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Bulgaria expects budget surplus through September despite COVID-19

SOFIA, Sept 30 (Reuters) - Bulgaria expects to have a fiscal surplus of 890 million levs ($534 million), or 0.8% of economic output, in the first nine months of 2020 despite falling tax revenues because of the coronavirus, the finance ministry said on Wednesday.

The Balkan country is still running budget surpluses despite the hit from COVID-19 on its small and open economy but expects to end 2020 with a fiscal deficit of 3% of GDP as the government, under pressure from anti-corruption protests, boosts spending to support jobs and incomes hit by the pandemic.

Sofia registered a fiscal surplus of 1.6 billion levs in the first eight months of the year or 1.4% of GDP.

The Bulgarian economy contracted by 8.2% in the second quarter from a year earlier. The European Commission expects it to shrink by 7.2% in 2020.

Government revenues are expected to have dropped by 400 million levs to 32.4 billion levs at the end of September compared to the same period a year ago. Spending is seen at 31.5 billion levs at end-September, virtually flat on last year, when the country made a one-off $1.26 billion payment for new F-16 warplanes.

Fiscal reserves, held under a currency regime that pegs the lev to the euro, stood at 9.47 billion levs at the end of August. ($1 = 1.6672 leva) (Reporting by Tsvetelia Tsolova; Editing by Alexandra Hudson)

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