Municipalities with BGN 175 mln in overdue liabilities

As of September 30, 159 Bulgarian municipalities (60% of the total) are responsible for BGN 175.6 mln in overdue liabilities, according to data from the Ministry of Finance. This represents a decrease of BGN 3.8 mln, compared to what local authorities owed at the end of the second quarter. With respect to state authorised activities, arrears amount to BGN 5.3 mln, or 3% of all payments in default. For the period as a whole, as well as throughout 2012, overdue municipal liabilities have shown a slight downward trend. They are down from 9% to 8% of combined own revenues and countervailable state subsidy.

Among the country's big municipalities with population of more than 50,000 people, Burgas, Rousse, Stara Zagora, Blagoevgrad and Dimitrovgrad have the strongest financial positions. At the other end of the spectrum are Kyustendil, Kardzhali, Vidin, Karlovo and Silistra. In the past year, Kardzhali has suffered the largest increase in overdue liabilities – by a margin of BGN 2.1 mln to BGN 10.7 mln. However, Pernik remains the overall leader with BGN 13.5 mln in arrears.

The Finance Ministry makes its assessment of municipalities' fiscal soundness based on: financial independence (as measured by the share of own revenues in gross proceeds), financial sustainability (the budget balance/total proceeds ratio among other indicators), effectiveness (what part of overall spending is allotted to salaries and social security contributions) and investment activity (capital spending as a share of overall outlays).

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