31.01.2023

The 2022 deficit, estimated according to the European System of National and Regional Accounts (ESA 2010) methodology, is expected to be around 2.9% of GDP, which is within the criteria of the Stability and Growth Pact and provides a stable outlook for the convergence assessment in the report of the European Commission and the ECB in the course of Bulgaria’s euro area accession process.

Key parameters of the Consolidated Fiscal Programme as of the end of 2022

Revenues, grants and donations reported under the Consolidated Fiscal Programme (CFP) for 2022 amount to BGN 64,765.4 million, including BGN 3,181.0 million of revenue of a one-off extraordinary nature^[1] which are not included in the estimates to the 2022 State Budget of the Republic of Bulgaria Law. In order to compare the data with the annual estimates to the 2022 State Budget of the Republic of Bulgaria Law, the impact of these one-off revenues or expenditures, respectively, should be eliminated. Compared with the estimates to the 2022 State Budget of the Republic of Bulgaria Law, CFP revenues, grants and donations for 2022 amount to BGN 61 584.3 million, which represents an excess of the estimates to the 2022 State Budget of the Republic of Bulgaria Law by 3.2%.

The tax and social security revenues reported under the CFP amount to BGN 46,794.6 million, which is by 1.5 per cent or BGN 672.0 million higher than the estimates to the 2022 State Budget of the Republic of Bulgaria Law. This includes a surplus of BGN 352.9 million over the estimate for social and health insurance contributions, BGN 221.7 million higher tax revenues under the state budget (including BGN 72 million advance solidarity contribution from Lukoil Bulgaria) and BGN 101.3 million above the estimate for property taxes, mainly under the municipal budgets. On the tax revenue side of the state budget, there is an overperformance of corporate taxes, PIT and customs duties, while VAT and excise duty revenues are lower than those planned for the year. For VAT revenue, the data show that compared to the estimates to the 2022 State Budget of the Republic of Bulgaria Law, the revenue for the year is by BGN 688.7 million lower than planned. The implementation parameters for this tax are close to the estimates proposed by the Ministry of Finance in the initial draft Law Amending the 2022 Draft Law of the State Budget from June, which after the deliberations and voting of the bill in the National Assembly were additionally increased by BGN 760.0 million in the final voted texts. As regards excise duty revenues, it should be noted that in 2022 the National Assembly did not pass the amendments proposed by the Ministry of Finance to introduce an excise duty calendar on tobacco products in 2022, while the corresponding reduction in the estimated amount of excise duty receipts was not made by the effect of the measure of BGN 100 million included in the 2022 State Budget of the Republic of Bulgaria Law, i.e. approximately the non-performance of the estimate for the year. The measure will become effective as from 1 March 2023.

Non-tax revenues amount to BGN 11,976.9 million (including BGN 3,181.0 million of one-off extraordinary revenues). On a comparable basis, when eliminating the impact of one-off extraordinary revenues, the non-tax revenues under the CFP for 2022 amount to BGN 8 795.9 million, which represents an overperformance of the annual estimate by 19.8% (BGN 1 452.6 million). Non-tax revenues are formed mostly from state, municipal and legal expense revenues, rents, including payments from revenues from state-owned and municipal enterprises, concession revenues, greenhouse gas emission allowance revenues, etc. In the part of non-tax revenues, the most significant overperformance of the estimates is registered in the deductions from Kozloduy NPP for the two so-called “nuclear” funds - the Radioactive Waste Fund and the Nuclear Decommissioning Fund. Deductions for the two funds are BGN 511.6 million higher than the planned due to the high electricity prices on the free market. The situation is similar with the revenues from the sale of greenhouse gas allowances, which are BGN 163.3 million above the annual estimates and are again related to the volatile conditions on the free electricity market.

Grant and donation proceeds amount to BGN 5,993.8 million.  The receipts are lower than those estimated in the 2022 State Budget of the Republic of Bulgaria Law by BGN 198.9 million, which is due to the lower absorption of expenditures on the accounts for EU funds and the lower amount of funds reimbursed by the European Commission, respectively.

The CFP expenditures (including the contribution of the Republic of Bulgaria to the EU budget) for 2022 amount to BGN 66 112.6 million, including BGN 3,181.0 million of one-off extraordinary expenditure which are not included in the estimates to the 2022 State Budget of the Republic of Bulgaria Law. Compared with the estimates to the 2022 State Budget of the Republic of Bulgaria Law, CFP expenditures amount to BGN 62,931.6 million, representing 95.5% of the estimates to the 2022 State Budget of the Republic of Bulgaria Law.

The data show that CFP expenditures are lower than the planned ones, with the most significant delay in the absorption of the planned expenditure being in the expenditures under EU fund accounts. The main reason for this is the low absorption of expenditure under the Recovery and Resilience Plan (RRP) and some operational programmes of the 2021-2027 programming period, with the expenditures and the transfers under the state budget also being lower than planned. The absorption of capital expenditure under the state budget is also lower than planned. The delay in the implementation of projects and programmes shifts the majority of the expenditures planned for 2022 into 2023 and the subsequent years, which on the one hand improves the 2022 cash balance but on the other hand puts pressure on the 2023 budget.

Based on the monthly data on cash execution of first-level spending units’ budgets, the Consolidated Fiscal Programme (CFP) budget balance on a cash basis for 2022 is negative, amounting to BGN 1,347.3 million, or 0.8% of the projected GDP, and is formed by a national budget deficit of BGN 5,087.2 million and by an excess of revenues over expenditures of BGN 3,739.9 million under the EU funds.

The part of Bulgaria’s contribution to the EU budget, as paid from the central budget as of 31 December 2022, amounts to BGN 1,705.0 million, which complies with the existing legislation in the area of EU own resources.

The fiscal reserve as of 31.12.2022 is BGN 13.4 billion, including BGN 12.1 billion of fiscal reserve deposits in the BNB and in banks and BGN 1.3 billion of receivables under the EU Funds for certified expenditures, advance payments, etc.

The Consolidated Fiscal Programme implementation data as of 31 December 2022 are published in the Statistics section on the website of the Ministry of Finance. The statistics is accompanied by an Information Bulletin on the Execution of the State Budget and the Main Indicators of the Consolidated Fiscal Programme, which represents a short analysis of the performance of the key budget parameters on a consolidated level and by constituent budgets.

^[1] The budget of the Electricity System Security Fund receives non-tax revenues and expenditures are incurred, respectively, in accordance with §24 and §23 of the Transitional and Final Provisions of the 2022 State Budget of the Republic of Bulgaria Law, which are of one-off extraordinary nature and are not included in the estimates to the 2022 State Budget of the Republic of Bulgaria Law. The revenues from earmarked contributions for the period July-December amount to BGN 3,181.0 million.