Bulgaria’s end-July budget surplus hits 4.7 percent
SOFIA – Bulgaria’s budget surplus increased to 4.7 percent of expected 2007 gross domestic product at the end of July due to continued outperformance in tax collection, Finance Ministry data showed yesterday. The cumulative January-July surplus stood at 2.4 billion levs ($1.67 billion), compared with 1.99 billion levs in the same period a year earlier. Bulgaria, which runs one of the tightest fiscal policies in European Union, has vowed to maintain its stance and run hefty fiscal surpluses to counter external risks arising from its swelling current account deficit. Finance Minister Plamen Oresharski has said Bulgaria will target a surplus of at least 2.3 percent of GDP this year. The government plans to tighten further spending, targeting a surplus of 2.5 percent for 2008. Yesterday, rating agency Standard & Poor’s said Bulgaria was one of the European countries most exposed to changes in investor risk appetite if the current tighter liquidity conditions were to expand. Driven by strong imports of consumer goods after decades of restraint under communism, Bulgaria’s current account gap is seen as coming in at up to 18 percent of GDP this year and 17.2 percent in 2008. Sofia operates under a currency board regime which curtails its central bank operations, leaving the fiscal policy as one of the few tools it has to influence the economy. Total fiscal revenues in the period between January and July stood at 13.2 billion levs and spending was 10.5 billion levs. Some 308 million went for contribution to the EU budget. Tax income, the largest revenue item, stood at 10.8 billion levs. Prime Minister Sergei Stanishev attributed the rise in the tax collection to the cutting of the corporate income tax to 10 percent in 2007 from 15 percent a year earlier. Analysts however have rapped Bulgaria’s poor budget projections which have allowed the country to report massive outperformance in past years and have made it impossible to figure out whether Sofia was curbing spending or not. Under the currency board, Bulgaria also maintains a large fiscal reserve, which grew to 7.4 billion levs at the end of July, up from 7.1 billion the previous month.
