THE Budget 2004 Bill envisages further financial decentralisation for municipalities, Deputy Finance Minister Kiril Ananiev said in an interview with Bulgarian news agency BTA.

Municipalities' expenses are set at 1.909 billion leva. About 1.07 billion leva is for activities delegated by the state and 702 700 leva is allotted for municipal activities, Ananiev said.

For the first time patient services in municipal hospitals will be financed by the National Health Insurance Fund (NHIF). About 335 million leva are allocated from the budget on the condition that the NHIF reserve will contribute 70 million leva. Thus the total amount will be 405 million leva, while the Bulgarian Medical Association requested 400 million leva, Ananiev said.

The Budget 2004 Act has envisaged 205.22 million leva for the judiciary while the Supreme Court Council (SCC) requested 299 million. The 2003 Budget allocation was 138 million leva and this triggered serious protests on the part of members of the judiciary, Ananiev said.

The general budget deficit is set at 0.7 per cent of GDP next year. The Government expects a 5.3 per cent growth in GDP. The wages in the public sector will be raised by 8.5 per cent as of July 1 next year and the pensions by 5.8 per cent. The growth of the projected revenues is slightly slower than the expected GDP growth.

The reduction in the profit tax rate next year from 20 per cent to 19.5 per cent was suggested by Prime Minister Simeon Saxe-Coburg, Finance Minister Milen Velchev said last week. The Cabinet's decision to cut the tax from 23.5 per cent to 19.5 per cent was a surprise, since the Finance Minister had insisted the rate would be reduced to 22 per cent only. The profit tax was projected at 20 per cent in the draft budget submitted for discussion on October 9 but the higher rate was announced because the ministries wanted bigger budgets, Velchev said. According to him, the 0.5 per cent difference will not affect the budget next year, since it equals about 18 million leva.

About 14.4 billion leva worth of taxes are expected to come to the budget next year, the expenses are set at 14.7 billion leva. In 2004, 13,5 per cent of the GDP will be spent on social policy (compared to 13.8 last year), 4.2 per cent will be allocated for education (against 3.9 per cent in 2003), 4.3 per cent will be for health care (compared to four per cent last year). The percentage for defense will be the same as last year - 4.9 per cent of GDP, 2.1 per cent will go for construction, compared to 1.9 per cent last year.