If the epidemic or pandemic takes a turn to the worse, the implementation of Bulgaria's budget will be at risk and the country’s debt will soar more than expected. Such a forecast made the BNB in its traditional edition Economic Review.
The bank sees as risky the Treasury Department's forecast that the budget deficit is expected to shrink to 1.8% of GDP in 2023, when the pressure from epidemic-related spending is expected to be relieved.
If the gap between revenue and spending grows, it will have to be covered with more debt, the Economic Review said. The ceiling recorded in this year's Budget Act is BGN 4.5 billion in the medium term, the budgetary framework foresees that the country's indebtedness will increase from 23.5% of GDP in 2020 to 28.2% at the end of 2023.
The increase is due to several major factors - more transfers and allowances for households and pensioners, funds for the 60/40 employment subsidy programme, more spending on the health insurance fund and salaries for medical professionals, increased salaries in the budget sector.