There are indications that the Finance Minister Simeon Dyankov has begun to listen to other peoplerquote s opinions when it comes to drafting legislative acts. This thought provoked the draft bill on public finances passed on September 26 by the Cabinet. The original version was posted for public comment on the website of the Finance Ministry in August. It is possible that expert debate on the paper took place, but in no case were they public. The draft document was commented on in the media by few specialists and their comments were of more fundamental nature. No details were reviewed. Only the association of municipalities protested that the financial independence of local government has been limited. But that is what they do before voting every state budget.
Officials in the Ministry of Finance, however, say the government adopted a project very different from the published version from the summer. Around 40% of text was more where less corrected. Is it so difficult for an outsider to verify this as the discussion on the governmentrquote s version was not uploaded on the website of the financial institution, nor on that of the Council of Ministers. And in the electronic database of the National Assembly this bill is still missing.
From the transcript of the Government meeting on September 26, it is clear that the draft law on public finances has been changed from the original version. Dyankov told explicitly that the law will come into force in 2014. The first drafted date of its introduction was 2013 but it has been viewed as unacceptable because it would bring chaos in the legal implementation of the budget for 2013. The reason is that the process of preparation and adoption will run under the current Law on the State Budget while the implementation of revenue and expenditure is to take place under the new law on public finances.
Before other ministers in the Cabinet, Minister Dyankov clearly indicated
why the law should be adopted:
First, it aims at implementing the provisions of Title III – this is the so-called Fiscal Pact (the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union in the European Union), which Bulgaria joined. These are the so-called golden rules and let me remind you that in fact our laws are even more stringent – 2 percent deficit, 40 percent debt ratio, while the country has not yet joined the other chapters, Dyankov explained to his colleagues. The only problem is that he failed to clarify some details. Firstly, why, after we have already more stringent rules than those in the European Fiscal Pact must we still change the law and accept it as a brand new law? It makes no sense. The truth is that our country is required to establish and rule the so-called
structural deficit
having declared that it joins the Treaty on Stability. This means that the structural deficit can not exceed 0.5% of GDP, while countries like ours, whose debt ratio is below 60% of the GDP, the former can reach up to 1 percent. This text via the operation copy/paste has been inserted in the bill for the public finances, but it has not been done in the best possible way. The text on the structural deficit has been places next to that for the deficit on a cash basis endash which could be up to 2 percent of the GDP. And it is not clear how the two indicators ??correspond to each other. Because in certain economic situations (in a period of major structural reforms and economic downturn), both deficits can also come into conflict with one another.
The other important reason for changes is that now Finance Minister and mayors of municipalities have pretty vast room to change and redirect public finances after the local and state budgets are passed, which is not good for the fisscal discipline
