The Cabinet approved the main parameters for the new middle-term fiscal framework for 2008 to 2010.

The framework was based on the prognosis for macroeconomic indicators, the Cabinet's news room said, as quoted by Focus news agency.

The real GDP growth will be six per cent, with middle-term inflation at 3.7 per cent, which will decrease to 2.6 per cent in the end of the period, and budget surplus at 2.5 per cent. The parameters correspond to the Cabinet's engagements to maintain high economic growth and active social measures.

The Cabinet plans to introduce a flat tax rate of 10 per cent on personal income in 2008.

The minimal monthly wage will become 220 leva. It is currently 40 leva below that sum, at 180 leva. Salaries in the budgetary sphere will increase by up to 10 per cent as of July 1 2008.

Social security instalments will be reduced by three per cent.

Pensions will increase by 10 per cent as of October 1 2007. For the first time, the Government has increased pensions twice this year by 10 per cent. The first hike was on July 1 2007.

The corporate tax rate will remain 10 per cent in 2008 and the VAT rate, 20 per cent.

Excise duties on cigarettes will go up 50 per cent in 2008.