The budget surplus fell by 42.8% y/y to BGN605.7m in Jan-Mar, according to the Finance Ministry’s preliminary data. The surplus represented 0.6% of the projected GDP. In March alone, the budget balance posted a BGN146.6m deficit compared to a BGN226.3m surplus in Mar 2017.
The y/y Jan-Mar budget surplus decline was driven by a 10.0% y/y growth of total expenditure, which reached BGN8.3bn. The government spending increase was explained by both higher health insurance and social payments, taking into account the base effects related to the pension indexation as of Jul 2017 and the two hikes of the minimum pensions as of Jul and Oct 2017, the Finance Ministry said. Further upward pressure on the public expenditure has come from the teachers’ wages hike as of Sep 2017. Payments related to EU-funded programs have also risen, the ministry added.
Total revenues rose by 4.5% y/y to BGN9.2bn or 24.2% of the annual target. The growth was supported by higher tax and non-tax revenues, which went up by 7.5% y/y. On the downside, grant revenues continued their y/y decline due to the slower than scheduled EU fund absorption.