Bulgaria’s National Assembly officially adopted this country’s 2021 state budget at second reading. In fact, the MPs approved three separate budgets- the Social Insurance budget, the budget of the National Health Insurance Fund and the 2021 state budget. The voting took place one day before the introduction of the new anti-epidemic measures aimed to contain the spread of Covid-19 infection and the extension of the emergency epidemic situation until January 31, 2021.

The parameters of next year’s state budget caused many controversial comments and reactions. Criticism boils down to allegations that the new budget is unrealistic, that it provides for too much public spending and it is not quite clear whether the expected revenues will be collected. The main opposition force – the Bulgarian Socialist Party called the 2021 state budget “inadequate”.

In 2021, budget revenues are estimated at EUR 24.2 billion, while budget expenditures will exceed revenues by EUR 2.56 billion and amount to EUR 26.8 billion. In other words, the budget deficit is estimated at EUR 2.56 billion, or 3.9% of this country’s gross domestic project (GDP). The cabinet will be able to cover these expenditures by issuing government bonds to the tune of EUR 2.3 billion. However, Bulgaria will still remain among the EU countries with the lowest debt-to-GDP ratio. 

The new state budget is defined by some observers and especially by its authors as social and anti-crisis, aimed at greater support for both companies and citizens affected by the Covid-19 crisis. Wages in many sectors will see increase, which would boost consumer demand and the economy as a whole. In 2021, people employed at the education field, the healthcare system, the Ministry of Interior and the public sector are expected to get a pay rise. Child allowances for low-income households will be increased as well. Tax relief is also planned for all families with children. The minimum monthly salary will increase to EUR 332 and the minimum pension will amount to EUR 153 per month as of January 1.

The authors of the budget have taken into account the global economic crisis stemming from the coronavirus pandemic and have made their calculations with an expected GDP growth of 2.5% and projected global growth of over 4%. On the eve of the introduction of the new anti-covid measures, the projected growth does not seem quite certain, because the partial lockdown that enters in force on Friday night and the expected temporary closure of many businesses will definitely have an additional negative impact on the economy which is expected do decline by 7% in 2020. “”It will turn out that relatively soon after the Parliamentary elections next year, the 2021 state budget will have to be amended and some expenditures will have to be cut”, Associate Professor Krassen Stanchev from the Institute for Market Economics forecasted, quoted by “Dnevnik”.

English version: Kostadin Atanasov