Bulgaria's minfin to propose budget gap of 6.6% in 2023

The caretaker government envisages GDP of 173.826 billion levs in its budget plan for next year, which also projects 4.5% unemployment and 6.4% inflation, the ministry said in a statement on Thursday.

The revised budget for 2022 allows for a fiscal shortfall of 6.2 billion levs.

The 2023 budget draft will be submitted to parliament by the end of October. It will retain current policies, since the caretaker government is not in a position to adopt new ones.

The draft budget will retain until July 1, 2023 certain support measures introduced this year so as to tackle soaring energy prices and rising inflation. These are 9% value-added tax on heating energy and natural gas instead of 20% VAT, zero tax on bread and milling flour and the removal of excise tax on power, natural gas and motor fuels, with the latter to last until July 1, 2025.

According to the estimates by the caretaker government, economic growth will abate to 1.6% in 2023, or 173.826 billion levs, down from 2.9% economic growth this year as per the budget revision bill adopted by parliament in July.

"For 2023, GDP growth forecasts are in the range of 0.1-3.8% and average annual inflation forecasts are in the range of 5.2-8.0%," caretaker economy minister Rossitza Velkova said.

New government debt is forecast to more than double to 15.9 billion levs in 2023 from a current debt of 7 billion levs.

The planned cash deficit for 2022 amounts to 4.1% of GDP, while the expected gap is equivalent to 3.4% of GDP, Velkova also said.

Bulgaria held a snap general election on October 2, which delivered a fragmented parliament that will find it hard to elect a viable government coalition.

(1 euro = 1.95583 levs)