ECONOMY

Bulgaria’s Jan budget surplus at 0.7 percent

SOFIA – Bulgaria posted a budget surplus of 0.7 percent of GDP in January, in line with its plans to end the year with a fiscal windfall of at least 3 percent of gross domestic product, Finance Ministry data showed yesterday. The Balkan country’s budget surplus stood at 440.4 million levs ($341.7 million) in January. The windfall was four times more than the surplus in January of 2007. Bulgaria leads one of Europe’s tightest fiscal policies and has produced a series of hefty surpluses in the past five years to decrease risks from overheating and keep its huge current account gap from spiraling out of control. Booming imports and strong domestic demand as Bulgarians rush to take banking credits to buy new cars and apartments after decades of communist austerity have sharply boosted the current account deficit. The Socialist-led government ended 2007 with a record-high 3.8 percent budget surplus, after the external shortfall jumped to 21.6 percent of gross domestic product. Finance Minister Plamen Oresharski has said that the government is ready to further cut spending and increase the fiscal surplus to avoid a hard landing of the economy if foreign investment, needed to cover the current account gap, decrease due to the global credit crunch. The Finance Ministry forecasts the strong domestic demand will further expand the current account deficit to 21.9 percent of GDP this year. Total fiscal revenues in January stood at 2.1 billion levs, while spending was 1.6 billion, data showed. Tax income, the largest revenue item, was 1.9 billion levs and some 74 million went for contribution to the EU budget. Sofia has been operating under an IMF-prescribed currency board regime since 1997, which leaves fiscal policy as one of the few tools it has to influence the emerging economy. Under the currency straitjacket Bulgaria is obliged to keep a fiscal reserve. At the end of January it stood at 7.7 billion levs, up from 7.5 billion in December.