The draft of Bulgaria’s 2010 Budget appro-ved by the Cabinet on October 28 foresees revenue of 26.4 billion leva, with 20.9 billion coming from tax revenue.
The revenue envisaged in the Budget is the equivalent of 41.6 per cent of GDP.

According to the Cabinet, Budget 2010 is aimed at "ensuring stability through a prudent fiscal policy and maintaining a balanced budget".

Earmarked as priorities for spending are the social sector, education, health care, environment and road infrastructure, according to a post-Cabinet media statement.

The Budget was compiled against a background of official expectations of a return to economic growth in 2011 as liquidity problems are overcome and confidence is returned. Economic growth in 2012 is foreseen at 4.8 per cent.

Prime Minister Boiko Borissov told a news conference that a key aim of the Budget was to demonstrate to European institutions that Bulgaria was capable of a balanced budget and one that could take the country out of economic crisis.

Simeon Dyankov, Finance Minister and Deputy Prime Minister, said that against the background of Bulgaria’s Currency Board arrangement, which stabilises local currency the lev by pegging it to the euro, it was important to have a balanced budget because this would serve as a good basis for entry into ERM-2, the entry corridor to the euro area.
Social spending would take up 37.3 per cent of total expenditure, the equivalent of 15.3 per cent of GDP, the Cabinet said.

The Budget foresees an "add-in" next year for pensioners older than 75, of about 50 leva with a differentiation depending on the rate of the pension.
"The main objective of pension policy in 2010 is to preserve the level of security protection for people at retirement age and to improve financial security for older people who are in the most vulnerable position," the Cabinet said.

Provision is also made to supplement the payments made to spouses eligible under the Social Security Code to draw a portion of their deceased spouses’s pensions. This "widow’s supplement" is envisaged to grow annually by five per cent to reach 40 per cent of the pension of the deceased spouse in 2013.

The Cabinet said that in coming years, pensions would be revised on the basis of a "flexible mechanism" based on Bulgaria’s economic development, changes to social security rates, inflation and labour market trends.

Health care will get 4.2 per cent of GDP, about 2.6 billion leva. Investment spending in Budget 2010 will be, according to the draft approved by the Cabinet, focused on priority environmental and road infrastructure projects.

The total capital expenditure on the consolidated fiscal programme is seen as 6.1 per cent of GDP, made up of three per cent from national revenue and 3.1 per cent from European Union funds.

Within this, estimated spending on environmental protection will be 1.6 per cent of GDP. Public sector salary adjustments will be "driven by the capacity of the state budget and will strive to better link pay with productivity," according to the Cabinet, which added that salary increases would depend on the rate of recovery of Bulgaria’s economy.

The Cabinet said that it foresaw that, as a key to sustainability of the macro-economic system, there would be a balanced budget up to 2013. This context, with firm ceilings on spending, would make it possible to cater for priority operational programmes irrespective of the limitations of the fiscal framework.

The Budget, presented to representatives of business and labour before the October 28 Cabinet meeting, drew support from employers but serious misgivings from unions, who warned that it would cause public protests.

The Confederation of Employers and Industrialists in Bulgaria (CEIBG) said in a statement, reported by Dnevnik, that the bill matched the reality of the global crisis. The organisation endorsed the planned taxation and social security targets aimed at safeguarding economic stability while providing incentives for businesses and investments.

The Bulgarian Industrial Association supported the Cabinet’s ambition to put together a "balanced and cautious" Budget but said the expected two per cent decrease in GDP and 3.3 billion leva in foreign investments were "too optimistic", local media reported.

"The Confederation of Independent Trade Unions in Bulgaria (CITUB) has fundamental differences with the Government on the Budget philosophy and the 2010 Budget items," CITUB vice president Plamen Dimitrov said.

Dimitrov said that the reduced allocations for active labour market measures would force unemployment in Bulgaria up to 15 to 16 per cent in 2010, pushing 500 000 people out of work.

Podkrepa Confederation of Labour said that Budget 2010 was "restrictive" and through it, the Finance Ministry was trying to shift part of the burden of the economic crisis on to wage earners and Bulgaria’s poorest people. "That is why we cannot support it," Podkrepa said.

CITUB president Zhelyazko Hristov said that the proposed cutbacks could set off a wave of protests.