Bulgarian Finance Minister Vows 'Stability Budget' for 2011

Bulgaria's Minister of Finance Simeon Djankov presented the draft budget bill for 2011 in front of four parliamentary committees Thursday, calling it "a budget of stability."

The draft was tabled to Parliament October 1 and Thursday it was reviewed by the Committees on Finance, Economic Policy, Social Policy and Healthcare.

Djankov confirmed a 3.6% growth for 2011 and stated redistribution will be 35.5% of GDP.

He said no salaries or pensions will suffer reductions. According to Djankov, the social sector has the greatest share of state spending at 36.1% of GDP.

He further stated that the much-debated rates for pension insurance will be raised by 1.8 percentage points.

The finance minister's ambitions are to restrain budget deficit within 3%. Earlier he had stated a more precise figure of 2.5% deficit previewed.

He further vowed that Bulgaria will keep its currency board and will not raise any direct taxes which will leave it within the "top 10 countries with the least tax burden on households."

In the draft budget, cabinet plans to collect in 2011 BGN 25.8 B in revenues, which is BGN 1.3 B more than the 2010 updated budget. In the expenditure side of the balance sheet there is a planned reduction of BGN 12 M - down to BGN 27.9 B. If executed, this will lead to a lower budget deficit for 2011 - BGN 1.9 B compared to BGN 3.3 B in 2010.

In the approved "expense ceilings," those of the Ministry of Labor and Social Policy are up by 19% to BGN 951 M, those of the Defense Ministry are up by 11% to BGN 990 M, and those of the Health Ministry are up 5% to BGN 570 M.