National Assembly: The budget deficit should not exceed 2%, and expenditures - 40% of GDP

The deficit in the consolidated fiscal programme should no longer exceed 2% of GDP, the MPs decided when discussing the amendments to the State Budget Act at second reading. The draft bill also stipulates that the maximum amount of expenditures in the consolidated fiscal programme may not exceed 40% of the projected GDP. The changes are projected to take effect as of January 1, 2012. The motives for the amendments read that they support the maintenance of a balanced budget in the long run. According to GERB (Citizens for European Development of Bulgaria), this will be a buffer providing greater security for compliance with the reference value for budget deficits under the Stability and Growth Pact and thus any political manipulations will be avoided.

According to MP Rumen Ovcharov from Coalition for Bulgaria, these legislative amendments are connected with constitutional changes and the latter can not be adopted in Parliament, which renders the discussed amendments pointless.

Ovcharov also expressed a negative opinion for the provisions in the amendments, explaining that a 40% ceiling on budget expenditures would be “a very artificial restriction”. “There is not a single country in the EU, where there is both a 2% budget deficit and an up to 40% budget spending,” he said and asked why Bulgaria needed such limitations.

Blue Coalition Co-Chairman Martin Dimitrov joined the debate, saying that his colleagues would support the amendments although they did not quite agree with them. In his words, before Greece reached the current crisis, its budget deficit had been 2% for a period of 10 years, but it didn’t help. He expressed his support for the policy of Germany - there the deficit in one year, is compensated the next one.

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