SOFIA, June 30 Bulgaria reported a ballooning
budget deficit on Wednesday, adding to uncertainty about whether
the outgoing parliament will back efforts to seek solutions for
failed Corporate Commercial Bank (Corpbank).
Corpbank was closed in June after bank runs, raising the
prospect that holders of its dollar-denominated bond won't be
repaid when the debt matures on Aug. 8.
Wednesday's figures from the finance ministry showed
Bulgaria's budget deficit ballooned to 995.6 million levs ($681
million) in the first half of the year due to higher social
spending and increased outlays for EU-funded projects.
In the same period last year the Balkan country recorded a
shortfall of just 7.6 million levs.
The outgoing parliament voted on Tuesday to increase the
2014 fiscal deficit to 2.7 percent and raise 3.4 billion levs in
new debt, giving the interim government some tools to solve the
county's banking crisis.
But the GERB party, tipped to win a snap election in
October, backtracked on Wednesday, saying it would not support
the hike at a final reading.
President Rosen Plevneliev is due to appoint an interim
government on Aug. 6 to govern the Balkan state for two months
ahead of a general election, but it cannot raise new sovereign
debt without this parliament's permission.
Prime Minister Plamen Oresharski said on Wednesday that the
proposed budget gap increase was meant to provide fiscal buffers
for the interim government, but the fiscal target was still
"There is no drama whether the revision will be approved or
not. If approved, the next government will have more calm, if
not - it would have to be more careful about spending," he told
reporters after his government's last meeting.
Sofia needs to keep fiscal policy tight to protect its
currency peg to the euro.
The finance ministry said the higher deficit through June
was partially the result of faster tapping of EU funds, up by 48
percent on last year, and increased spending on pensions.
Total fiscal revenues in the first six months of the year
were 14.2 billion levs, virtually flat from last year, while
spending rose 7 percent to 15.2 billion levs, data showed.
Fiscal reserves, which Bulgaria needs to support its
currency peg, stood at 6.6 billion levs at the end of June,
compared with 5.8 billion levs a month earlier.
The budget deficit so far this year is equivalent to about
1.2 percent of gross domestic product, the data showed. The
target for the year is 1.8 percent.
($1 = 1.4621 Bulgarian Levs)
(Reporting by Tsvetelia Tsolova; Editing by Ruth Pitchford)