SOFIA – Bulgaria’s parliament on Friday rubber-stamped the 2022 budget bill that targets a fiscal deficit of 4.1% of economic output this year, planning for an increased public investment to kick-start the small and open economy.
The centrist coalition government, poised to lead Bulgaria into the euro zone in two years, has pledged to double capital investment to 5.8% of GDP to underpin economic growth and boost living standards in the European Union’s poorest member state.
“This budget is unprecedented. There are huge investments which will kick-start the change we promised,” Prime Minister Kiril Petkov told the parliament after the bill was approved.
The Balkan country plans to spend over 63 billion levs ($36.27 billion), or 44.2% of GDP this year to build new infrastructure, and to raise state pensions by 6% from July and earmark funds to partially compensate businesses struggling with high energy costs.
The ruling coalition, which took office in December, rejected opposition’s concerns that its spending plans constitute a fiscal loosening that could threaten Bulgaria’s path to join the euro zone. Bulgaria ended 2021 with a fiscal deficit of 3% of GDP.
Following the Russian invasion in Ukraine, lawmakers voted to provide humanitarian help to ethnic Bulgarians there, including those who wish to be evacuated.
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The government has estimated economic growth at 4.8% this year and saw annual average inflation at about 5.6%.
Prior to the Russian invasion in Ukraine, Finance Minister Assen Vassilev had indicated that a military conflict in Ukraine could prompt revisions in the growth and inflation estimates.
Bulgaria’s consumer prices surged to a 13-year high to 9.1% on an annual basis in January, fuelled by a surge in energy and food prices.
($1 = 1.7369 leva)
(Reporting by Tsvetelia Tsolova in Sofia; Editing by Matthew Lewis)