UPDATE 1-Bulgaria raises 2019 fiscal shortfall over F-16 aircraft purchase

Bulgaria's government decided on Monday to increase its 2019 fiscal deficit to 2.2 billion levs ($1.27 billion), about 2% of economic output, as it prepares to finance the purchase of eight new F-16 fighter jets from the United States.

The decision is pending parliament approval. On Friday, the finance minister said a good economic outlook and the budget performance so far allowed Sofia to pay $1.26 billion for the warplanes in full this year. "The government has approved changes in the state budget for 2019 in relation to the acquisition of new fighter jets that are of extreme importance for the national security, NATO collective defense and the EU defense and security policy," the government said in a statement.

"Given the increased expenditure of 1.8 billion levs, an increase in the budget deficit to 2.2 billion levs is envisioned." The new deficit target will not breach the EU's threshold on fiscal shortfalls -- 3% of gross domestic product -- and is not likely to be an obstacle to Bulgaria's plans to join the euro zone's "waiting room" this year.

Bulgaria will issue state bonds on the local market and use the hefty fiscal reserves it keeps under its currency board regime, which pegs its lev to the euro, to finance the purchase. Because of the fighter jets deal, the biggest military procurement since the fall of communism, NATO member Bulgaria will delay its plans to buy new military ships and armoured vehicles for the next year.

In April, Italy's Fincantieri, German shipyard Luerssen and Bulgaria's MTG Dolphin submitted bids in a 984 million levs tender to build two patrol ships for the Bulgarian Navy. Deputy Defence Minister Atanas Zapryanov told reporters he hoped that a deal to buy new ships will be sealed by the end of the year with payments planned to start next year.

($1 = 1.7346 leva)

Also Read: WB government observes Save Water Day