The excessive deficit procedure can end relatively quickly if the government manages to limit spending and return the budget to more sustainable parameters. This is stated by economist Petar Ganev in his analysis dedicated to the history of such procedures in Bulgaria.
According to the expert, this is the second excessive deficit procedure for our country. The first covers the period between 2009 and 2015 and coincides with the global financial crisis, the European debt crisis and the bankruptcy of the Corporate Commercial Bank.
Ganev emphasizes that then the main problem was the sharp contraction of budget revenues, while today the situation is different.
“Revenues grow together with the economy. The main problem is now in the expenditure side“, he notes.
According to him, the serious deterioration began during the COVID-19 pandemic, when large-scale social payments were introduced. After that, the pressure on the budget intensified further due to the significant increase in salaries in law enforcement agencies.
The data cited by the economist show that for the period 2001 – 2024, the average amount of revenue under the consolidated fiscal program is about 37% of gross domestic product, and currently this indicator is even higher.
For the same period, the average amount of expenditure is 38% of GDP. According to Ganev, this limit has been exceeded only in a few extraordinary situations - during the bankruptcy of Corpbank, at the beginning of the pandemic and at the present time.
“However, now this is happening without the presence of an extraordinary crisis to justify it“, the economist points out.
He recalls that for the period under review, the average deficit is about 1% of GDP - a level that allows the state debt to remain under control.
According to Ganev, if the new budget sets a return to these more sustainable values - especially in terms of expenditure and deficit - Bulgaria can exit the excessive deficit procedure relatively quickly.
“If fiscal discipline is restored and spending returns to historically more normal levels, the end of this procedure could come relatively soon“, concludes the economist.