No Christmas bonuses will be paid to Bulgarians that are employed by government-owned companies and the administration. This was announced on Tuesday by Finance Minister Milen Velchev.

According to Velchev, the previous government spent, "in an absolutely illegitimate manner," 178 million leva under a 300 million leva scheme called Additional Investment Program. The program was cancelled after the June 2001 parliamentary elections.

"If a decision is made against disbursing Christmas supplements to pensions and wages, the above-mentioned expenses will be one of the reasons," Velchev told reporters.

The National Social Security Institute (NSSI) is expected to incur a 220 million leva deficit in its budget, in addition to the originally projected state subsidies. The NSSI is receiving interest-free government loans on a monthly basis, and these loans cannot be repaid by the year's end, Velchev explained. "Rough calculations show that these developments will result in a 1.4 billion leva hidden deficit in the national budget," the finance minister said.

Part of this deficit will be covered by the already announced increases in some taxes. A certain portion has to be transferred into 2002. The government has practically frozen all new large construction projects and will proceed only with construction that is already underway, realizing that losses will be larger if the latter are suspended, Velchev announced.

"Still another part of the national budget deficit will be offset using the money saved from the cancellation of the 10 per cent pay rise in October," the finance minister said.