The Ministry of Finance has published the draft 2017 State Budget of the Republic of Bulgaria Law and the updated medium term budget forecast for the period 2017-2019, which presents the arguments standing behind the Law.
The updated medium-term budget forecast for the period 2017-2019 presents the medium-term economic outlook and priorities of the government as well as the key parameters of the budget framework for the next year. The 2017 Budget framework and the parameters of the forecast until 2019 have been prepared on the basis of the updated macroeconomic forecast, the main underlying assumptions and realistic revenue estimates, with the rate of expenditure growth being limited by relative containment of national expenditure.
The updated medium-term budget forecast for the period 2017-2019 includes the required under the Public Finance Law comparison of the updated macroeconomic forecast of the Ministry of Finance to that of the European Commission; it is for the first time that it also includes a comparison of the forecast of the Ministry of Finance to the forecast of the European Commission on the General Government indicators.
Real GDP growth is expected to stay at relatively stable levels over the forecast period, while slightly slowing down to 2.5% in 2017 and gradually speeding up to 2.7% in the period 2018-2019. Domestic demand will be the key driver of growth in terms of both consumption and investment.
The medium-term outlook is tied to the defined priority of maintaining the stability of public financesand is expressed in pursuing the already set goals for further fiscal consolidation and adherence to the consolidation steps according to the spring medium-term budget forecast for the period 2017-2019. Taking into account the one-off effect on the budget balance for 2016, the current forecast keeps the deficit targets for the period 2017-2019 at 1.4%, 1.0% and 0.5% of GDP, respectively, as laid down in the spring medium term budget forecast.
The key objective for the period 2017-2019 is to implement a tax policy aimed at increasing budget revenue and reducing the share of the informal economy. The government is following a policy of keeping the low levels of taxation in relation to direct taxes and shifting the tax burden from direct to indirect taxes. The achievement of the budget revenue performance objective is related to maintaining a sustainable level of revenue while keeping the burden of taxation unchanged and expected positive effects of the enhanced actions relating to revenue administration.
The updated medium-term budget forecast for the period 2017-2019 provides for an increase in the minimum salary to BGN 460 as from 1 January 2017 and keeping it at this level in 2018 and 2019.
The 2017 budget priorities focus on measures promoting education reforms, maintaining up-to-date and efficient military forces and developing the country's defensive capacity, better functioning of the healthcare system, as well as implementing the National Programme for Energy Efficiency of Multi-Family Residential Buildings.