Transcript Финансиране и бюджетна

Addressing the Medium- and Longrun Challenges: the Overall Policy
Framework
Lyubomir Datzov
Deputy Minister of Finance
Republic of Bulgaria
May 2007
Macroeconomic developments


Increasing activity of the economy, GDP
growth rate accelerating to about 6.3% on
average in recent years;
High rates of investment and potential GDP
growth
Positive real convergence prospects
GDP growth
7
6
5
per cent

4
3
2
1
0
2000
2001
2002
2003
EU-25
2004
2005
Bulgaria
2006
2007 (f)
Source: Eurostat
2008 (f)
External sector developments



The current account deficit increased to around 16%, but
The inflow of FDI was also impressive: EUR 4.1 billion in
2006, covering 103% of the CAD
The FDI inflows were exclusively non-privatization related
mln. EUR
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2001
2002
Total FDI
2003
2004
privatization free
2005
2006
Source: BNB
Inflation rate



Single-digit since introduction of the CBA
Accelerated to 7.4% in 2006 mainly due to
adjustments in administrated prices and
excise taxes
Expected to decelerate in 2007 and following
years
Labour market



Employment is increasing steadily,
employment rate still to catch up with EU
averages
Unemployment decreasing, reaching recordlow levels
Some sectors report labour shortages, but
evidence is still somewhat contradictory
Overall policy framework

Outlined in three major strategic documents:


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
The Convergence Programme (2006-2009)
The National Reform Programme (2007-2009)
The National Strategic Reference Framework
(2007-2013)
Full consistency among goals and policy
actions is implemented in the three
documents
Main challenges before the fiscal policy

Three main strains of challenges:



Macroeconomic imbalances and adequacy of
budgetary policy
Structuring and re-structuring of budgetary
expenditures
Structural reforms in all areas of public spending
Macroeconomic imbalances and budgetary
responses



Output gaps: adequate fiscal surpluses need
to be achieved in order to counter-balance
eventual demand-pull inflationary pressures
Expenditures need to be constrained in order
not to stimulate imports and CAB
deterioration
In cases of economic downturns the fiscal
policy should react properly to provide the
required recovery impulses
Achieving public spending efficiency
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Increasing budget revenues has an upper
limit
A ceiling of 40% of GDP has been
established for budget expenditures
Higher expenditures efficiency needs to be
sought in order to obtain higher value of
public services for a unit spent on them
Increased productivity of the public sector
has to be targeted at all levels of
administration
Program budgeting – a way to boost
efficiency of the public sector
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A transition to result-oriented spending is
indispensable
The policy framework of budget-related decisions is
shifted from planning of inputs to planning of outputs
Currently program budgeting is introduced and
implemented in all line ministries
The long-term vision is to allocate funds per policy
fields and priorities and not per institutions
Result-oriented measures are also envisaged at the
individual level in order to stimulate the productivity
of civil servants
Fiscal decentralization and public spending
efficiency


Reform started in 2002
Still to improve:



Standards for public services delivery
Matching revenue collection with expenditure
needs
Higher level of citizens’ participation in the
planning and execution of municipal bugdets
Important sectors that need urgent policy
attention: Healthcare

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A key sector with a view to the ageing
population;
Posing significant risks to long-term
sustainability of public finances;
A ‘higher value for money’ approach is
indispensable
Higher quality of the medical service is
demanded by citizens
Important sectors that need urgent policy
attention: Education

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Mismatches between labour supply and labour
demand need to be addressed by adequate reforms
in the area human capital formation;
Higher expenditure efficiency of spending should be
required from schools and universities
The channels of public funding to education should
be transformed and follow closely the students
Consolidation of universities and school networks is
exigent
Financing of research should be shifted from
subsidies to project financing
Other relevant reform areas
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
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Business environment and administrative
reform: to reduce the burdens to businesses
and facilitate growth;
Innovation and R&D: to enhance the longterm growth potential of the economy at the
micro and macro levels
Labour markets: to increase flexibility and
reduce the social payments burden to the
budget
Envisaged short-term policy formulation
actions
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The National Reform Programme will be reviewed
and a monitoring of goals achievement will be
performed until the autumn of 2007
New goals and targets will be defined in order to
match better economic developments, problems and
prospects
The medium-term budgetary framework will be
elaborated and announced until mid-2007
The annual update of the Convergence Programme
will be submitted to the Commission until December
1, 2007
Thank you for your attention!