Bulgaria has unveiled its budget plan for next year and Finance Minister Assen Vassilev's proposals are now open for public discussion. The 2024 budget enters the scene with a planned deficit of 3% of GDP on a cash basis and 2.9% on an accrual basis (as per EU standards). The finance ministry is banking on economic growth of 3.2%, with annual inflation expected to reach 4.8%.
Approximately one-third of the investments planned by the government for the coming year will be allocated to infrastructure projects. This is evident from the lists of projects, which are part of the government's capital investment program.
In total, investments planned for next year amount to 10 billion levs (5.1 billion euro) - a combination of European funding, projects financed with national resources, and a one-billion-lev fund for municipal projects. This marks the first year in which taxpayers can clearly see where capital program funds will be invested. The state budget is accompanied by an attachment with specifics, which provides a degree of transparency previously absent from the country's budgets.
Ministries and municipalities
The projects, to be executed by ministries, state agencies, and funds have a combined value of 8.7 billion levs. Most of these projects are related to road and railway infrastructure (accounting for over one-third of the total value), as well as modernization efforts in the defense sector (15% of the entire budget). Several initiatives will align with Bulgaria's Recovery and Resilience Plan, focusing on energy, education, and healthcare.
Municipal projects total 765 with a combined value of 2.9 billion levs. These projects will span multiple years, thus exceeding the allocated capital program budget of 1 billion levs for 2024. It remains unclear on what principles some of these projects have been included, given that, for instance, the contract for the stadium of Lokomotiv Plovdiv soccer club is being challenged in court.
The list of projects to be funded was a point of contention between the finance minister and members of parliament from GERB, one of the parties that support the government. To avoid speculation that funds would be distributed by the government on the basis of the political affiliation of mayors (as suspected by opposition Bulgarian Socialist Party), it was decided that Parliament would approve the list of municipal projects.
Paving the way for infrastructure projects
The budgeted funds will unlock delayed road projects and kickstart new ones under the capital investment program of the Ministry of Regional Development and Public Works. Among the top ten projects for 2024, those related to road and railway construction and modernization stand out. For instance, the high-speed Vidin-Botevgrad road is allocated 400 million levs. Contracts for this project were signed during the last GERB government (2017-2021), but due to design issues and a lack of funds, construction has been progressing slowly.
The road section from Botevgrad to Mezdra, currently closed for traffic, will reopen by the end of this year, the Minister of Regional Development Andrey Tsekov said during a business meeting in Sofia organized by Capital Weekly.
With a budget allocation of 300 million levs, the project for the Ruse-Veliko Tarnovo highway in northern Bulgaria is also on the list. Last week, the government said that ground was broken on the first 7.9 km section of Lot 2 of the future highway that is a bypass of the town of Byala with a total length of 35.4 km. Lot 3, from Byala to Veliko Tarnovo, will be tendered later, with the bidding process expected to be launched by the end of this year. This raises questions about the possibility of executing the budgeted expenses within 2024, as potential appeals and delays in procedures could occur.
In total, over 800 million levs are earmarked for the Europe, Struma and Hemus highways. The construction of the Europe highway is likely to proceed without issues and could be completed next year. On the other hand, the Struma highway, particularly the section through the Kresna Gorge, is prone to delays, and allocated funds may not be fully used. As for the Hemus highway, the situation is relatively clear, with projects continuing as per the in-house contracts signed during the last GERB government. Major renovations of primary roads, the reconstruction of the Ruse-Giurgiu bridge over the Danube, tunnels, and smaller bridges are also among the projects that have been allocated funding by the ministry and the government's Road Infrastructure Agency.
Within the expenses of the Ministry of Regional Development in the 2024 budget, around 200 million levs are dedicated to water and wastewater infrastructure. A portion is earmarked for completing projects under the Environment operational program for the period 2014-2020, while the rest is included in the expenditure for the new programming period 2021-2027.
The programme for modernization of Bulgarian State Railways' locomotives is allocated 285 million levs. This programme is associated with a significant procurement under Bulgaria's Recovery and Resilience Plan, which has been delayed for over a year due to documentary and procedural issues.
A Boost for the Military
Next year, the Ministry of Defense is set to become the second-largest recipient of budgetary investment funds after the Ministry of Regional Development. It is expected to receive a total of 1.536 billion levs to realize several key projects aimed at modernizing the Bulgarian armed forces. The largest chunk of 546 million levs is designated as initial installment for the acquisition of nearly 200 infantry fighting vehicles and related support equipment for the establishment of a mechanized brigade. The contract for the purchase of American-made Stryker armored vehicles was signed last week and will soon be presented to Parliament for ratification. An additional 55 million levs will be allocated for acquiring Javelin anti-tank missiles.
The initial version on the 2024 budget published by the finance ministry included debt financing of 11.9 billion levs. Of them, 3.5 billion levs are allocated for debt refinancing, with 2.9 billion levs designated for payment on Еurobonds issued in 2014 and 0.4 billion levs for domestic government securities. Additionally, 0.2 billion levs are allocated for the repayment of state loans. The remaining 8.4 billion levs will be used to finance the planned budget deficit and secure the fiscal reserve's liquidity
The minimum wage, maximum income, and pensions are all on the rise
The 2024 budget is just as socially oriented as the current one. Next year, there is a planned increase of almost 29% in the minimum monthly wage, to 933 levs. Pensions are expected to be raised by 11% from July 1st under the Swiss formula that combines 50% growth in the average pension insurance income and 50% of the inflation ratefor the past year). The maximum insurance income is also planned to increase, to 3750 levs.