23.12.2015

„The estimates of the Ministry of Finance are the 2015 budget to end with a deficit of around 2.5-2.6% of GDP, or 0.7-0.8% of GDP less than projected in the revised budget for this year,", Minister of Finance Vladislav Goranov announced this news during the final for this year press conference of the Ministry. It was attended by the team of Deputy Ministers of Finance Karina Karaivanova, Kiril Ananiev and Feyzi Bekir, and the directors of the National Revenue Agency and the Customs Agency Boyko Atanasov and Vanyo Tanov.

Minister Goranov underlined that deficit reduction was mainly due to the better performance of the revenue administrations - National Revenue Agency and Customs Agency, which had collected about BGN 2 billion more revenues compared to the previous year. Minister Goranov reminded that during the vote on the 2016 State Budget Law he had commended that "3.3% CFP deficit is the worst possible scenario which will not take place" and it has come true. Goranov stated a number of times in his presentation that the role of revenue administrations throughout the year had been crucial for the overall stability of the current government as the reforms which the government had tried to impose through the 2015 Budget Law had not proved easy and some of the Ministers had failed to implement them as quickly as needed and to stay within the limits of the budgeted expenditures. "If the revenue administrations had not collected nearly BGN 2 billion more, we would have been in a very unpleasant situation and would hardly avoid the excessive deficit procedure as all additionally collected resources are used to reduce the potential level of debt", the Minister commented.

Vladislav Goranov said that in the coming years MF will make substantial efforts to improve the efficiency of public spending, but added that "unfortunately, the instruments available to the Minister of Finance in this respect are very limited because expenditures are incurred by first level spending units and, as we saw, the forced imposition of reforms without having the necessary support from the relevant systems does not always lead to the required result". The Finance Minister also said that he would not stop raising the difficult issues of cost effectiveness in individual systems and offering solutions although he received criticism for proposing unpopular measures and decisions. According to Vladislav Goranov a good finance minister is the one who conservatively managed citizens' money and tried not to generate debts that place a burden on future generations.

Looking forward to the new year, the Finance Minister said that difficult political debates were underway as to what the redistributive role of the state should be. He is convinced that the current model of the tax system was optimal and should not be changed because it suggested low level of taxation and relatively low redistribution of resources by the state. Minister Goranov stressed that "under the conditions of a low tax burden it is important to put an end to all possibilities of abuses in terms of taxes and for this reason all upcoming changes in the legislation will be aimed in this direction". The logic behind it is that it will improve not only fiscal performance, but also the environment for doing business by means of eliminating the natural advantages of smugglers and VAT thieves to legal businesses and people who want to be upright to the state.

„I see year 2015 as the year of returning to predictability in the economy; the macroeconomic indicators show this, as consumer confidence is restoring and domestic consumption is increasing - and this can be achieved only with the good work of the entire government", added in his annual review Minister Goranov. He reminded that in terms of GDP growth, growth estimates in the autumn of 2014 had been for around 0.6-0.8% and now we were getting closer to almost 3% for the current year. He said that "if we manage to cross the psychological barrier of 3% of the economic growth, it will trigger automatic mechanisms that will make it possible to overcome the unfavourable trends for low growth in the past years".

As first legislative proposals of the Ministry of Finance in early 2016 Minister Goranov announced a change in the Public Finance Law which would introduce a mechanism for financial recovery of municipalities. It will clearly regulate the relationship between the municipalities and the government in case of emergency financial situations. The Executive Director of NRA Boyko Atanasov said that in 2015 the tax administration had collected BGN 1,600 billion more compared to 2014 and had achieved over 80% collection of new liabilities within the statutory deadline. "NRA has managed to establish precise and clear rules on the way to collect liabilities irrespective of whether it is an individual, a legal entity, a small, a medium or a big business", said Atanasov. According to him, that had enabled an equal application of the law to all taxable persons. Furthermore, NRA has radically changed its policy on the control functions - it has started monitoring the biggest companies, i.e. more than 400 companies in the "Large taxpayers" and "Medium taxpayers" in the form of monthly monitoring of their turnover and constant contact with their management. According to the Director of the NRA fiscal control has led to a growth of the declared tax base of transactions in the EU by more than BGN 500 million, exceeding by 25% the 2014 level. The NRA has implemented a possibility for quality, good and quick service, has carried out several campaigns directed to taxpayers and has shown a good attitude which resulted in better revenue collection, summed up Boyko Atanasov. "The NRA's idea is to be predictable for loyal taxpayers and unpredictable for disloyal ones", the NRA Executive Director said in conclusion.

The Director of the Customs Agency Vanyo Tanov reported BGN 550 million more collected revenues from excise duty, their growth being 12% in 2015. When the 2015 budget was drafted, the excise duty revenue growth was projected to rise up by 9.6% in 2018, i.e. in the course of one year the customs achieved a goal planned for four years, he reminded. Tanov projected the customs duty revenue overperformance at 10-15%.