02.12.2022

Based on preliminary data and estimates the budget balance of the Consolidated Fiscal Programme (CFP) on a monthly basis for November is expected to be a deficit, amounting to BGN 610 million. Cumulatively for the past eleven months of the year, the CFP deficit is expected to be around BGN 605 million (0.4 % of the forecast GDP). 

The analysis of the data for November should take into account the fact that significant corporate tax revenues are received during the month which is related to the deadline for making the corporate tax prepayments in 2022. The proceeds from this tax for the month exceed BGN 1.3 billion, which, respectively, has a positive impact on the revenues to the budget for the month. The good performance of corporate tax proceeds also indicates a possible overcompensation of certain business sectors, mainly due to the wide scope of the measures for electricity consumers outside the regulated market. Many companies have already shifted the burden of the high energy prices to final customers and households, and the lack of focus in compensation measures has led to distortion of their financial results and generation of significant profits. As a result of the implemented tax measures for a lower and a zero VAT rate for the supplies of certain goods and services, as well as the faster growth of refunded VAT, the expectations are for an underperformance of the planned VAT revenues for 2022. On the other hand, expenditure growth outpaces revenue growth, mainly due to higher expenditures on subsidies, social payments, capital expenditures, etc. For this reason, the expectations for November are for excess of expenditures over revenues and a CFP deficit on a monthly basis.

Key CFP parameters on the basis of preliminary data and estimates:

As of November 2022, CFP revenues, grants and donations are expected to be BGN 56,352 million, increasing by BGN 8,573 million (17.9%) compared to the same period of 2021. Compared to November 2021, tax proceeds under CFP rise by BGN 5,430 million in nominal terms and non-tax proceeds – by BGN 3,668 million, while proceeds from grants and donations (mostly EU programme and fund grants) are by BGN 525 million less.

It should be noted that, pursuant to §24 of the Transitional and Final Provisions of the 2022 State Budget of the Republic of Bulgaria Law, as from July public enterprises in the energy sector pay contributions to the budget of the Electricity System Security Fund which are used to cover the expenditures under Article 36b(1)(4) of the Energy Law. For this reason, non-tax revenues report a growth as no such payments were made in 2021. Similarly, in terms of the expenditures on subsidies under the budget of the Electricity System Security Fund, pursuant to §23 of the Transitional and Final Provisions of the 2022 State Budget of the Republic of Bulgaria Law compensations are paid to end non-domestic consumers of electricity outside the regulated market which should also be taken into account when comparing expenditures with the same period of the previous year.

The Consolidated Fiscal Programme expenditures, including the contribution of the Republic of Bulgaria to the EU budget, as of November 2022 amount to BGN 56,957 million (86.4 % of the annual estimates). For comparison, the expenditures under the CFP as of November 2021 amounted to BGN 47,141 million.

A major driver to the increase in expenditures are the programmes for payment of compensations to non-domestic electricity consumers due to the high electricity prices. Considered by economic elements, the most significant increase is reported in the expenditures on subsidies which include, in addition to the traditional expenditures on subsidies to non-financial enterprises in 2022, the expenditures under the programmes to the budget of the Electricity System Security Fund. Social and health insurance expenditures also reported significant growth, mainly in the part of expenditures on pensions. Another element of the expenditures, which reported a significant increase compared to the same period of the previous year, are the maintenance expenditures, where the main driver are the liabilities from previous years paid to road construction and maintenance companies under contracts for ongoing repair and maintenance. Capital, staff and interest expenditure also recorded a nominal increase compared to November 2021.

The part of Republic of Bulgaria's contribution to the EU budget, paid from the central budget as of 30 November 2022, amounts to BGN 1,678 million, which complies with the current 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 indicators of the Consolidated Fiscal Programme based on data from the monthly reports on the cash performance of the budgets of the first-level spending units as of November 2022 will be published on the website of the Ministry of Finance at the end of December 2022.