Bulgaria revises 2020 budget to run fiscal deficit of 2.9%/GDP

Bulgaria revamped its fiscal plans to run a deficit of 2.9% of economic output this year and raised the ceiling on new debt it can raise to 10 billion levs ($5.65 billion) due to the coronavirus pandemic, the government said on Monday.

The centre-right government said it would increase its spending by 1 billion levs to support employment, while decreased public demand, a drop in exports and weaker oil prices will decrease public revenues by 2.44 billion levs. The revision, which will target a fiscal deficit of 3.5 billion levs, is pending parliament approval.

Bulgaria, one of the poorest but also one of the least indebted European Union member states, had planned to run a balanced budget this year and raise up to 2.2 billion levs in new debt prior to the coronavirus outbreak. "The need for the revision draft stems from the outlined inability to achieve the initial fiscal targets for 2020," the government said in a statement.

Finance Minister Vladislav Goranov said on Sunday that lifting the debt ceiling would allow the country to tap global markets when conditions allow it. Like many countries across the globe, Sofia has closed schools, restaurants and bars and banned access to parks to contain the spread of the coronavirus. The virus has infected people and eight have died.

Earlier on Monday, the government voted to cover 60% of the salaries of workers in companies which had to close due to the stringent measures or suffered a serious drop in their sales. Sofia plans an aid package that should ensure 4.5 billion levs in support to struggling businesses and workers, while banks are considering introducing a delay on loan payments to borrowers in the country of 7 million people.

The coronavirus crisis will also postpone the country's plans to join the two-year obligatory precursor to the euro zone, the ERM-2 mechanism and the bloc's banking union until 2021.. ($1 = 1.7711 leva)