Draft Law on the State Budget of the Republic of Bulgaria for 2019 and Law on the State Public Insurance Budget for 2019.

Mr. Valery Simeonov
DEPUTY MINISTER-PRESIDENT
ON ECONOMIC AND DEMOGRAPHIC POLICY
AND CHAIRMAN OF THE NATIONAL COUNCIL
FOR TRIPARITE COOPERATION

CONCERNING: Draft Law on the State Budget of the Republic of Bulgaria for 2019 and Law on the State Public Insurance Budget for 2019.

DEAR MR SIMEONOV,

The Confederation of Employers and Industrialists in Bulgaria, after discussing with its members, expresses support for the draft Law on the State Budget of the Republic of Bulgaria for 2019 and Law on the State Social Insurance Budget for 2019, except for the part that provides for an increase of the minimum wage and the maximum insurance income, starting from January 1, 2019.

We believe that the projects were developed at a high professional level and are in accordance with the budget forecast, as well as with the current legislation, including the amendments, which take effect from the beginning of the 2019 budget year, by expressing our synthesized comments on the bills.

1. The 2019 budget draft continues the fiscal policy followed by the government in recent years, with the main priority remaining the preservation of the stability of public finances.

2. The proposed budget continues the policy of fiscal consolidation and balancing of the country's finances. Therefore, the planned deficit of 0,5% of GDP (BGN 502 million) is strange for KRIB. Due to the serious budget surplus in recent years, including the projected budget surplus for 2018, the expectations were that the state finances would be balanced in 2019.

3. The draft law on the budget states that the maximum amount of the new state debt will be BGN 1 billion, which is in line with the needs of the state, given the high level of the fiscal reserve.

4. In the area of ​​public debt management, we welcome the expected reduction of the public debt to the level of BGN 22 billion or 16,5% of the estimated GDP levels, significantly below the level of the permissible reference value of 60% laid down in the Maastricht criterion for convergence.

4. Revenues are expected to increase in nominal value by about BGN 3.7 billion, which is logical based on the expected nominal growth of 3,7% of GDP, the expected one-time revenues, including from the Sofia Airport concession, as and continuing positive collection trends.

5. In the field of fiscal policy, KRIB welcomes the tax stability created over the years and the preservation of low levels of tax rates, which contributes to increasing economic growth. Also, we are consistent in supporting the measures taken to improve collection, stimulate economic development and reduce the administrative burden.

6. Expenditures are expected to increase for the period by about BGN 3,1 billion, but in real terms they will decrease by 2,4% of GDP. It is positive to prioritize measures related to upgrading sectoral and horizontal policies in the "Education", "Social Policy" sectors, maintaining modern and combat-ready armed forces and developing defense capabilities and capabilities related to the collective defense of the country.

7. KRIB does not support some parameters of the income policy, as follows:

Increase in the amount of the minimum wage from BGN 510 to BGN 560 from January 1, 2019.
Increase of the maximum insurance income from BGN 2600 to BGN 3000 from January 1, 2019.

8. We are consistent in the position advocated by the nationally representative employers' organizations for the adoption of a package of measures providing for the suspension of the gradual increase in the amount of the minimum wage until the adoption of clear and objective criteria and a mechanism for determining the amount of the minimum wage for the country and repeal of the minimum insurance income.

We believe that the planned increase in the amount of the minimum wage for 2020 and 2021 should be dropped from the Medium-term budget forecast for 2019-2021. We strongly insist on negotiating a mechanism for determining the amount of the minimum wage and fulfilling the commitments made by the of the Minister of Labor and Social Policy for the ratification of Convention 131 of the ILO.

9. We do not support the proposed increase in the maximum insurance income, as it is contrary to the commitments in the pre-election programs of the ruling coalition parties, the Government's management program and the mid-term budget forecast for NOT increasing the tax burden.

The decision to increase the threshold was taken illegitimately in violation of the dialogue between the social partners, without prior discussion with the nationally represented employers' organizations, but only in dialogue with the trade union organizations, which subsequently announced it on behalf of the Government. The employers' organizations are always ready for a constructive dialogue on the subject in order to find suitable compromise solutions between the interested parties in the spirit of social dialogue.

10. We are consistent in our position on:

Repeal of the minimum insurance thresholds (minimum insurance income by main economic activities and qualification groups of professions)
Cancellation of payment at the expense of the employer for the first three days of temporary incapacity for work due to illness (sickness) of employees
Modernization of the supplement for night work - in reasonable amounts, achieved through dialogue between the social partners
Waiver of additional remuneration for acquired work experience and professional experience (class of time served)

11. KRIB supports the increase in capital expenditure, given the observed slowdown in the last year.

12. We do not agree with the continued postponement of the reform in the mechanism for determining the Household Waste Fee. Already in 2017, a mechanism was developed and adopted for determining the Household Waste Fee according to the "polluter pays" principle, and its entry into force should not be delayed any longer.

With respect,

Eugene Ivanov
Ex. Director