Bulgaria’s consolidated budget deficit increase to BGN 1 275.6m as of end-August

Bulgaria’s consolidated budget deficit (cash basis) increased to BGN 1 275.6m (1.6% of GDPe) as of end-August from BGN 1 147.2m at the end of July and compares to a deficit of BGN 212.7m at the end of August 2013. The deficit is formed by a national budget deficit of BGN 710.9m and a deficit on EU funds of BGN 564.7m. Revenues and grants for January-August totalled BGN 19.2bn (61.1% of the planned for 2014), up by BGN 218.7m YoY. Tax revenues came to BGN 15.1bn (62.2% of the planned for 2014), up by BGN 405.5m compared to January-August 2013 as direct tax revenues were up by BGN 250m to 66% of the planned, while indirect taxes came to only 58.7% of 2014 budget due to underperformance of VAT and excise duties. Revenues from social security and healthcare contributions were up 4.4% YoY to BGN 4.1bn, or 65.8% of the annual plans. Expenditures, including the contribution to the EU budget, increased 6.7% YoY to BGN 20.5bn mainly due to higher expenditure under European programmes and funds, and to growth of social and health insurance payments. Expenditure under the EU funds accounts (including national co-financing) rose by 40.2% (BGN 754.7m) compared to the same period of 2013, and expenditure under the national budget - by 3.2% (BGN 538.8m). The growth in social expenditure is mainly due to the base effect of the increase of pensions as from 1 April 2013 and to higher health insurance payment in the first months of 2014 linked to payment of last year liabilities. The fiscal reserve was at BGN 8.7bn as of end-August from BGN 8.9bn at the end-July.