President Rosen Plevneliev has released an alarm signal for yet another round of macroeconomic concerns, calling for an urgent review of the budget.
Pressure to update the state budget is a cyclical phenomenon. When the current rulers took offices last year, they wanted an update of the budget and received it. The same thing happened when the government of Boyko Borisov took up the post. Is this only by accident?
Of course not. The explanation is speculative, but reveals the unshakable truth. When government is coming down from the political stage, it thinks only about how to sign more contracts with companies close to it, and finds ways how to recruit more people in their government. This is a kind of „continuity“ in the changing of power in Bulgaria. The new government is hardly expected to approve that institutions are filled with prot?g?s of the previous politicians but has to obey the state contracts and the treasury is empty and doomed to enter into numerous additional contracts and accordingly – pay ahead.
Somewhere at this point it comes to requests for updating the budget. This is the buffer in the future exercise of power. Old government officials have to confess their sins and incompetence, while the new one will have to raise revenue and to slash costs, but will eventually will follow in their footsteps.
Ideally, the new administration may inherit a budget surplus, but after the crisis in 2008 this now has become impossible.
A good option is to move expect a planned deficit.
An option, is to avoid catastrophes as exist in the healthcare fund – where there is a gap of 250 million levs.
So there are always occasions for formal requests for an update, but they most often pursue one goal – to reduce the effects of personnel and financial tsunami that was caused by the government in its last days.
And now – the facts:
IT TURNED OUT THAT THE DATA FOR THE FIRST FIVE MONTHS THE PEOPLE REQUESTING AN UPDATE VARIED SIGNIFICANTLY FROM THE DATA THAT THE BANKER HAVE GOT HOLD OF.
First, there is no reason to talk about reduced revenue collection
by the National Revenue Agency (NRA). In the first half of the year NRA collected 6.9 billion levs, which is 48.2% of the annual plan. Compared to the same period last year, the results are more than good, because then it collected 6.6 billion levs. This means that the NRA contributed to the treasury 250 million levs more this year. This explained specifically for the BANKER Lyudmila Petkova, Deputy Minister of Finance. She added that this year there is a record growth in the collection of insurance – and health and social care – they have collected over 316 million levs more.
Petkova explained that the tax on personal income for the first half collected 233 million levs more, and corporate taxes brought 13 million more. Not the same are the things with VAT collection – it collected about 15 million lev less, admitted Petkova.
(The collection of VAT is directly related to the timely repayment of the tax credit to businesses. Choice of strategy here is very important. Former Finance Minister Simeon Djankov was holding large amounts non-reimbursed tax credit – from 250 to 400 million levs, and so held – statistically – artificially high tax collection rate. Tchobanov his successor, however, decided to loosen the rope and cut the rate of the retained tax credit up to 100-130 million lev)
The Customs Offices registered a collection of 155 million levs less than over the corresponding period previous year. The effect was received in March, when our only oil refinery was closed for scheduled maintenance. But Kadiev example sets a fair question: why after this fact was known in advance, the people who wrote the budget, have not taken it into account. Petkova disagreed and pointed out that this was taken into account. Lukoil as large taxpayer has dutifully sent the annual plan before preparing the budget and the March crash was reported at him with the understanding that by the end of the year, the refinery will cover this deficit. At the end of June, the refinery has „catching up“at half of that amount.
Overall, however, the customs are not at the level of the NRA. There is a huge gaping hole in the collection of customs revenue. For the first six months they have raised 3.65 billion levs, or just over 40 percent of the planned by the agency. The backlog is about 790 million levs.
Petkova, however, tends to justify a somewhat weaker result. She reasoned as follows for the BANKER: „WE have identified currently implement a number of measures to increase the collection. Some of them are already working, while others expect to get results in the next quarter. So the good results lie ahead. We are talking about fiscal control bodies recently put on the list of risk entities. „
Third. Overall budget revenues is lagging behind schedule,
when one talks about the sums both collected by the National Revenue Agency and Customs. At the end of the first six months of the year there are about 1 billion levs under what was planned. The amount, however, will be made up to the end of the year, representatives of the Finance Ministry promised. An increased collection from July onwards was promised by Finance Minister Peter Tchobanov. In yet another interview – in the case for the Bloomberg, he said that revenues will increase in the second half of the year and what was fixed in the Budget Act as a deficit of 1.8 percent for the year is an achievable goal. The Minister confirmed that there is no reason to change the accounts of the State Treasury.
Fiscal agents that monitor the import of goods at the borders, said they could bring in the Treasury about 200-300 million levs extra.
Customs also hope more revenue in the coming months. However, the ministry explained that the year will not end well, and the gap in the plans will be around 400-600 million levs.
The BANKER
