a deficit under the national budget of BGN 2,388.5 million and a deficit under EU funds of BGN 659.6 million.

Fiscal reserve as of 31.12.2014 is BGN 9.2 billion, including BGN 8.1 billion deposits in BNB and banks and BGN 1.1 billion receivables under the EU Funds for certified expenditure, advance payments, etc. In accordance with §1, point 41 of the Public Finances Law Additional Provisions the fiscal reserve scope has been changed to include the receivables under the EU Funds for certified expenditure, advance payments, etc. In January 2015, the resource available in the fiscal reserve allowed to make without any problems the payments for debt servicing connected mainly with the maturing US Dollar denominated Global Bond issued in 2002.

Data on the consolidated programme implementation as of 31 December 2014 are published on the website of the Ministry of Finance in category Topical Publications/Statistics. 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.

Law amending the 2014 Law on the State Budget of the Republic of Bulgaria (promulgated SG No 98/28.11.2014).