Despite appeals by businesses, foreign institutions such as the International Monetary Fund (IMF) and the opposition to scale back spending to counter the economic slowdown, the Bulgarian Government continues to dig deeper as revenue tumbles.

According to Budget figures, the state ramped up spending by 22 per cent year-on-year to 8.4 billion leva in the four months through April as revenue fell by five per cent to 9.1 billion leva. The budget surplus dwindled to 675 million leva from 2.7 billion leva over the same period of 2007.

The trend has persisted for several months now despite а buffer to curtail expenses by 10 per cent and the widely-accepted forecast that the Budget surplus will be far less than the initial target - three per cent of the gross domestic product (GDP).

The data published by the Finance Ministry is even more alarming, showing that revenue has fallen sharply compared to the previous year. For instance, the Budget ended April with a surplus of 161 million leva, following deficits in March and February. However, two-thirds of the surplus came from European Union funds and the Budget would have been in the red save for a one-off contribution from the Bulgarian National Bank.

Value-added tax revenue was 18.9 per cent down on the year and is projected to fall 3.3 billion leva short of the full-year target.

The IMF and the European Commission have both warned Bulgaria to tighten spending, but the Socialist-led Cabinet of Prime Minister Sergei Stanishev continues splashing cash around.

Simeon Dyankov, chief economist with the World Bank’s finance and private sector vice-presidency, said that the Bulgarian economy was in danger of running a deficit of 3.5-4 billion leva and will have to seek an IMF bailout.

Late in April, at the IMF and World Bank spring meetings in Washington, Finance Minister Plamen Oresharski said that the Government had lowered its deficit target to just one per cent of GDP, a day after he called on other ministers to draft a plan on even deeper spending cuts at their respective ministries. Finally, the Budget revision was postponed until August or September, a move that employer organisations dismissed as a publicity stunt ahead of July’s parliamentary elections.

Source: Dnevnik