20.07.2013

The new debt to the amount of BGN 1 billion will not be spent by the end of the year. Its aim is to provide a certain buffer, Minister of Finance Petar Chobanov stated in the Sedmitsata (The Week) programme of Darik Radio. He is certain that Bulgaria\'s debt level is sufficiently low to be able to take a loan which anyhow has been provided for in the 2013 budget. \"This means that the potential indebtedness of the economy will not exceed the provided for BGN 14.6 billion\", Chobanov said. He reminded that next year we had again to repay foreign debt and that it was important to ensure resources now in order not to put pressure in the first months of 2014 when expenditure were traditionally more than revenues, thus we would not be forced to urgently issue debt. The Minister stressed that the loan would not be used for social payments.

The 2013 budget revision will be approved at an extraordinary meeting of the Cabinet on Monday and then the law will be tabled in Parliament, the aim being its fast adoption, Chobanov stated. \"Expenditure will not be non-transparent. In the given situation we have opted the buffer to be in the central budget and not to revise the expenditure ceilings of line ministries because this would entail a serious discussion. We cannot meet in full the considerable underfinancing of the systems, and this is also an additional opportunity for the ministries to optimize and prioritize their expenditure\". Thus the Minister of Finance replied to the criticisms that no specific expenditures were specified as a reason for the changes. He clarified that in the present budget there were many underfinanced activities, not well planned expenditure, as well as items that had not been at all planned in the budget for this year. Among those is investment expenditure of around BGN 5-6 million for some hospitals that are in a dire situation and no funds have been planned for freeing frequencies for the digitalization. Another expenditure that is not planned is the commitment made by the Caretaker Government for a subsidy of BGN 11 million for agricultural producers and a notification procedure is already underway. The Minister stated that additional BGN 86 million will appear in the revenue and in the expenditure side after the change of the budget for this year. The revenue will come from CO₂ emission trading according to the MEW. At the same time they will be spent in the expenditure side because of the amendments to the Energy Law pertaining to \"green\" energy. \"Thus part of the electricity price reduction will be paid, in particular the reduction of the green energy allowance will be compensated as per a programme of the Ministry of Economy and Energy\", the Minister clarified.

\"We have started to actively refund VAT to businesses. Generally the monthly average of VAT refund is BGN 460 million, while only for the first 12 days of July we have refunded BGN 454 million, of which BGN 60 million to SMEs - a sector that has been overlooked so far\", the Finance Minister confirmed. He reminded that the delayed VAT refund generated interest which for last year amounted to BGN 25 million and as of the end of May - to BGN 12.5 million. Minister Chobanov thinks that the overall question whether the budget should be revised is contained in whether the policy of delaying payments to businesses and the State being an ineffective and unconscientious partner to Bulgarian and foreign economic and trade partners should continue. Measures are being developed and implemented to increase revenue collection, to combat contraband and to optimize the work of the revenue administrations and next week they will be presented, Chobanov announced. The NRA Executive Director Boyko Atanasov has credibility; he has very good ideas how to improve collection and they do not involve putting pressure on the businesses which is very important, the Minister stated.

For the time being the 2013 budget revision does not foresee an increase of the minimum salary or Christmas bonuses for pensioners, the Finance Minister confirmed. However, he was adamant that resource would be sought for Christmas support, while the issue about the minimum salary would be finalized within the National Tripartite Council. He warned that it was too early yet to define the philosophy of the 2014 budget, but he was certain that there would be no tax increases or a different VAT rate. In regard to the announced tax on cash flows to offshore zones the Minister said: \"We intend to apply such tax, but work on it is still on-going\".

Petar Chobanov was explicit that when the deal for \"Doverie\" was approved in 2009, when Vienna Insurance Group acquired it, it was clear who the owner actually was although the buyer was an offshore company. In respect of the current opportunity to sell the Pension Fund to United Capital, the matter is within the competence of Financial Supervision Commission, Chobanov added. He stated that he was not going to interfere in the work of the regulator.