April 28, 2017 / 4:11 PM / 4 months ago

Bulgaria expects Jan-April fiscal surplus to shrink to 1.6 pct

SOFIA, April 28 (Reuters) - Bulgaria expects a fiscal surplus of 1.6 percent of gross domestic product in the first for months of 2017, compared with a surplus of 2.6 percent in the same period a year ago, the finance ministry said on Friday.

The ministry also said the Balkan country recorded a surplus of 1.1 percent of GDP at the end of March compared with 2.1 percent for the first three months of 2016 as social and health spending rose.

The Black Sea state has pegged its lev currency to the euro, in a regime that prevents the central bank from setting interest rates and leaves fiscal policy as one of the few tools it has to influence the economy.

Bulgaria ended 2016 with a surplus of 1.6 percent after initially targeting a deficit of 2.0 percent. The turnaround was mainly caused by delays in administering EU-backed projects, which reduced capital spending, while economic growth exceeded forecasts.

On Thursday, the centre-right GERB party signed a coalition deal with a nationalist alliance after the two sides reached an agreement to raise the minimum state pension in the European Union's poorest country.

However, ex-finance minister Vladislav Goranov - tipped to regain the post in Bulgaria's next government as well, said the move will not affect the country's fiscal deficit target of 1.4 percent of GDP for this year in a budget that projects higher revenues and spending.

Government revenue in the first three months of 2017 rose 8.5 percent from the same period in 2016 to 8.8 billion levs ($4.91 billion). Spending rose to 7.8 billion levs from 7.2 billion a year ago, data showed.

Fiscal reserves held under the currency regime pegging the lev to the euro stood at 12.6 billion levs at the end of March. ($1 = 1.7939 leva) (Reporting by Angel Krasimirov; Editing by Toby Chopra)

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