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Bulgaria expects budget surplus of 1.3% of GDP at end of August

SOFIA, Aug 31 (Reuters) - Bulgaria expects to have a fiscal surplus equal to 1.3% of economic output in the first eight months despite a drop in tax revenues in July and August because of the coronavirus, the finance ministry said on Monday.

The Balkan country is still running fiscal surpluses despite the hit from the coronavirus on its small and open economy, data showed.

Sofia registered a fiscal surplus of 1.7 billion levs ($1 billion) in the first seven months, or 1.5% of gross domestic product, the ministry said in a statement.

Bulgaria aims to end 2020 with a fiscal shortfall of 3% of GDP as the government, under pressure from anti-corruption protests, boosts spending to support jobs and incomes hit by the impact of the pandemic.

The Bulgarian economy contracted by 8.2% in the second quarter from a year earlier. The European Commission sees the Bulgaria’s economy shrinking by 7.2% in 2020.

Government revenues are expected to have dropped by 950 million levs to 28.8 billion levs at the end of August compared to the same period a year ago. Spending is seen at 27.3 billion levs at the end of August, down from 28.2 billion a year ago, when the country made a one-off payment for new F-16 warplanes.

Fiscal reserves, held under a currency regime that pegs the lev to the euro, stood at 10.1 billion levs at the end of July.

$1 = 1.6546 leva Reporting by Tsvetelia Tsolova; Editing by Susan Fenton