Balancing budget, reducing deficit
Minister Goranov outlines the public fiscal framework
19 May, 2017
Balanced budget, a gradual reduction of the deficit and a conservative fiscal policy are some of the main points in the three-year budget forecast approved by the Council of Ministers, which sets out the framework for the development of public finances and the distribution of government expenditures across the board for the next three years. Minister of Finance Vladislav Goranov presented this information to journalists on 17 May.
The programme, which is published on the ministry’s website, targets a gradual reduction of the deficit and reaching a balanced budget in 2020, the minister noted. Other priorities include keeping tax rates unchanged, raising excise duties to the minimum EU rates and pursuing a conservative fiscal policy as a prerequisite for sustainable development and economic growth.
Current projections laid out in the latest macroeconomic forecast show growth of about or a little over 3% but there are also reasons to expect growth of several tenths of the percentage point above that level, Goranov elucidated. “Let us see how the first half of the year progresses and then we will analyse the macroeconomic framework,” he said.
Asked about the tension between employers and trade unions, the finance minister commented that there has been such tension in previous years whenever the interests of the two sides – labour and capital – have clashed and that it is the government’s role to try and mediate this process. “If we fail despite our best efforts, the law and the responsibility remain in the hands of the executive and legislative branches of power,” Goranov said. He added that if common ground is not found on changing the minimum salary, the Cabinet will adhere to the Labour Code and set it after initiating dialogue with employers’ organisations and trade unions. In the absence of a consensus, the state agencies are forced to make the decisions, Goranov concluded.
According to the minister, the labour market landscape allows for the increase of the minimum salary. The employers’ arguments that such a move would put a strain on the labour market and some of the businesses are also valid. The goal is to find the right balance and the type of employment the country would like to support. Some of the demographic problems and the exodus of labour from Bulgaria stem from the level of pay in the country, and the business should recalibrate itself to reach levels of efficiency that would keep workers in Bulgaria.