After meeting for more than three hours on October 11, the Cabinet announced two major decisions about its draft of the 2010 Budget.

The draft must be tabled in Parliament by the end of October, and  Finance Minister Simeon Dyankov is facing pressure to find the money for Bulgaria’s public sector next year. For now, his approach seems to be more focused on the revenue aspect of the Budget. On October 11, the Cabinet decided not to go ahead with Dyankov’s plans to increase liquor excise duties in 2010. This idea had been preceded by another one, asking for a hike in excises on cigarettes from January 2010. Both ideas met resistance from the respective industries, while Dyankov said that the money raised from the two hikes would help fund the country’s health care and pension systems.

At the meeting, Dyankov managed to defend his position only on cigarette excise duties, with the Cabinet deciding to leave excises on hard liquor unchanged in 2010. The reason, according to Dyankov, was that this year grape production had been considerably high.

"This over-productivity means that this year larger quantities of grapes will be used for the production of home-made rakiya (a sort of grape brandy) and higher excise duties will hit small producers hard," Dyankov told Nova Televisia on October 12.

"This was what Agriculture Minister told me," he said.

Naturally, this meant a change in Dyankov’s calculations for fresh incomes next year. Dyankov and the Cabinet decided to get six state-owned companies into the game by transferring half of their 2008 profit into additional dividends. After this is done, the companies will add 64 million leva to the Budget, money that Dyankov had expected to come from increased excises on spirit liquor.

The decision was taken a few days after it was announced that a number of state-owned companies had unpaid debts of up to 1.2 billion leva which, according to Dyankov, the state did not have enough money to pay.

Municipalities got the same message when, on October 1,  it was announced that the state would not cover unreasonable municipal debts, but would allow taxes to be put up within the statutory cap. The Government will ask for this cap to be increased from its current level, which means potentially higher local taxes in some parts of the country in 2010.
On another front, Dyankov managed to persuade his fellow ministers to deepen cost cutting, to the discontent of most of them, such as Interior Minister Tsvetan Tsvetanov who has to deal with police officers’ demands for higher salaries.

Most ministers blamed their predecessors for the poor state of their respective Budgets. For example, Labour and Social Policy Minister Totyu Mladenov said that his Ministry would have a deficit this year of close to 100 million leva, while the Regional Development Ministry currently had 132.5 million leva in unpaid debts. The only ministers who had something to celebrate after October 11 were Sport Minister Svilen Neikov, Education Minister Yordanka Fandukova and Environment Minister Nona Karadjova, whose budgets remained basically intact. The others, Dyankov said, would have to make do with whatever they got – which was not much.