“I am very concerned about the 4-year framework you have proposed, which envisages a very sharp jump in the state debt. According to the estimates presented to us, the Ministry of Finance plans for Bulgaria's debt to increase in absolute value and as a percentage of the gross domestic product”, said from the rostrum of the National Assembly Dimo Drenchev from “Vazrazhdane” at the hearing of the Deputy Prime Minister on the draft budget for 2025.
From 2023 to 2028, the liabilities will increase from 21.9% to 32.8% of GDP, or by one third. And in absolute terms, the growth is from 40 billion to over 80 billion leva, i.e. double. Surely this unsustainable way of managing debt will be reflected in the country's credit rating and there will be a corresponding growth in interest payments.
“The budget deficit is set at 3% or 6.4 billion. And you plan to withdraw 16.9 billion credits, i.e. much more.
This is twice the deficit and maturities for 2025. The logic of debt policy indicates that over-accumulation with loans is done if now, at the moment, we have favorable conditions, and interest rates are expected to rise in the future. Only then does it make sense to withdraw debt ahead of schedule”, Drenchev also commented.
However, the current situation is not like that at all. The ECB is pursuing a permanent policy of lowering interest rates.
“I fear that the real purpose of drawing these 17 billion loans is for them to be the real buffer in the budget if the planned, in my opinion, absolutely unrealistic revenues do not come true. The question remains why it is planned to draw so much above the deficit”, Drenchev also noted.
The Deputy Prime Minister replied that a larger amount of debt is planned to cover the deficit for the current year, there is also refinancing of old debt, and funds are planned to increase the capital of the Bulgarian Development Bank, in order to support small and medium-sized enterprises, as well as in cases of need and providing funds to increase the capital of the Bulgarian National Bank.
The People's Representative from “Vazrazhdane” pointed out that there are significant uncertainties regarding the BDB scheme. There are reasonable doubts that once again, certain and selected companies will receive loans to pay their overdue debts, without interest, in connection with the proposed tax amnesty.