TRYING TO BALANCE BUDGET, COMPANIES' INTERESTS

Economy's overall debt bigger than gross domestic product

The goal of the government and finance minister Simeon Dyankov to balance the 2010 budget should not be achieved at the expense of companies in Bulgaria. That opinion was voiced by the economists, financiers and politicians interviewed by the Pari daily.

For & against

Economists Georgi Ganev and Georgi Angelov believe that the balanced budget is a feasible goal and the government can pay its dues to companies in 2010. Despite the debts of the government I think we can have a balanced budget because of the better expectations for the economy, Angelov pointed out. A register of all contracts awarded by the different ministries should be urgently compiled, as that will help both the government and the companies, he added.

Business should not be stifled for the sake of a balanced budget and eurozone entry, ex deputy finance minister Krasimir Katev was adamant. The state should have paid its debts as early as last year. The government's current policy will not help overcome the crisis but deepen it, he pointed out. If the state fails to pay its dues to companies, we may witness a chain of corporate bankruptcies, Katev warned. The problem is that company debts are huge and that the debt of the economy as a whole is bigger than the gross domestic product, which creates concerns among foreign investors, Valeri Petrov, partner at private equity firm Bancroft, told the Pari daily.

Criticism

The government is making every effort to balance the budget. However, that will not be good if the price is the bankruptcy of many companies, as that means loss of potential in the economy, Bulgarian Industrial Capital Association chairman Vasil Velev underscored. The state has delayed quite many payments, which will create problems.

Meanwhile it emerged that the ministry of regional development and public works paid BGN 38 million of its debts to construction companies in January. Minister Dyankov has promised that another BGN 40 million will be transferred by February 15 for amounts due by the regional ministry under the Phare programme. According to regional minister Rosen Plevneliev, the state owes nearly BGN 200 million to construction companies. Employers' organisations, however, estimate their receivables at between BGN 1 and 2 billion. Another BGN 300 to 500 million is due to municipalities and BGN 500 to 800 million is the amount of outstanding VAT refunds, socialist MP Rumen Ovcharov said. When these debts are taken into account, the actual budget deficit is much bigger than 0.7%, he added.
At any rate, even with a small deficit in 2010 Bulgaria will rank among the best budget performers in Europe. Most of the leading economies are expected to report a two-digit gap.