site.btaDraft 2015 National Budget: 3% Deficit and Increase of Retirement Age

121 - ECONOMY - FINANCE - 2015 NATIONAL BUDGET - DRAFT

Draft 2015 National Budget:
3% Deficit and Increase
of Retirement Age


Sofia, November 26 (BTA) - The Finance Ministry Wednesday
unveiled a draft 2015 national budget. It says the budget
framework is based on conservative forecasts for the key
macroeconomic indicators, realistic revenue estimates and
restrictive expenditure planning.

The budget parameters are consistent with the changed
macroeconomic environment and take into account the effects of
the revisions to the 2014 budget which passed conclusively in
Parliament earlier the same day.

The fiscal targets of the Government for the period 2015-2017
reflect the government's priority of ensuring financial
stability.

The budget aims to eliminate the factors that have caused the
worsened budget position in 2014 and bring budget deficit within
the 3 per cent target already in 2015.

In the medium term, the plan is to step down the deficit by 0.5
per cent every year. "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 demonstrate a
sustainable trend of improving the budget position," the Finance
Ministry says.

The budget deficit is projected at 3 per cent of GDP in 2015,
2.5 per cent in 2016 and 2 per cent in 2017.

The tax and social security policy will be oriented towards
supporting economic growth, improving the business environment,
limiting tax fraud and enhancing fiscal sustainability in the
long term, the Ministry says.

The 2015 budget provides for an increase of the tax rate on
interest earnings from 8 per cent to 10 per cent and an
expansion of the taxable base. A tax relief for income not
exceeding 12 monthly minimum wages will be repealed and two new
reliefs for children will be set in place.

Achieving the minimum levels of Community excise duty rates in
line with the agreed transition period is also among the
priorities. The excise duty on cigarettes will be increased in
the 2015-2017 period.

No changes are planned in respect of social security and health
insurance contributions.

The maximum contributory income for 2015 for all socially
insured individuals is set at 2,600 leva and the plan is to keep
this unchanged until 2017 inclusive.

The minimum contributory income for agricultural producers will
be increased to the amount of that income for the rest of the
self-insured individuals as from 1 January 2015 (from 240 leva
to 420 leva).

The updated medium term budget forecast provides for an increase
of the minimum salary to 360 leva as from the start of 2016 and
to 380 leva as from January 1, 2017.

Personnel costs in the budget-financed sector will be capped by
10 per cent, delegated budgets excluded, and this will be linked
to a review of the administrative structures and their
streamlining.

The 2015 budget revenues are planned at 36.8 per cent of GDP.
Because of the need to maintain fiscal stability, the fiscal
consolidation measures on the revenue side are focused on
establishing better organization 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 budget expenditure level is 39.8 per cent of GDP
for 2015.

The pension policy for 2015 will continue to apply the so called
"Swiss rule" whereby pensions are adjusted by 50 per cent of
the previous year's inflation, whether positive or negative, and
by 50 per cent of the growth of the average contributory
income. This percentage for 2015 is 1.9 per cent.

From 2015, the retirement age and length-of-service requirement
will start to increase by 4 months each year in the period
2015-2017.

The successful implementation of EU-supported operational
programmes will have key importance for the implementation of
the sectoral policy priorities. In 2015, all operational
programmes co-financed by the EU 2007-2013 Cohesion and
structural funds enter into the final stage of implementation of
the projects financed thereby, which is why payments under
these programmes are expected in 2015.

The government debt is expected to increase to 24.5 billion leva
at the end of 2015, the government debt to GDP ratio being 29.7
per cent. An issue of new government debt to the amount of 8.1
billion leva is planned in 2015.

The budget is aimed to enhance activities to bridge the
disproportions between regions. LN/