Bulgaria registered a miniature budget surplus in March after substantial deficits in the first two months of the year, according to preliminary data of the Finance Ministry.

Thus, in March 2011, the monthly balance of the Consolidated Fiscal Program of the government showed a surplus of BGN 8.6 M.

This result comes as a marked improvement after Bulgaria registered a deficit of BGN 750 M on cash basis in the first two months of 2011, or BGN 100 M more than Finance Minister Simeon Djankov's earlier expectations for January-February.

In February, Bulgaria had a deficit of BGN 273.2 M, after seeing a deficit of BGN 477 M in January.

The Finance Ministry pointed out Monday that in the first quarter of 2011 Bulgaria's budget deficit "shrank" to BGN 741.9 M compared with BGN 1.669 B in the first quarter of 2010, a decline by 55%, or BGN 927.1 M, year-on-year.

According to the Ministry, the improvement stems from better results with respect to both revenues and state spending.

Compared with January-March 2010, in the first quarter of 2011 Bulgaria's tax revenues grew by 6.9%, or BGN 358.3 M.

Even though precise figures have not been made available yet, the performance of indirect taxes and income from social security and insurance payments is said to be "good", while the results from direct and other taxes is about the same as in 2010 Q1 as are those from non-tax income. Property taxes in municipal budgets have declined slightly.

Bulgaria's consolidated budget spending is down by 8.7%, or BGN 568.8 M, in the first quarter year-on-year.

According to the Finance Ministry, the state expenditures for capital investment, subsidies, and administration payments are smaller, while the social security and health insurance spending is on the rise. The Ministry expects to have the final data for the first quarter at the end of April.

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.

Bulgaria registered a budget deficit of 3.9% in 2010 instead of the forecast 4.8%. Bulgaria's deficit under the consolidated fiscal framework on cash basis was BGN 2.8 B in 2010, or 3.9%. The accrual deficit, which is measured according to EU accounting rules, was 3.6%. According to Bulgaria's revised 2010 State Budget Act approved in June, the expected 2010 budget deficit was 4.8%, or BGN 3.691 B.

After in mid June 2010, Bulgaria had to revise its state budget for the first time in 14 years, and even though the January 2011 deficit is substantial, it is still unclear whether it might have to go for a mid-year revision of the 2011 budget.

In early December 2010, the Bulgarian Parliament approved the 2011 state budget, which provides for an economic growth of 3.6%, and a budget deficit of about 2.75% of the GDP, barely below the 3% threshold of the EU Stability and Growth Pact, which is also required for ERM II and euro zone accession.