Bulgaria’s Government approved the 2022 Budget Bill drafted by the Finance Ministry at a Cabinet sitting on 31 January, held by videoconference.
Owing to three parliamentary elections in 2021 and two short-lived parliaments that failed to elect a government, it was not until 13 December that Prime Minister Kiril Petkov’s Cabinet took office, leaving it no time to put forward a 2022 Budget Bill before the end of last year.
Earlier in January, the National Assembly approved a bill extending the duration of the provisions of the 2021 Budget Act until 31 March 2022.
Speaking to reporters after the Cabinet sitting, Petkov described the bill as “a Budget of growth”, as government investment is set to double to 5.8 per cent of gross domestic product (GDP), from 2.9 per cent in 2021.
A total of BGN 8.2 billion, or about EUR 4.2 billion, was earmarked for capital investment, Petkov said, to be funded by deficit spending.
The deficit target was 4.1 per cent of GDP, in part due to the government spending on measures meant to counter the economic impact of the coronavirus pandemic, Petkov said. Without the cost of those measures, the deficit would be 2.5 per cent of GDP, he said.
In nominal terms, that was a deficit of BGN 5.9 billion, according to the draft bill published by the Finance Ministry earlier in January.
The ministry’s bill envisions a consolidated fiscal programme – which includes the state Budget, local administration budgets, healthcare and pension funds – with total revenues of BGN 57.25 billion and total spending of BGN 63.15 billion.
By comparison, the 2021 consolidated fiscal programme is expected to reach BGN 52.34 billion in total revenues and BGN 56.25 billion in spending, with the BGN 3.91 billion deficit being the equivalent of three per cent of GDP.
The 2022 Budget will be revised mid-year, Vassilev said earlier this month, since the draft bill included only a small part of the public policies agreed during the talks to form the current government coalition.
Even in its current form, the bill envisions an increase in spending in several areas – spending on social security and pensions was set to rise to BGN 20.76 billion (up from 19.27 in the revised 2021 Budget), education would receive BGN 6.41 billion (up from BGN 5.67 billion) and healthcare spending was set to reach BGN 8.34 billion (up from BGN 7.04 billion).
As regards the spending on Covid-19 measures, the draft bill split the BGN 2.27 billion earmarked for those purposes into three main groups: measures to support households (BGN 817.5 million), measures to support businesses (BGN 853.2 million) and measures to support state institutions (BGN 597.9 million).
The single largest items were the allocations to purchase vaccines, medicines and Covid-19 tests (BGN 416.4 million), wage-support measures (BGN 400 million) and money for first-line personnel (BGN 378 million).
In a departure from the 2021 Budget, which envisioned no increase in the minimum salary in 2022 and 2023, the bill is set to increase the minimum salary to BGN 710 from BGN 650, starting 1 April.
The proposal has angered employer groups and led to sharp exchanges with Vassilev last week, at a sitting of the consultative council that brings together representatives of the government, employer associations and trade unions.
Economic growth in 2022 is forecast at 4.8 per cent, while the 2021 GDP is expected to rise by 3.7 per cent. The European Commission’s most recent forecast in autumn projected Bulgaria’s economy growing by 4.1 per cent in 2022 after 3.8 per cent in 2021.
The draft budget sets the debt ceiling at BGN 35.5 billion, or 24.8 per cent of projected GDP, with the government allowed to issue BGN 7.3 billion in new debt in 2022. The Finance Ministry said government debt was BGN 31.2 billion at the end of 2021.