Bulgaria's Cabinet has adopted the report for the consolidated state fiscal program for the first half of 2011, stressing the stabilization of the country's macroeconomic indicators.

"The stabilization and gradual recovery of the Bulgarian economy which started in the second half of 2010 are continuing in the first half of this year," the announcement of the Borisov Cabinet.

It contains latest data from the Finance Ministry showing that in the first quarter Bulgaria's economy grew by 3.4% year-on-year, followed by a 1.9% y/y growth in the second quarter – compared with the average EU y/y growth of 2.5% and 1.7%.

At the same time, however, the government statement omits to mention the slowdown in Bulgaria's economy on a quarterly basis as the emerging economy expanded a slim 0.1% from April through June 2011 compared with the previous quarter.

"The main driver of Bulgaria's economic growth in the first half of 2011 is export but a recovery of the domestic consumption and investments is also observed," the government says.

It stresses that in the first half of 2011, Bulgaria's current account arrived at a surplus of 1.4% of the GDP, up from a current account deficit of 2.4% of the GDP in the first half of 2010.

"The positive dynamics of the trade balance – which was a major source of increasing imbalances in the previous periods of high economic growth – has a major contribution to the positive change," according to the government statement.

Latest government data confirm that as of June 30, 2011, Bulgaria's state fiscal reserve amounted to BGN 5.2 B. Bulgaria's fiscal reserve has grown by some BGN 200 M since May, amounting to BGN 5.2 B as of end June.

As of April 30, 2011, Bulgaria's fiscal reserve stood at BGN 4.7 B, a decline of BGN 400 M in just two months, and its lowest point since the pre-crisis years. Bulgaria's fiscal reserve amounted to BGN 5.1 B as of February 28, 2011, a decline of BGN 300 M. Bulgaria's fiscal reserve stood at BGN 5.4 B at the end of January compared with BGN 6 B at the end of December 2010.

The government's fiscal report adopted Wednesday indicates Bulgaria's budget deficit on cash basis under the government's Consolidated Fiscal Program in the first half of the year was BGN 650.7 M, or 0.8% of the projected GDP. This is a correction of the preliminary data announced in July, which said the budget deficit was 0.9%, or BGN 652.1 M.

The deficit in Bulgaria's national budget in H1 2011 is BGN 454.3 M , whereas the deficit in Bulgaria's EU transactions (i.e. the absorbed EU funds minus Bulgaria's contribution to the Union) is BGN 196.4 M.

Thus, Bulgaria's H1 2011 budget deficit is BGN 864.7 M (1.3 percentage points) smaller than it was in the same period of 2010.

The government says that the major parameters of the state income and spending in the first half of the year "developed as planned."

At the end of June 2011, Bulgaria's state income amounted to BGN 12.042 B, or 45.9% of the 2011 projection. Compared to the same period of 2010, proceeds report a growth by BGN 853 M or 7.6%. This is mostly due to higher indirect tax revenue, which increased by BGN 638.1 M (15.8 %) year-on-year

Revenues from direct taxes and from other taxes under the Corporate Income Tax Law also report some growth compared to the data reported in the same period of 2010, the Cabinet notes.

Bulgaria's total tax revenues, including health insurance fees, amounted to BGN 9.837, or 81.7% of the total state income.

The income from direct taxes was BGN 2.035 B, or 53.6% of the projected amount for 2011.

Income from indirect taxes came to BGN 4.683 B, or 45% of the annual projection, while income from VAT was BGN 2.912 B, or 44.9% of the projected amount. Excise tax revenues were BGN 1.707 B, which too is 44.9% of the project of the 2011 State Budget Act. Revenues raised from customs duties were BGN 54.2 M, or 54.2% of the projection.

Property taxes and other taxes brought the Bulgarian state budget BGN 433.4 M in the first half of the year, which is 56.5% of the expected annual amount.

The state income from health insurance and social security payments amounted to BGN 2.686 B at the end of June, or 46.8% of the annual projection.

Bulgaria's non-tax revenues and foreign aid arrived at BGN 2.2 B, or 40% of the projected amount, at the end of June 2011.

Bulgaria's state spending in the first half of 2011 was BGN 12.692 B, or 45.1% of the projection for the entire year.

In structural terms, compared to the June 2010, wage bill, social security expenditures and capital expenditures are lower, while health insurance payments are higher.

Bulgaria's current non-interest spending amounted to BGN 10.972 B, or 48.8% of the projection; the capital spending including the net increase of the fiscal reserve reached BGN 1.020 B, or 27.6% of the projection for the entire year; the interest payments amounted to BGN 333 M, or 50.4% of the project amount.

Bulgaria's contribution to the common EU budget in H1 2011 amounted to BGN 367.5 M in accordance with Regulation 1150/2000 of the EU Council.