Bulgaria Unites On 2012 Draft Budget

by Ulrika Lomas, Tax-News.com, Brussels

04 November 2011

The Bulgarian government has recently approved during an extraordinary meeting the country’s 2012 budget bill, designed to reduce the deficit, to minimize the effect of the drawn-out eurozone sovereign-debt crisis on the economy, and to guarantee debt repayments in early 2013.

According to Bulgarian Finance Minister Simeon Djankov, the budget bill provides for economic growth of 2.9% next year, compared to estimated growth this year of 2.8%, for a budget deficit of 1.35% of gross domestic product (GDP), down significantly from 2% in 2011 and from 3.9% in 2010, and for inflation of 3.2%.

Djankov confirmed government plans to maintain both corporate and personal income taxes, the lowest in Europe, unchanged at 10% in 2012.

The government also reportedly plans to align national tax legislation with European Union law and to improve existing tax laws in Bulgaria.

The minimum fiscal reserve is to remain static at BGN4.5bn (EUR2.3bn or USD3.2bn).

While acknowledging the fact that it is “a tight budget” and that next year will be a financially difficult year, Finance Minister Djankov nevertheless stressed that the budget is expected to work even if economic growth is subsequently revised downwards to either 1% or 2%.

The International Monetary Fund (IMF) recently downgraded its economic growth forecast for Bulgaria for this year from 3% to 2.5%.

Bulgaria’s 2012 budget bill, drawn up in collaboration with trade unions and business representatives, is yet to be ratified by parliament.

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