The general government budget posted a BGN2.7bn surplus in Jan-Sep, up by 10.9% y/y, according to the finance ministry’s preliminary data. The surplus represented 2.5% of the forecast GDP compared to a budget deficit target of 1.0% of GDP for the full 2018. In September alone, the budget surplus amounted to BGN297.8m, up by 10.5% y/y.
The y/y surplus increase was supported by slight acceleration of total budget revenue growth to 11.7% y/y during the period. Total revenues amounted to BGN29.2bn in Jan-Sep and accounted for 76.4% of the annual target. Their y/y growth was underpinned by an 11.0% y/y increase in tax and non-tax revenues, which we consider expected given the strengthening domestic demand and rising employment in the past months. The finance ministry noted that grant revenues were also up by BGN 282.2mn compared to the same period in the previous year.
Total government expenditure also registered a strong 11.4% y/y growth to BGN25.7bn in Jan-Sep, accelerating from 11.3% y/y in Jan-Aug. The finance ministry explained spending growth with higher social and health insurance payments, including the several pension indexations from Jul 2017 and Jul 2018, alongside the two minimum pension hikes in 2017. The government also had higher personnel costs, mostly due to the increases of the teachers’ wages in the past year. Capital spending maintained its upward trend as EU fund absorption resumed at stronger pace.