01.03.2023

Based on the preliminary data and estimates, the Consolidated Fiscal Programme (CFP) budget balance as of end-February 2023 is expected to be a deficit of BGN 250 million (0.1% of the projected GDP). For comparison, a surplus of BGN 713.3 million was reported for the first two months of 2022, which means that on an annual basis the budget balance for the period deteriorates by about BGN 1 billion. The data also show that, for the first time since 2015, a deficit is formed in the Consolidated Fiscal Programme by the end of February.

Although CFP revenues, grants and donations increase by around BGN 1.3 billion year-on-year, the early growth in expenditures (by around BGN 2.3 billion) results in a deterioration of the budget balance. As per individual expenditure items, the most significant increase is registered with pension expenditures, which increase by more than BGN 700 million, as well as subsidy expenditures (by around BGN 680 million), maintenance costs (by around BGN 400 million), personnel expenditures (by around BGN 400 million), etc. The growth of expenditures is due to some pieces of legislation that have become effective, including amendments in the pension field, current programmes compensating electricity consumers, settlement of liabilities under the budget of the Ministry of Regional Development and Public Works, increased salary levels in a number of administrations, etc.

If the outlined trends in revenues and expenditures continue on an annual basis, there is a possible risk of an excessive deficit above the 3% of GDP reference value under the Stability and Growth Pact, a key indicator in the context of Bulgaria's efforts to join the euro area. This, in turn, requires that during the deliberations and the adoption of the 2023 State Budget of the Republic of Bulgaria Law measures both on the expenditure side of the budget and on revenue reinforcement are discussed and adopted so as to finance the expenditures under the current legislation while preserving the sustainability of public finance and complying with the current fiscal rules in the Public Finance Law.

Key CFP parameters based on preliminary data and estimates:

As of February 2023, CFP revenues, grants and donations are expected to be BGN 9,350 million and increase by BGN 1,341 million compared to those reported in January and February 2022. CFP tax and non-tax revenues grow by BGN 1,335 million in nominal terms compared to the same period of 2022, while grant and donation proceeds (mostly EU programme and fund grants) are close to those reported for the same period of the previous year.

As of February 2023, the Consolidated Fiscal Programme expenditures, including the contribution of the Republic of Bulgaria to the EU budget, amount to BGN 9,600 million. For comparison, the CFP expenditures as of February 2022 amount to BGN 7,296 million.

The part of Bulgaria’s contribution to the EU budget, as paid from the central budget as of 28 February 2023, amounts to BGN 284 million, 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 Consolidated Fiscal Programme indicators based on the monthly data on cash execution of first-level spending units as of February 2023 will be published on the website of the Ministry of Finance at the end of March 2023.