Bulgaria’s Finance Ministry will propose Budget 2023 with a 3% Deficit, Tax Changes and Spending Cuts

The Ministry of Finance is preparing a draft Budget 2023 with a deficit of 3%, tax changes and cutting some expenses. This became clear at a briefing by Acting Finance Minister Rositsa Velkova.

The project provides for:

• the introduction of the so-called "excess profit tax" - a one-time joint contribution for the second half of 2023
• 100% dividend from all public enterprises after deduction of accounting loss
• increase in toll fees and concession fees
• recovery of some of the reduced VAT rates. Lower VAT is expected to remain only for bread, flour, baby food and books
• increasing the excise duty on e-cigarettes, this concerns so-called vapes, not for heated tobacco
• VAT declaration for registered risk goods
• limitation of business trips, entertainment and living expenses

The implementation of these measures will guarantee the implementation of the Swiss rule on indexation of pensions, the payment of increased salaries, as well as an increase in salaries in the budget sector, but only to the institutions that did not increase salaries in 2022, said Finance Minister Rositsa Velkova.

She commented that theoretically there is a danger of the currency board falling if the deficits in the state become excessively high. The goal of the draft budget prepared by the government is to limit the deficit to 3%.

"If the deficit is increased above 3%, we will not meet the deficit criterion. This means that we must have a higher debt, which in turn means it will be more difficult to raise liquidity on the international capital markets. Because with a higher deficit and losing the prospect of entry into the Eurozone, international investors would not have yielded the kind of yield we...