Bulgaria's Parliament Adopts 2010 Budget Bill with 0.7% Deficit

“This is an honest budget, our resources are scarce but we will give them wherever they are needed. [...] We are facing four more difficult months and after that the crisis will fade and there will be more money for spending on health care and social benefits,” Dyankov told local bTV broadcaster after the vote in parliament.

Consolidated budget revenue is set at 26.4 billion levs, or 41.6% of the projected GDP, while spending is set at 26.9 billion levs, or 42.3% of GDP.

Raising tax on gambling to 15% from 10% from next year is projected to contribute 70 million levs in revenue that will be used to finance the healthcare sector, the parliament said in a statement. The government would also raise excise duty on cigarettes by over 40% as of 2010 to boost budget revenue.

The projected revenue in 2010 is 19% lower than the 2009 target, while spending is set at 11% below the 2009 plan. The priority areas for budget spending in 2010 are the social sector, education, health care, environment and road infrastructure, the government said earlier.

Earlier this week global ratings agency Standard and Poor's (S&P) revised its outlook on Bulgaria to stable from negative, and affirmed the country's BBB/A-3 sovereign credit ratings. S&P expects Bulgaria’s GDP to contract by around 6.0% this year and shrink a further 2.0% in 2010 before resuming growth in 2011.

“The ratings on Bulgaria reflect our 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”, S&P said.

"The stable outlook also hinges on our expectation that the government will implement structural reforms in the social security system, particularly in health care, despite the adverse economic environment", it added.

The 2010 budget bill was approved after 17 hours of debate in parliament with the votes of centre-right GERB party and its right-wing allies.

Bulgaria's jobless rate is expected to rise to 11.4% next year from 9.2%-9.3% forecast for the end of the current year, Labour Minister Totyu Mladenov said last month. The unemployment rate rose to 8.23% in October from 8.03% in September and 5.85% in October 2008.

(1 euro = 1.95583 levs)