Bulgaria Plans To Cut VAT by 3.0 Points to 17% in 2011

Borisov spoke at a business lunch in Sofia organized by the American Chamber of Commerce in Bulgaria (ACCB). He did not elaborate on the plan.

The right-of-centre government, which took office in July after ousting a Socialist-led coalition, has said it would consider cutting VAT after Bulgaria exits the current economic crisis.

Analysts and officials expect that Bulgaria will reach the bottom of the economic crisis by the end of this year or early next year. The economic contraction will slow down in the second half of next year and even a small growth could be expected. The Bulgarian economy is expected to start recovering in 2011.

“I am pleased to say that so far the performance of the country has been more than satisfactory. […] Clearly when the numbers come out in the beginning of next year I am also venturing to say that they would be probably one of the best if not the best for the whole of Europe for that I think Bulgaria and surely this government and all of us in fact should be very proud”, the ACCB President, Anthony Hassiotis, told the same meeting.

The Bulgarian parliament has adopted a budget bill for next year that assumes a 2.0% drop in GDP and a budget deficit equivalent to 0.7% of the projected GDP.

Earlier this month,  Standard and Poor's revised its outlook on Bulgaria to stable from negative, and affirmed the country's BBB/A-3 sovereign credit ratings. The global ratings agency said the ratings on Bulgaria reflected its view of the government's strong track record of prudent fiscal policy and low gross debt; solid growth prospects over the medium term; and the country's EU membership.

(1 euro = 1.95583 levs)