The fiscal situation in the country continues to raise concerns after the Ministry of Finance reported a budget deficit of nearly 4.3 billion leva by the end of July - just five months before the end of the year. Against the backdrop of the officially set annual deficit of 6.4 billion leva, the question is increasingly being raised whether Bulgaria will be forced to raise taxes, including VAT.
In the studio of “Hello, Bulgaria” The executive director of the Union for Business Initiative, Mihail Krastev, and the economist and lecturer at Sofia University “St. Kliment Ohridski“ Vasil Karaivanov commented on the topic. According to them, raising taxes will not solve the structural problems of the budget.
“The budget is going according to plan, but not according to the plan of the Ministry of Finance, but according to that of the economists, who warned us at the beginning of the year that the planned revenues were unrealistic,“ commented Mihail Krastev.
According to him, revenues are not growing at the pace that the government has foreseen, and spending policies are mainly focused on the social sphere. “Increasing taxes will not solve the structural problem. The 2% VAT increase could bring in around 5 billion leva in additional revenue, but the NSSI's spending over the past five years alone has jumped by around 15 billion leva. This is a temporary solution that will burden businesses and households," Krastev is categorical.
Vasil Karaivanov stressed that the budget was prepared on the basis of a four-year program, coordinated with European partners, but the real processes are leading to a strong accumulation of deficit. “A miracle would have to happen to maintain the 6.6 billion leva framework by the end of the year“, he pointed out.
According to the economist, the main problem is not the size of the deficit itself, but the fact that it is built on unrealistic revenues and excessive expenditures. “When the plan is wrong, its implementation leads to even bigger problems. "We are currently paying pensions and salaries in the public sector with funds from new debt – this is a structural imbalance," Karaivanov added.