site.bta Parliament Passes on Principle 2015 Budget Act

116 - POLITICS - ECONOMY - BUDGET - PARLIAMENT updated2

Parliament Passes on Principle 2015 Budget  Act


Sofia, December 8 (BTA) - Parliament passed on principle Monday
the 2015 National Budget Bill. It went through on 130 votes from
 GERB, the Reformist Bloc, the Patriotic Front and ABV. 82
deputies from BSP-Left Bulgaria, the Movement for Rights and
Freedoms (MRF), the Bulgarian Democratic Centre (BDC) and Ataka
voted against. There were no abstentions. The Deputy Prime
Minister in charge of EU funding and economic policy, Tomislav
Donchev, said the budget bill is not perfect but it is the only
one possible. 

During debates that lasted over three hours, Finance Minister
Vladislav Goranov said that it is the first step towards a
stable and realistic budget, and underscored the importance of
efficient management of the EU funding. 

He said that the global economic projections are unfavourable.
There is a risk for an extended period of low inflation and even
 deflation in the euro zone. In Bulgaria, the GDP growth is
expected to slow down to 0.8 per cent due to low internal demand
 before picking up speed in the next couple of years. The slow
inflationary processes will bring about a lower nominal growth
of the national economy, the Minister said.  

In 2015, unemployment is expected to drop to 11.7 per cent.

The updated medium-term budget forecast envisages an increase of
 the minimum wage by 20 leva to 360 leva from the start of next
year, by another 20 leva from mid-2015, by 40 leva from January
1, 2016, and then again by 40 leva from January 1, 2017.

In 2015, all EU-funded operational programmes for the 2007-2013
period will be in their final phase and intensified payments are
 expected for all.

The proposed budget also envisages a deficit of 3 per cent,
unchanged tax, social and medical insurance burden and taking
out a new debt of 8.1 billion leva in 2015.

It proposes an increase of the tax on the income from bank
deposits to 10 per cent from the effective 8 per cent and
broadening of the type of deposits to which this will be
applicable (now it is only charged on savings deposits).

This proposed tax increase did not get the support of the
parliamentary budget committee and it remains to be seen how the
 plenary will vote.

The revenue side of the budget is set at 36.8 per cent of GDP
and the expenditure side at 39.8 per cent of GDP with unchanged
tax policy.

The government debt is set to grow to 24.5 billion leva at the
end of 2015 making a debt-to-GDP ratio of 29.7 per cent.

The chairperson of the parliamentary budget committee, Menda
Stoyanova, said it is "the budget of what is possible".

Stoyanova said during the debates that after the Socialist
government the budget revenues were over 1 billion leva short of
 the target; the Interior Ministry had a 127 million leva
shortfall; 50 million leva were lacking for social payments and
another 70 million for payments in agriculture. Suspended EU
payments further worsened the picture.

She added the Corpbank failure with direct consequences for the
budget of the amount of 2 billion leva and indirect consequences
 for the economy. In conclusion, she said that the Socialist
government was a disaster.

The priorities will include the administrative reform, the
reform in health health and in high school and university
education, Stoyanova said.

She was adamant that the revenues for next year are conservative
 and realistic "to make sure we will not need a budget update
again". If the revenue target is oveachieved, the extra income
will go for reducing the deficit. "Another criticism is that the
 budgets for the ministries are not enough for implementing the
sectoral policies, but we can only spend as much as we make,"
said Stoyanova.

The ABV group said they would support the budget framework on
first reading but would seek wats to improve it before the final
 voting. Presenting the ABV position, its deputy leader and
Deputy Prime Minister Ivaylo Kalfin said that excessive
expenditure in 2014 led to the budget deficit to soar to 3.6 per
 cent of GDP and it now needs to be lowered to 3 per cent if
this country wants to keep its autonomy in running its finances.
 
Kalfin said that his party will expect to see policies aimed at
enhancing economic growth by encouraging investment and
establishment of a national investment fund. It also wants to
see an active government policy in the troubled energy sector.

In the social sector, ABV is supportive of keeping unchanged
social payments. He said though that it is a bad idea to set a
10 per cent cap on personnel costs in the administration because
 the jobs in this sector are aimed to provide specific services
to citizens who need them.

Emil Dimitrov of the Patriotic Front said that the government
"did the only possible and sensible thing" with the 2015 budget
which his group would support. They, however, have objections to
 the appropriations for education, defence and the Agency for
Bulgarians Abroad. "This budget is not the best thing: it is bad
 and restrictive, but it is the only thing that could be had at
the moment," Dimitrov commented. 

Reformist Bloc co-floor leader Radan Kanev said that the budget
ensures "some cost cuts and very little growth but these are the
 realities". The deficit is set at 3 per cent not to allow
investment and make reforms but because "somebody has to pay for
 the theft from the taxpayers resulting from the negligence of
the State Agency for National Security, the National Bank of
Bulgaria and other state institutions", Kanev said apparently
referring to their role in the collapse of Corporate Commercial
Bank and the new loan that Bulgaria had to take out to help the
payout of guaranteed deposits in this bank. 

Kanev also said that the resources for reforms have been
depleted and that there is no way to have legislative decisions
for reforms reflected in the 2015 budget "because we don't have
wnough resources for that".

Almost all projections for the 2015 budget have been made with
an overly pessimistic scenario, said Aliosman Imamov of the MRF.
 He believes it is unrealistic to expect consumption to be the
main driving force behind economic growth, adding that the role
of investments is underestimated. The 2015 budget can be
described as one of continuing depression and growing poverty,
Imamov said likening the budget bill to those from the early
period of former GERB finance minister Simeon Djankov. "Next
year, Bulgaria will continue to be the most solid pauper in the
EU," Imamov said.

Roumen Gechev of BSP-Left Bulgaria said the 2015 budget is "a
budget of economic stagnation" and called "shocking" the
economic growth target of 0.8 per cent. He said that the
European and global economies are growing and described the 8
billion leva government debt as colossal and outrageous.

Independent MP Velizar Enchev said the subsidies that the State
pays to political parties are "absurd, cynical and ludicrous,"
adding that the poorest country in the EU pays the highest party
 subsidies. He said that he will propose that the party subsidy
is reduced from the current 11 leva to 5 leva per vote before
the conclusive voting of the 2015 budget bill.

Chavdar Peychev of the BDC said that the proposed budget is "a
budget of survival". According to him, it provides for an
increase of the tax burden and there are too many buffers in it
allowing the government to spent them in a non-transparent
manner. It does not mention e-government at all and lacks
measures for economic growth. In conclusion, Peychev said his
group will not support the budget bill.

Ataka leader Volen Siderov said that his group does not support
the proposed budget  because it envisages too small an economic
growth and because of the new debt of 8 billion leva. Further
flaws are the underfunding of healthcare and education, and that
 no resources are planned for the Bulgarian State Railways.
"Since 1997, Bulgaria has not been an independent state, we do
not have the right to issue money. Now we are offered a colonial
 budget," he argued.

Emerging from a meeting with the leadership of the GERB group
and the chair of the parliamentary budget committee, Menda
Stoyanova, Confederation of Independent Trade Unions in Bulgaria
 leader Plamen Dimitrov said that the unions' plans for a
protest on December 11 over the proposed budget remain
unchanged.

Dimitrov explained that the unions and the government have yet
to decide how the pensionable age and length of service will
increase over time. "We have agreed to have a week of busy work
with the participation of all political forces in Parliament in
order to have a formula for consensus before the 2015 budget is
put to conclusive voting," the union leader explained.