Bulgaria Posts Lower-Than-Expected Budget Deficit of 6.1 Billion Leva
In a press release, the Ministry of Finance (MF) announced that Bulgaria has ended the year with a budget deficit of 6.1 billion leva. Notably, this figure is 100 million leva lower than initially projected, marking a significant improvement thanks to concerted efforts by the ministry. This reduction raises hopes that the deficit will remain within the 3% limit of the country’s GDP, as stated by the MF.
Analyzing the data, the scenario appears complex. According to the latest medium-term budget forecast for 2024, Bulgaria has projected a GDP of 201.47 billion leva, with a deficit set at 3.03% of the GDP. However, there’s a stark contrast between the expected economic growth and the actual data from the previous year, which showed a GDP 6 billion leva lower than projected. If the GDP for 2024 turns out to be 3 billion leva lower than anticipated after seasonally adjusting the data, the deficit of 6.1 billion leva would exceed the 3% threshold, indicating a failure to meet the fiscal stability criteria outlined in the Stability and Growth Pact and the Law for Public Finances.
The worry is that the negative factors that hindered revenue collection in 2024 may persist in 2025. While planned revenues from traditional taxes were met, non-tax revenues fell short. Non-tax revenues were around 9.7 billion leva, due to reduced sales of non-financial assets, lower-than-expected state and municipal taxes, and other factors. The income from EU funds and grants also fell significantly short of projections.
Moreover, the Bulgarian National Bank has stated that it will not fulfill its 2025 budget obligation to contribute 1 billion leva to the treasury. In terms of expenditures, without necessary actions by the government and parliamentary parties to freeze and limit them, they will continue to fuel the rapid expansion of the deficit. As a result, public debt and its servicing costs are likely to skyrocket.
The Minister of Finance, sapeva.askasa, commented on the situation, "While we expected challenging fiscal conditions, the actual scenario is proving more difficult than anticipated. We remain committed to implementing policies that align with our EU fiscal rules and ensure long-term stability."
As the situation unfolds, it’s increasingly important to monitor the economic indicators to assess whether Bulgaria will be able to meet its fiscal targets and maintain macroeconomic stability.
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Meta Description: Bulgaria posts lower-than-expected budget deficit of 6.1 billion leva, with hopes of keeping it within the 3% GDP limit. However, economic and fiscal challenges persist, as stated in the Ministry of Finance’s press release.
