More than 6.7 billion leva will be allocated to social programs next year, according to the draft 2007 budget the Government approved on October 30. The spending forms a third of the overall budget and is the biggest share of the 2007 consolidated budget.
The maximum pension will be raised from 455 leva to 490 leva, up 35 per cent from the maximum contributory income of 1 400 leva of the previous year. The amount budgeted for pension payments amounts to 4.422 billion leva, up 319 million compared to 2006. The draft provides also for the social pension for the aged to be increased from 63 to 68.36 leva on July 1, 2007, despite Social and Labour Minister Emilia Maslarova insistence that pensions be raised on January 1, 2007.
A bigger budget is envisaged for maternity payments, as benefits will be paid for 315 calendar days, compared with 135 days at present. The unemployment benefits will remain between 90 leva and 160 leva a month.
A total of 190 million leva will be spent on measures aimed at reducing unemployment. According to government forecasts, economic activity will rise by 1.3 percentage points and the unemployment rate will remain steady at eight per cent. The average wage in 2007 is expected to increase by 8.4 per cent. The draft envisages a minimum monthly wage of 170 but most probably the threshold will be raised to 180 leva during discussions in Parliament.
The draft budget does not include the promised reduction by three per cent in social security instalments from July 1, 2007. The contributions will continue to be paid by employers and employees at a 35:65 ratio.
Next in line is healthcare spending. The draft budget envisages spending 2.1 billion leva on healthcare, or 4.33 per cent of the forecasted GDP . This is up to 11.8 per cent from last year, not mentioning the National Health Insurance Fund (NHIF) reserve.
Hospitals will be financed primarily by the NHIF, but the state will continue to fund specific activities, such as psychiatric aid, hemodialysis, transfusion hematology, transplantation of tissues, organs and cells. Funds provided for these purposes are 130 million leva. NHIFs budget for hospital aid will amount to 680.2 million leva, with another 282.2 million leva allocated for medicines. The funds deficit will be covered with a 282.7 million leva state subsidy.
Spending on defence next year would increase by 40 million leva, according to the draft. The transformation and reform of the armed forces will continue: targeting a more mobile and efficient force, with the goal not only of guarantying the countrys security but also participating in collective defence with allies. Some 75 million leva is envisaged in the draft budget for financing of activities ensuing from Bulgarias NATO membership. An additional 74 million leva will fund Bulgarian troops in NATO operations.
A total of 4.2 per cent of GDP or 2 138 million leva will be allocated for education.
Overall the draft budget for 2007 targets a surplus of 0.8 per cent of GDP against an estimated surplus of at least three per cent this year.
The other projections include: real GDP growth of 5.8 per cent; end-year Consumer Price Index (CPI) inflation of 3.1 and year-average CPI of 4.4 per cent; CA deficit of 11.8 per cent of GDP (down from projected 12.4 per cent this year); and net Foreign Direct Investments (FDI) inflows of 1.04 per cent of GDP. Budget revenues are projected at 21.3 billion leva or 41.7 per cent of GDP.
Bulgarias contribution to the EU budget (about 1.2 per cent of GDP) and mandatory co-financing to EU funded programmes accounts for the narrowing of the general budget surplus to 0.8 per cent of GDP next year.
Parliament is expected to give final approval of the draft budget 2007 by the end of November or early December.
