MF expects a surplus of BGN 3,198.3 million under the Consolidated Fiscal Programme for the first half of 2019
Based on preliminary data and estimates the revenues and grants under the Consolidated Fiscal Programme (CFP) as of June 2019 are expected to be 50.8 percent of the annual plans. Revenues performance for the six months of the year is in line with the plans for the period as well as with the specificities of the tax calendar on the basis of which a significant part of the annual proceeds from certain taxes (the corporate income tax, the personal income tax, etc.) are concentrated in the first half of the year. It is also for this reason that the revenues for the period traditionally exceed 50 percent of the annual plan.
The performance of the annual plan in the part of the expenditures under the CFP for the first half of year is expected to be 42.9 percent. It is evident that the utilisation of expenditures is lagging behind the performance of revenues which is also the reason for the surplus of revenues over expenditures for the period. The planned pension indexation, as envisaged in the annual estimates, will be applied in the second half of the year. Furthermore, a large part of the capital expenditures planned for the year takes place in the second half of the year due to the construction season and other factors.
In view of the above reasons, the budget performance in the first half of the year is traditionally characterised by an excess of revenues over expenditures, while in the second half and in particular in the last quarter of the year the budget balance is negative. Therefore, the budget balance for the six months of the year cannot be referenced to the annual fiscal target envisaged in the estimates within the 2019 State Budget of the Republic of Bulgaria Law.
Key CFP parameters on the basis of preliminary data and estimates:
Revenues and grants under CFP as of June 2019 are expected to be BGN 22,273,3 million, or 50,8 % of the annual estimates. As compared to June 2018, CFP revenues have risen by BGN 3,063.0 million, with growth being registered in both tax and non-tax revenues, and grants and donations where the grants under the EU programmes and funds are mostly recorded. Based on the available preliminary estimates, the growth of tax revenues is BGN 1,710.3 million, of non-tax revenues – BGN 902.4 million, and of revenues from grants and donations – BGN 450.3 million. As regards non-tax revenues there is a baseline effect in the part of revenues to the budget of the Energy Security Fund due to the amendments to the Energy Law which have entered into force and changed the mechanism of collection of revenues to the Fund’s budget. For this reason the revenues to the Fund’s budget for the first half of 2019 were higher than the revenues for the same period of 2018.
The Consolidated Fiscal Programme expenditures, including the contribution of the Republic of Bulgaria to the EU budget, for June 2019 amount to BGN 19,075.0 million, which accounts for 42.9 % of the annual estimates; the performance of expenditures as compared to the annual plans is usually higher in the second half of the year. For comparison, the expenditures under the CFP as of end-June 2018 amounted to BGN 17,497.1 million. Compared to the same period of the previous year, the nominal increase is mainly due to the higher staff costs (due to the 10% increase in the wage bill for the public sector and the next step of increasing the remunerations in the education sector), the higher social and health insurance payments (a baseline effect from the pension increase in July 2018 and an increase in the health insurance payments set out in the 2019 NHIF Budget Law), etc.
The part of Bulgaria's contribution to the EU budget, paid from the central budget as of 30.06.2019, amounts to BGN 717.5 million, which complies with the current legislation in the area of EU own resources – Council Decision 2014/335/EU, Euratom on the system of own resources of the European Union, Council Regulation (EU, Euratom) No 608/2014 of 26 May 2014 laying down implementing measures for the system of own resources of the European Union, and Council Regulation (EU, Euratom) No 609/2014 of 26 May 2014 on the methods and procedure for making available the traditional, VAT and GNI-based own resources and on the measures to meet cash requirements as amended by Council Regulation (EU, Euratom) No 2016/804 of 17 May 2016.
For the first half of 2019, the surplus of revenues over expenditures under the CFP is expected to be BGN 3,198.3 million (2.8 % of the forecast GDP).
The statistical data and the Information Bulletin on the execution of the state budget and the key indicators of the Consolidated Fiscal Programme based on data from the monthly reports on the cash performance of the budgets of the first-level spending units as of June 2019 will be published on the website of the Ministry of Finance at the end of July 2019.