MoF Expects Excess of Revenues over Expenditures of BGN 3,246.2 million under Consolidated Fiscal Programme as of July 2019
31.07.2019
Based on the preliminary data and estimates, the Consolidated Fiscal Programme (CFP) balance on a cash basis as of July 2019 is expected to be positive, amounting to BGN 2,979.1 million (2.8% of the projected GDP). On a monthly basis, the CFP budget balance is close to balance only for July.
The key factors behind the forecast excess of revenues over expenditures for the first seven months of 2019 are the positive revenue development, on the one hand, and the relatively low performance of expenditures as a result of concentrating the majority of investment and other expenditures in Q3 and Q4, on the other hand. Having in mind the above reasons, budget performance in the first half of the year is traditionally characterised by an excess of revenues over expenditures, while the second half, in particular Q4, reports a negative budget balance. The budget balance for the first seven months of the year cannot therefore be correlated to the annual fiscal goal set by the estimates to the 2019 State Budget of Republic of Bulgaria Law.
Key CFP parameters based on preliminary data and estimates:
As of July 2019, CFP revenues and grants are expected to be BGN 25,942.7 million, which accounts for 59.2% of the annual estimate. Compared to July 2018, CFP revenues grow by BGN 3,395.2 million, with some growth being registered for both tax and non-tax revenues and proceeds from grants and donations where EU programme and fund grants are mainly received. Based on the estimates available, tax revenues report a growth by BGN 1,755.7 million, non-tax revenues – by BGN 1,068.8 million, and proceeds from grants and donations – by BGN 570.7 million. A baseline effect appears in the non-tax revenue part relating to the revenues under the Electricity System Security Fund due to the amendments to the Energy Law in force as from 1 July 2018 which have changed the mechanism for collection of revenues under the Fund’s budget. The revenues under the Fund’s budget as of July 2019 are therefore higher than the proceeds for the same period of 2018.
As of July 2019, the Consolidated Fiscal Programme expenditures, including the contribution of the Republic of Bulgaria to the EU budget, amount to BGN 22,696.5 million, which accounts for 49.0% of the annual estimates[1], with expenditure performance in comparison to the annual estimates usually being higher in the second half of the year. For comparison, the CFP expenditures as of July 2018 amount to BGN 20,532.5 million. Compared to the same period of the previous year, the nominal increase is mainly due to the higher amount of staff costs (a 10% increase in the wage bill for the public sector and the next step of increasing the remunerations in the education sector), the higher social and health insurance payments (a baseline effect from the pension increase in July 2018, the pension indexation in July 2019 and an increase in the health insurance payments set out in the 2019 NHIF Budget Law), etc.
The part of Bulgaria’s contribution to the EU budget, as paid from the central budget as of 31 July 2019, amounts to BGN 811.9 million, which complies with the existing legislation in the area of EU own resources, i.e. Council Decision 2014/335/EU on the system of own resources of the European Union, Council Regulation (EU, Euratom) No 608/2014 of 26 May 2014 laying down implementing measures for the system of own resources of the European Union and Council Regulation (EU, Euratom) No 609/2014 of 26 May 2014 on the methods and procedure for making available the traditional, VAT and GNI-based own resources and on the measures to meet cash requirements, as amended by Council Regulation (EU, Euratom) 2016/804 of 17 May 2016.
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 July 2019 will be published on the website of the Ministry of Finance at the end of August 2019.
[1] Estimates to the Law amending the 2019 State Budget of the Republic of Bulgaria Law (promulgated in the State Gazette, issue 60 of 2019, effective as from 30.07.2019).