Bulgaria's budget deficit under the consolidated fiscal program reached almost 570 million euros on a cash basis by the end of February. In just three months, it increased to 1.5 billion euros. The topic was commented on by former Deputy Minister of Finance and member of the BNB Board of Directors Lyudmila Elkova and economist and founder of the Institute of Market Economics Assoc. Prof. Krasen Stanchev on the air of “Your Day” on NOVA NEWS.
According to Elkova, the trend itself is not surprising, but the rate of deepening is of serious concern. She outlined the dynamics in the first months of the year - from a surplus of about 200 million euros in January to a deficit of approximately 600 million euros in February, reaching 1.5 billion euros in March. According to her, although spending should be limited, there is no real intention to reduce it. “The truth is that the situation is not very rosy. This is a very rapid movement and I do not think it will stop soon”, Elkova emphasized.
For his part, Assoc. Prof. Stanchev said that he was surprised by the behavior of the caretaker government. He noted that unlike previous periods, when caretaker cabinets imposed financial discipline, the opposite trend has been observed since 2022. “The caretaker governments have started to break discipline”, he said.
The economist added that the state still has a relatively comfortable reserve in the Bulgarian National Bank. In his words, the question remains how this resource will be used and whether adequate measures will be implemented, including temporary adjustments to the excise policy.
Elkova drew attention to the lack of buffers in public finances and questioned some of the recent decisions, such as the increase in budget salaries by 5%. She emphasized that budget revenues are growing steadily, but the problem remains in the expenditure side. “Revenues are going well. Expenditures are the ones that are the big problem. They need will and courage to be limited”, commented the former deputy minister.
For his part, Assoc. Prof. Stanchev described the policy in the field of public finances over the past two years as “misguided”. He gave an example of the growth of salaries and pensions, which significantly outpaces economic growth and productivity. "When you increase spending at a rate that the economy can't sustain, it means you're counting on money to come out of thin air," the economist said.