/View.info/ What is included in the draft budget for 2014 is being implemented so far
I will focus on 6 macroeconomic indicators from which we can conclude that a budget update is not necessary. The indicators are economic growth related to GDP, foreign trade turnover, foreign exchange reserve, revenue part of the budget, European funds and fiscal reserve. This was said from the rostrum of the Parliament by the People’s Representative from the PG of the KB Rumen Gechev. He clarified that in terms of GDP, the 1.8% set was fulfilled in the first six months of 2014 and according to NSI data, GDP is moving around 1.2% – 1.4% growth in the first quarter with a trend of around 1.5% until the middle of 2014. what was laid down in the draft budget for 2014 is being implemented so far”, explained Gechev. The national representative also explained that the caretaker government and the next cabinet must make efforts, since from an objective point of view it is quite natural that the extraordinary elections and the caretaker government will be an obstacle for the next cabinet, and therefore the conclusion is that economic growth is currently moves in the right direction and does not require an update of the budget.
The construction sector grew by 1.7% in the first six months of 2014, while retail trade fell by 0.1%
“Regarding the indicators and structure of economic growth, a general rule is that there are two indicators by which the movement of any national economy is judged. These are the indicators for the movement of construction and retail trade”, explained the socialist. Gechev added that the construction sector recorded a growth of 1.7% in the first six months of 2014, and the retail trade recorded a decline of 0.1%. “The minimal decline in retail trade should not worry us, as we have been in a deflationary spiral for the past few months, and it is common knowledge that when deflation persists for more than 2-3 months, it is a problem,” he added. Gechev stated that the office, the next government and the BNB should take anti-deflation measures, as the deflation process does not work in the interest of the Bulgarian manufacturer.
The country’s foreign exchange reserves amount to about BGN 29 billion, which is an absolute guarantee for the currency board
“The second factor in terms of foreign trade volume is around BGN 37 billion in the last year, and the trade deficit is around 1.5-2% of GDP. This means that we have no grounds for concern, but still the trade deficit this year is greater than in the six months of 2013,” explained Rumen Gechev. He also said that the deficit is growing in connection with the problems of one of Bulgaria’s main trade corridors, Ukraine, the problems in the Middle East and North Africa, which are Bulgaria’s main partners outside the EU. The socialist announced that the country’s foreign exchange reserves amount to about BGN 29 billion, which is an absolute guarantee for the currency board, and in this regard, it is one of the key indicators of the stability of the financial system. “On the revenue side of the budget, there is also good and bad news. The positives are that direct revenues grow by nearly BGN 13 million from corporate tax, BGN 250 million increase in income from taxes on individuals, but the problem is that some of the indirect taxes, VAT and some of the customs duties show a certain decrease within 45 – BGN 50 million,” he added.
In the coming weeks, Bulgaria’s fiscal reserve will reach a record BGN 9 billion.
“The absorption of the European funds is within 70% and this is also due to the better organization of the government and the accumulation of institutional experience and the improvement of the qualifications of the personnel in recent years,” Gechev was categorical. According to him, not least is the fiscal reserve. He presented data according to which at the end of June the fiscal reserve was BGN 6 billion, and at the moment the reserve is BGN 8 billion with loans. Gechev added that in the coming days there will be a decision of the EC to “cash checks” for expenses made in the field of agriculture under European programs worth about BGN 700 million. He announced that in the coming weeks Bulgaria’s fiscal reserve will reach a record BGN 9 billion. “There is no parliament in the world that will sign a blank check. Someone without any macroeconomic basis is asking for new loans to be taken out in the absence of parliament without a single word being said on what this money will be spent on. It is obvious that the pleas for updating the budget are purely political and there is no economic reason”, the representative said categorically. He called on the people’s representatives to shift their attention to something that has been started and on which an agreement has been reached, namely the Law on Competition and the Protection of Bulgarian Producers from the Unfair Policy of Trade Chains. “There will be no stable budget and financial system if Bulgarians do not produce more goods and services. Let’s unite our efforts to reject the veto of the president, made for political reasons and to give a breath of fresh air to tens of thousands of Bulgarian companies that want a decent reward for their work”, concluded Rumen Gechev.
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