Mitko Dimitrov, Director, Economic Institute of the Academy of Sciences: Funding for the state administration and Ministries of Interior and Defence should be cut

- Mr. Dimitrov, as Deputy Prime Minister Simeon Djankov already mentioned, the budget framework for 2012 will be the same as in 2011. Can we then conclude that the budget would be restrictive?
- These are the funds that we dispose of and we should not plan for more than that. It would not be reasonable to plan for more expenditures than revenues We need to aim at a balanced budget. Usually financial analysts recommend not to exceed the set deficit since this created a negative picture of our country and affects us all. Take the Greek example, citizens there are angry at politicians since they think most of the overexpenditures were incurred by the latter. In this sense, our approach is correct.
Another questions remains, though - did we collect all the funds that we could? The Ministry of Finance and related institutions still have a lot to do in this respect. We know that the share of the grey economy is very high: the cases of smuggling and VAT frauds are numerous. That is, when we tell ourselves not to spend more than we have, we should also be careful as to whether we collected everything that we should have.The Government can still do a lot about that and this is a problem that should not be overlooked by the Finance Minister and the entire administration.
 
- In what areas should we impose savings so as to have the budget deficit decline?
- The major budget restrictions should be imposed on the state administration and on the Ministries of Interior and Defense. Analyses have shown that we have overexpenditures there at the expense of the traditionally and chronically under-funded sectors such as education, scientific research, culture, healthcare. It is not accidental that none of the previous ministers have tried to make an internal restructuring of the budget. Some 2% of the intended budget for the Ministries of Interior and Defence and the state administration should be redirected to the above-mentioned sectors.
The good news is that Minister Djankov publicly announced his intention to do that, although the administration was not been determined as a possible source for funds reallocation. The difficulty remains, though. Previous governments had also announced their cost-cutting schemes or plans for funds reallocation, but they failed to implement them. This is because either the problem is very difficult, or political statements are delivered just to delude citizens with empty promises. I remember that one of the previous governments even set up ministry, which was responsible for reallocating the budget. Overall, there are two possible ways. The first one pertains to the increase in revenues and much more must be done in this respect, while the second way refers to the internal reallocation of the funds. 

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