Budget 2018: more money but modest reforms

Photo: BTA

The Bulgarian National Assembly finally adopted the 2018 state budget after two days of sittings filled with tension and loud disputes. In fact, Bulgaria’s Parliament adopted three separate budgets - the state budget, the budget of the National Health Insurance Fund and the budget of the Social Security System.

After nearly ten years of austerity, the state authorities have decided to spend more money in some spheres such as the social security system, the pension system, education, security, defense and healthcare. The public expenditures next year will amount to nearly EUR 20 billion and according to the 2018 budget, these public spheres will receive and extra EUR 1.7 billion as compared to 2017.

Some questions occurred after the final adoption of the 2018 budget such as: is this money enough, how it will be spent, what the results and the consequences of the higher budget expenditures will be, etc? Unfortunately, there are no simple answers to these questions in a country where everyone complains of a shortage of money.

However, we should note that the bigger public expenditures in next year’s budget are due to larger revenues from taxes and fees. The state authorities manage to collect more money, because the country’s economy is growing, local consumption and exports have increased, which resulted in better macroeconomic indicators.

The state will spend more money to help the poor. Pensions will also increase next year. Although the Bulgarian healthcare system has been subject to constant criticism, the money allotted to this sector will see a quite significant increase in 2018. Education, which has been experiencing a series of problems, will also receive more money next year. Moreover, the country’s police and armed forces can also rely on higher budgets. However, despite the significant increase of the money in some sectors, the 2018 budget will not be able to solve all problems in this country. Scientists from the Bulgarian Academy of Sciences have already started to protest against the budget allotted to BAS and hung black flags on the buildings of their institutions as a sign of mourning over the “death of the scientific research in this country” due to the lack of financing.

Now the question is how these higher budgets will be spent and what will be the result of the significant financial injections in some public spheres. Unreformed, uncompetitive and non-profitable science is one good example which casts doubt on the effectiveness of the government subsidies. This is so, because the authorities are not following the golden rule which reads that money should be linked to reforms. The 2018 state budget is not planning many socially-significant reforms. Moreover, highest increase of the state subsidies is planned for the most unreformed and ineffective fields such as the social sector, education, healthcare, defense and justice.

There is a Bulgarian proverb reading: He who pays the piper calls the tune. However, reforms are always painful, have a very high electoral price and make people unhappy. Currently the ruling coalition is enjoying the approval and affection of the majority, there is social peace in this country, wages are growing and the country does not face any real foreign threats. When some public discontent occurs, it is quickly quelled with posts, more money and populist measures. Currently, the economic cycle of this country is in its peak which allows greater generosity. However, experts are warning that the bubble is about to burst and landing will be hard.

English version: Kostadin Atanasov

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