Bulgaria’s public finances were in for a major collapse, threatening to widen the consolidated budget deficit to between two and three billion leva unless the Government took decisive action, unofficial estimates from the finance ministry showed.

Ministry sources told Dnevnik that the cash shortfall was worst in national social security contributions, where different calculations point to an annual deficit of between 250 million and  500 million leva if pensions are not increased on July 1.

The shortfall was triggered by diminishing receipts in the social security system and the insufficient financing from the 2009 Budget.

The Government, however, is firmly intending to raise pensions, which could raise costs by as much as 400 million leva, risking a gap of a staggering 900 million leva.

Budget revenue for the four months through April was lagging five per cent behind last year, while expenses have ballooned by more than 20 per cent. The difference is still covered by the 907 million leva surplus accumulated in January, which began melting away in February and March until getting a boost from one-off tax receipts in April. The surplus was 670 million leva at the end of April.

Budget buffers are estimated at around four billion leva, while the extra spending cuts unveiled by Finance Minister Plamen Oresharski last week would save only 500 000 leva. Finance ministry experts expect full-year revenue to plummet by more than six billion leva.

Source: Dnevnik