Guaranteeing financial stability and limiting the budget deficit within the 3% of GDP put forth in the 2015 State Budget bill

The Council of Ministers approved the 2015 State Budget bill and the updated medium-term budget forecast for the 2015-2017 period, which is the basis of the bill.

The Budget 2015 framework has been prepared on the basis of conservative forecasts for the main macroeconomic indicators, realistic revenue estimates and restrictive expenditure planning. The parameters provided for in the consolidated fiscal program (CFP) for 2015 are consistent with the changed macroeconomic environment and with the underlying key assumptions. It reflects the effects of the urgent update of the 2014 Budget submitted by the government to the National Assembly.

The fiscal targets of the Government for the 2015-2017 period are in line with policy of ensuring financial stability, which has been set as priority. Estimates and measures taken to curb the budget deficit presume elimination of factors leading to the deterioration of the budgetary position in 2014, and bringing this indicator within the 3% of GDP with the Budget for 2015.

In the medium term, an annual deficit reduction of 0.5% is planned. This will be a good signal of the government’s intentions to mitigate the negative effect of the one-off  loosening of the deficit in 2014 and to show a steady trend towards improving the budgetary position. The CFP balance in the 2015-2017 period is a deficit of  3% of GDP in 2015, 2.5% of GDP in 2016, and 2% of GDP in 2017, respectively.

Tax and social security policy will be oriented towards supporting economic growth, improving the business environment, as well as reducing tax evasion, and increasing fiscal sustainability in the long term. There is a plan to revoke the tax relief for income not exceeding 12 minimum wages.

Among the priorities is achieving minimum excise duty levels in the EU in line with the agreed transitional period. Excise duty on cigarettes is planned to increase during the 2015-2017 period.

With regard to social security and health insurance contributions, it is foreseen to preserve the amounts and proportions of the contributions to State Social Insurance Funds and state participation in the Pension Fund through a transfer at 2014 levels, and the health insurance contribution at its 2014 level.

The maximum contributory income for 2015 for all socially insured individuals is set at BGN 2,600, planning to maintain this figure until 2017 inclusive.

The minimum contributory income for farmers is planned to increase from BGN 240 to BGN 420 – the minimum contributory income of self-insured individuals – as from  January 1, 2015.

The updated medium term budget forecast provides for an increase of the minimum salary twice in 2015 - to BGN 360 in January and to BGN 380 in June. The next increase of the minimal minimum salary is planned as from January 1, 2016 to BGN 420 and as from January 1, 2017 to BGN 460.

Limiting personnel costs, delegated budgets excluded, by 10% in the budget sphere is foreseen, this being linked with a review of the administrative structures and their streamlining.

The 2015 CFP revenues are planned at 36.8% of GDP. Because of the need to maintain fiscal stability the fiscal consolidation measures on the revenue side are focused on establishing better organisation of and coordination between the revenue administrations, administering the tax and social security revenues, expanding the taxable base while preserving the flat rate taxation of natural persons' income, establishing conditions for better revenue collection while maintaining the low taxation levels.

The estimated CFP expenditure level is 39.8% of GDP in 2015, while maintaining the tax policy based on low taxes and a realistic assessment of the implementation of programs co-financed by the EU and other donors and the relevant fiscal targets. The main contributors to fiscal consolidation are costs whose share in 2015 compared to the expected performance for 2014 decreased by 0.6% of GDP.

The pension policy for 2015 foresees continuing the so-called “Swiss rule”,  or indexation of pensions as from  July 1, 2015 by a percentage  equal to the sum of 50 % of the increase of contributory income and 50% of the consumer price index during the previous calendar year.. This percentage for 2015 is 1.9%. After a one-year freeze in  2014, the retirement age and the necessary  pensionable service, required to be eligible for a pension, will increase by 4 months each year from 2015  to 2017.

The successful implementation of operational programs co-financed by EU Funds will be crucial for realization of individual sectoral policies. In 2015, all operational programs co-financed by the Cohesion  and Structural Funds 2007-2013, enter into the final stage  of implementation the financed under them projects, thus intense payments under programs for 2015 are expected.

The government debt at the end of 2015 is expected to increase to BGN 24.5 billion, public debt to GDP ratio being 29.7%. A new government debt of BGN 8.1 billion is planned in 2015.

Policies laid in the budget concerning municipalities are aimed at enhancing the possibilities for their sustainable and balanced development. Activities to tackle internal disproportions between regions will continue. In 2015, the implementation of operational projects aimed at generating employment and income in regions will continue.