What Happens When Bulgaria Doesn't Have an Approved Budget: Pros and Cons According to the Fiscal Council

There is nothing unusual about the state entering a new year without an adopted budget, as the law explicitly allows for such a situation and, if the National Assembly fails to adopt a new budget by the beginning of the year, the state does not stop working. This is stated by the Fiscal Council in its analysis, dedicated to the procedures and practices regarding the non-adoption of the state budget on time.

The institution writes that budget delays have been registered six times in the period 1992-1998, with the reasons being mainly related to economic and political instability in the country. In the last decade, such a situation has arisen three times.

If the National Assembly fails to adopt a new budget by the beginning of the year, a temporary procedure is applied, within which state revenues continue to be collected according to the same rules and laws that are currently in force, explains the Fiscal Council. Expenditures can only be made to the extent that they were made for the same period of the previous year. The institution gives an example that if last year in January 100 million BGN were spent on a certain activity, this year without a new budget, no more than those 100 million can be spent. In addition, expenditures cannot exceed the actual revenues received. The state can only spend what it has actually collected as revenue.

If there are new laws or decisions that have already come into force and require more or less funds, the state must comply with them. In parallel with this, all rules for stable state finances are observed, such as the restrictions on the deficit and the debt rule.

The Council of Ministers can take out a new loan, but only to pay off an old debt that expires the same year. That is, a new debt cannot be taken for new expenses, but only to “roll over” the old one, it is written in the analysis.

This temporary scheme can be used for a maximum of three months. However, if there is no elected National Assembly (for example, during elections), this period is not counted.

If after these three months there is still no budget in the National Assembly, at the proposal of the government, a special decision must be taken, with which a new deadline is determined, during which the state can continue to collect revenues and make expenditures under these temporary rules, it is written in the analysis.

The Fiscal Council points out historical cases, considering the budget not adopted on time in the last decade, including the Law on the State Budget for 2022, the Law on the State Budget for 2023 and the Law on the State Budget for 2025. 

The analysis highlights specific pros and cons in the late adoption of the budget.

According to the Fiscal Council, the possibility of more accurate planning can be considered as a plus, mainly because the revenues and expenditures from the previous year are known. There is a clearer economic environment and up-to-date data on inflation.

An advantage is that in this way, in principle, unnecessary increase in expenses is overcome. Since budget twelfths are used and "unnecessary expenses" are postponed, less funds are spent, therefore, the temporary postponement creates conditions for temporarily better and tighter fiscal discipline.

For coalition governments, and in most countries they are, more time is provided for additional negotiations in order to reduce the risk of changes made in a hurry and an opportunity is created to increase support for the adoption of the budget, it is also stated in the position of the Fiscal Council.

Weak governments make a weak budget, and in such a case it is better to wait for a government with clear commitments and vision, it is written in the analysis.

According to the Fiscal Council, among the minuses associated with a delayed budget are the manifestation of political instability, which erodes the general environment, the negative signal to investors and credit agencies, the delay of public investments, the delay of funding to municipalities, the delay of social policies, uncertainty in business.

The delay in adopting the budget can also lead to political deals that make it too optimistic and thus worsen the fiscal position of the country, and with that also cause negatives in many areas, add the Fiscal Council.

The analysis of the Fiscal Council was published a day after Prime Minister Rosen Zhelyazkov announced that the government was resigning as a result of the protests throughout the country, recalls BTA. It was accepted today by the National Assembly.