BIA STANDPOINT ON THE DRAFT BUDGETS OF THE STATE, NATIONAL HEALTH INSURANCE FUND AND STATE SOCIAL SECURITY

On 26.01.2022 BIA has sent to the Minister of Finance and Chairman of the National Council for Tripartite Cooperation its statement on the Draft Law on the Budget of the National Health Insurance Fund for 2022; Draft Law on the Budget of the State Social Security for 2022; Draft Law on the State Budget of the Republic of Bulgaria for 2022.

I. Draft Law on the Budget of the National Health Insurance Fund for 2022

1. The general assessment of the draft Law on the Budget of the National Health Insurance Fund for 2022 is that it does not create conditions for reforming the system and improving the quality of health care for the population.

2. There are no policies to increase the resource and increase its efficiency. Public spending on health as a share of GDP continues to be in the range of about 4.6 percent, compared to the EU average of 7-11%.

3. Again, there are disparities between the contributions that the state makes to its insured persons and the costs of their health insurance.

4. No significant increase in the share and amount of outpatient care expenditure is foreseen at the expense of the transfer of hospital care activities.

5. There are no policies and solutions to limit the cost of medicines, which reach 30% of the budget of the Fund, compared to the EU average of 15-18%.

6. No real mechanisms are proposed to reduce healthcare costs at the expense of individuals.

7. The amount of the liabilities of the hospitals is large (of about BGN 500 million), which are mostly state-owned. There is a real danger that the repayment of debts will be at the expense of the funds for hospital care provided for 2022, which may further unbalance the system.

8. The financial and personnel condition of the municipal hospitals is alarming, most of which are facing bankruptcy. Political and legislative measures are needed to stabilize their activities.

9. We propose to review the transferred and uncharacteristic for the NHIF activity for the purchase of aids for people with disabilities.

In view of the above, BIA refrains from supporting the submitted draft Law on the Budget of the National Health Insurance Fund for 2022.

II. Draft Law on the Budget of the State Social Security for 2022

BIA refrains from supporting the submitted draft Law on the State Social Security Budget for 2022, insofar as:

1. The amount of the minimum wage and its increase (from BGN 650 to BGN 710 as of 1 April 2022) has neither been argued nor discussed with the social partners.

2. The amount of the maximum insurance income (MII) increased from BGN 3,000 to BGN 3400, which is an increase of over 13.3%.

3. Along with the increase in the MII, the ceiling of pensions in the amount of BGN 1500 is maintained, which further reduces the incentives of employees to insure themselves on their real incomes.

4. The minimum daily amount of the unemployment benefit is increased from BGN 12.00 to BGN 15.00, without reasons and estimates of how this amount was reached.

5. The amount of the benefit for raising a child under the age of two is increased from BGN 650 to BGN 710, as of 1 April 2022. Such measures implement wrong policies

6. The regime of payment of cash benefits for temporary incapacity for work is maintained.

7. We do not find reforms aimed at limiting the number of people receiving disability pensions - a problem that employers' organizations have been warning about for years, but no real action has been taken at this stage.

III. Draft Law on the State Budget of the Republic of Bulgaria for 2022 and updated Medium-Term Budget Forecast for the period 2022-2024

After getting acquainted with the proposed project, regardless of the presence of some positive measures that are envisaged, we express reserves to the submitted draft Law on the State Budget of the Republic of Bulgaria for 2022 and updated Medium-Term Budget Forecast for 2022-2024.

In view of the above, our fears are that any deviation from the MoF's assumptions for the revenue side of the state budget for 2022 could lead to an excessive budget deficit of more than 6%.