This is a significant improvement on the revised target of 3.4% and is down from the 3% deficit seen in 2021. The country has reduced its fiscal shortfall due to better-than-expected tax collection, increased payments by state energy producers, and weaker capital spending.
Interim Government Warns of Increased Fiscal Deficit in 2023
The interim government in Bulgaria has warned that the fiscal deficit is expected to balloon to over 6.6% of GDP in 2023. This is due to increased state pensions, another social spending in the second half of 2022, and a looming economic slowdown. Weaker investment and delays in accessing European Union funds have contributed to the lower deficit for 2022, but this spending will be transferred into 2023, putting pressure on the budget next year.
Bulgaria's Government Revenues and Expenditures for 2022
According to the finance ministry, Bulgaria's government revenues are expected to have increased to 64.7 billion levs by the end of December, up from 52.3 billion levs the previous year. This is largely due to increased payments from energy producers. Government expenditures are also expected to have increased to 62.9 billion levs from 54.6 billion levs the previous year.
This is mainly due to compensation paid to businesses to protect them from rising energy costs and increases in some state salaries and pensions. As of the end of November, the country's fiscal reserves, held under a currency regime that pegs the lev to the euro, were 12.8 billion levs.