ECONOMY

Bulgaria surprises itself by posting a small budget surplus in 2003

SOFIA (Reuters) – Bulgaria posted a budget surplus last year for the first time since 1998, instead of an initially planned deficit of 0.7 percent of gross domestic product, data from the Finance Ministry showed yesterday. Bulgaria’s consolidated budget had a surplus of 937,300 levs ($601,000) at end-2003, compared to a deficit of 218 million levs at end-2002. Ministry officials attributed the budget surplus to a rise in tax and customs duties revenues as a result of measures to crack down on smuggling and tax evasion. Last year the ministry stepped up its fight against the gray economy, which some analysts say accounts for between a fifth and half of Bulgaria’s output, following pressure from the European Union and NATO, which Bulgaria is anxious to join. The government, encouraged by last year’s surplus, has gone for a slight fiscal loosening this year, targeting a budget deficit of 0.7 percent of GDP from a 0.5 percent gap initially agreed upon with the International Monetary Fund. The IMF, Sofia’s main economic mentor, gave a green light to the higher 2004 budget deficit last November after the government pledged to balance its 2003 budget. The IMF and analysts have urged Bulgaria to maintain tight fiscal discipline this year to counter a widening current account deficit. Imports and banking credits had boosted the current account deficit to 7.2 percent of GDP in January-November last year from 2.6 percent a year earlier.