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The consolidated budget balance for the first half of 2009 is positive, amounting to BGN 173 million or 0.3% of GDP. As per operational data as at last Friday (17 July) the fiscal reserve amounted to BGN 8.250 billion. These are the projections for the fiscal performance as at 30 June 2009 presented by Minister of Finance Plamen Oresharski at a press conference held today 20 July 2009. Revenues and grants under the consolidated fiscal program (CFP) for the reported period amount to BGN 12,927.6 million, which is 92.1% of the revenues for the same period last year.

Revenues for the first months of the current year in most of the EU countries are 10-15% less compared to last year and according to EC forecasts 20 of EU27 will close 2009 with budget deficits. For some of them, such as the United Kingdom, the figure will be a two-digit one. 

Minister Oresharski reminded the key objectives set by the Government four years ago - EU membership, accelerating economic growth, increasing the level of social responsibility and evaluated their implementation as good. Among the steps contributing to the attainment of the said objectives the Finance Minister indicated the tax reform, as well as the restructuring of key units of the Ministry of Finance, that had made the administration more adaptable to the new environment and compatible with the EU requirements. The Minister of Finance pointed out two indicators for the taxes having the greatest share in revenues - VAT and corporation tax. In the period 2000-2005 the VAT taxable base was between 40 - 60%, while for 2008 the result was 80%. Taxable profit as a share of GDP until 2005 was 10-12%, while in 2008 - 32%.

During the Government's term of office we had made more active the expenditure policies for financing key public sector units, noted Minister Oresharski and added that financing had doubled in 2009 compared to 2005.

In the period 2005 - 2008 we closed the years with budget surpluses - 3.1% of GDP for 2005, for 2006 and 2007 - 3.5 %, 2008 - 3 % of GDP. As a result the fiscal reserve had increased to BGN 8.2 billion; for the sake of comparison as of August 2005 it was less than BGN 4.5 billion, Plamen Oresharski reminded. We have prepaid government debt to the amount of BGN 2.3 billion, Minister Oresharski reported - we have repaid in full the country's debt to the IMF, part of the debt to the World Bank and in full our debt to some bilateral creditors, while at the end of last year, availing of the low prices of Bulgaria's external debt, the Government has bought back Global Bonds, issue 2002, to the amount of BGN 290 million.

The current year is the most difficult one compared to past years not for political reasons but for economic ones, Plamen Oresharski emphasized. For the first half of the year revenues total BGN 12,927.6 million, which compared to the plan for the year, is 39.7%. Tax revenues (including social contributions) amount to BGN 10,124.2 million, their performance for the first half of 2009 being 39.4% of the planned ones, while for the same period last year their performance is 50.3%, Minister Oresharski said. The underperformance compared to last year mainly pertains to revenues from indirect taxes, corporation taxes and property taxes under municipal budgets. The amount of expenditure (including Bulgaria's contribution to the EU general budget) under the general government for the first half of 2009 is BGN 12,754.6 million or 42.0 % of the plan, compared to 40.5% performance for the same period of 2008. The expenditure growth for the first half of the year is mainly due to the increase of current non-interest expenditure, mainly under social security funds' budgets (social and health insurance payments) and the executive budget, as well as to capital expenditure growth (under the executive budget, the municipal budgets, the pre-accession instruments and the EU operational programs, etc..). Capital expenditure for the first half of the year are 35.5% of the planned ones compared to 24.6% for the same period last year. Despite this growth however only 1/3 of the planned annual capital expenditure have been made.

In the event of substantial slow down of the economy I forecast a balanced budget for the year, Finance Minister Plamen Oresharski said in conclusion.

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