13.12.2021
THE MINIMAL SALARY BECOMES BGN 710 FROM JANUARY 1
The Ministry of Finance has published the draft law on the state budget of the Republic of Bulgaria for 2022 together with the updated medium-term budget forecast for the period 2022-2024, representing the reasons for it, and the accompanying documents.
The preparation of Budget 2022 and the updated medium-term budget forecast for the period 2022-2024 started with the development of a baseline scenario with current legislation reflecting the effects of the update of Budget 2021 (adopted laws amending the state budget, the state social security budget and the budget of the National Health Insurance Fund for 2021), which was subsequently upgraded with new assumptions for some policies in the field of income, social security and social policy.
The parameters of the draft Budget 2022 are in line with the fiscal rules and restrictions set out in the Public Finance Act, taking into account the effects of the temporary application of measures in emergency situations related to the COVID-19 pandemic.
The current medium-term budget forecast contains the required by the Public Finance Act (PFA) comparison of the macroeconomic forecast of the Ministry of Finance with that of the EC. A comparison of the forecast of the Ministry of Finance with the forecast of the European Commission regarding the indicators of the General Government sector is also included.
Following the temporary easing of fiscal policy in 2020 and 2021, which is estimated to be proactive countercyclical, the CFP deficit is projected to reach 5.1% of GDP in 2022 in the medium term (including COVID-19 measures) with subsequent annual steps for fiscal consolidation, reducing the CFP deficit to 2.8% of GDP in 2024.
In terms of limiting the fiscal rule for the CFP deficit (excluding the effect of COVID-19 measures) for the entire forecast period, the budget balance is within the deficit limit of 3 percent of GDP, as for 2020 and 2021. there is a positive balance of 0.2% of GDP and 1.3% of GDP, respectively, and for the forecast period - a negative balance within 2.8-2.9% of GDP.
In the medium term, CFP expenditures (excluding expenditures from EU accounts and other international programs and contracts equated to them, including related national co-financing) are within the 40% rule of the CFP, as marked a decline from 39.6% of GDP in 2022 to 35.7% of GDP in 2024.
In terms of revenues, the current forecast shows growth in nominal terms for the entire three-year period. As a relative share of GDP for 2022, they are 38.3%, for 2023 - 39.3% and for 2024 - 39.2%.
Regarding the expenditure trends for the period 2022-2024, nominal annual growth is observed, but as a share of GDP they decrease from 43.4% of GDP to 42.0% of GDP.
For the period 2022-2024, the envisaged tax policy will continue to adhere to the established principles and guidelines in recent years, and its main objectives are again aimed at maintaining economic growth, improving the business environment, combating tax abuse and increasing fiscal sustainability in the long run. The main priorities related to improving the collection of revenues, the prevention of opportunities for evasion and non-payment of taxes and social security contributions and the reduction of administrative burdens and costs for businesses and citizens remain.
The measures envisaged in the revenue policy are aimed at ensuring the necessary financial resources for the implementation of the government's expenditure policies. It is envisaged that low tax rates for corporate taxes and those for personal income taxes will be maintained as an important prerequisite for investment, economic growth and employment.
