Bulgaria will manage to bring its budget deficit below the European Union limit of 3% of economic production without a hike in taxes and social securities, which is the biggest success of budget 2011, according to the finance minister.
"Bulgaria is pulling out of the crisis in macroeconomic terms and our expectations are that the revenues in the budget will stabilize," Simeon Djankov told reporters as he handed on Friday the budget draft for next year to parliamentary speaker Tsetska Tsacheva.
Bulgaria is planning to sell bonds amounting to EUR 1 B on the international market in 2011 to shore up its finances, according to the finance ministry draft paper.
Bulgaria aims to have a budget deficit of 2.5% of gross domestic product and a growth of 3.6% in 2011, according to the budget draft.
In budget 2011, financing is going up the most in the social assistance, defense and health care sectors, according to the draft.
The cabinet plans to collect in 2011 BGN 25.8 B in revenues, which is BGN 1.3 B more than the 2010 updated budget. In the expenditure side of the balance sheet there is a planned reduction of BGN 12 M - down to BGN 27.9 B. If executed, this will lead to a lower budget deficit for 2011 - BGN 1.9 B compared to BGN 3.3 B in 2010.
In the approved Tuesday "expense ceilings" those of the Ministry of Labor and Social Policy are up by 19% to BGN 951 M, those of the Defense Ministry are up by 11% to BGN 990 M, and those of the Health Ministry are up 5% to BGN 570 M.
The plan is to increase the expenditures of the National Health Insurance Fund (NZOK) by 4% to BGN 2 B.
Analysts say Bulgaria's budget 2011 resembles its predecessor in its overly optimistic forecasts and risks.
In June, the center-right cabinet revised the state budget increasing its 2010 target for deficit to 4.8% of GDP on a cash basis and 3.9% of GDP under EU accounting rules, far wider than initial estimates.
The center-right government dropped its plans for applying for ERM II after raising the alarm that the 2009 budget gap was 3.7% of gross domestic product rather than the 1.9 % due to unaccounted procurement deals.
Bulgaria's economy contracted by 3.6% on an annual basis in the first quarter of 2010 from 5,9% in the previous quarter, but the government hopes for a 1% economic growth for this year as recovering exports bolster the expansion.
Prime Minister Boyko Borisov's government previously estimated the economy would grow 0.3% after a 5.1% contraction in 2009 as investments dwindled and consumption shrank.
Bulgaria boasts one of the lowest public debt-to-GDP ratio among European Union member states at about 15%.
Economists are cautious in their forecasts for Bulgaria's economy and say it will remain in recession or be about zero this year.