ECONOMY

Bulgaria sees doubling budget surplus target

SOFIA (Reuters) – Despite damage from debilitating floods, Bulgaria should produce a 2005 fiscal surplus up to double the size of an already ambitious target agreed with the IMF, its finance minister said yesterday. Plamen Oresharski, an academic debt specialist sworn in with Bulgaria’s new Socialist-led government this month, said the EU candidate’s budget surplus could be up to 2 percent of gross domestic product this year and next, against a 1 percent target. «Our preliminary forecast now is for a surplus of 1-2 percent of gross domestic product this year,» Oresharski told Reuters in an interview. «Next year, the preliminary plan is for a balanced budget, but I am sure there will be a 1-2 percent of GDP surplus.» The 2001-2005 government of ousted Prime Minister Simeon Saxe-Coburg ran one of Europe’s tightest monetary policies by consistently underestimating income and producing huge unplanned surpluses. In the first half of 2005 the surplus was 1.1 billion levs, far over the year-end estimate of 400 million levs agreed with the IMF. Oresharski said he would try to forecast budget revenue more accurately but would maintain a cautious policy. «Bulgaria has made some very difficult structural reforms and has a lot of potential risks,» he said. «From this point of view, next year we will make a more realistic revenue forecasts but will still continue to look at them in a conservative way.» Oresharski said the government would spend 200-300 million levs in short-term emergency payments for damage from floods this summer that killed more than 20 people, left thousands homeless and destroyed roads and other infrastructure. The total damage will amount to 800-900 million levs, of which the EU may help Bulgaria pay 20-30 percent. The rest must come from Bulgaria’s budget surplus, he said. Analysts have welcomed Oresharski’s appointment, saying it should reduce chances that the Socialists, now in a three-party coalition, will repeat the mismanagement that cast the country into economic meltdown when they were last in power in 1997. The coalition also includes Saxe-Coburg’s economically liberal centrists and the mostly ethnic Turkish MRF party. Oresharski, deputy finance minister in Ivan Kostov’s 1997-2001 right-of-center government, said a pre-election pledge by the Socialists to hike public wages by as much as 20 percent at the start of next year would be at least halved. «I think the discussion will be for a rise of 5-10 percent. This is realistic,» he said. Although the leftists have pledged to raise spending on Bulgaria’s dilapidated public services, Oresharski said the ruling coalition would keep the economy on track. «I have full support from the leaders of the coalition. All three parties agree that macroeconomic stability and a stable fiscal position is our key priority,» he said. He said Bulgaria, which hopes to join the EU in 2007, should comply with the criteria for adopting the euro by the middle of 2009 and adopt the single currency in 2010.