Convergence programme of Bulgaria, 2006-2009 - Main contents
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official title
Council opinion of 27 March 2007 on the convergence programme of Bulgaria, 2006-2009| Legal instrument | Opinion |
|---|---|
| Original proposal | SEC(2007)290  |
| CELEX number i | 32007A0424(03) |
| Document | 27-03-2007 |
|---|---|
| Publication in Official Journal | 24-04-2007; OJ C 89 p. 11-14 |
| Effect | 27-03-2007; Entry into force Date of document |
| End of validity | 31-12-9999 |
24.4.2007 |
EN |
Official Journal of the European Union |
C 89/11 |
COUNCIL OPINION
of 27 March 2007
on the convergence programme of Bulgaria, 2006-2009
(2007/C 89/04)
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(1) thereof,
Having regard to the recommendation of the Commission,
After consulting the Economic and Financial Committee,
HAS DELIVERED THIS OPINION:
(1) |
On 27 March 2007 the Council examined the convergence programme of Bulgaria, which covers the period 2006 to 2009. |
(2) |
Bulgaria has achieved a high degree of macroeconomic stability supported by sound public finances. Economic growth has been strong and stable, increasing to around 5 % in recent years, but the GDP per capita (in PPS) remains low at 32,9 % of the EU-25 average in 2005. Therefore, the scope for catching up remains ample and represents Bulgaria's overriding challenge for the medium and long term. After the introduction of the currency board in 1997, inflation was reduced to single-digit figures by 1999, but the disinflation process has stalled in recent years, and CPI inflation reached 7,3 % in 2006. |
(3) |
The macroeconomic scenario underlying the programme envisages that real GDP growth will remain at a high level, slightly increasing from 5,9 % in 2006 to 6,1 % on average over the rest of the programme period. Assessed against currently available information, this scenario appears to be based on plausible growth assumptions. However, high external imbalances continue to be a risk factor in the medium term, in particular as the external deficit in 2006 turned out at 16 % of GDP, although the financing of the deficit has been fully ensured through FDI inflows. The programme's projections for inflation appear realistic. |
(4) |
For 2006, the general government surplus is estimated at 3,3 % of GDP in the Commission services' autumn 2006 forecast, against a target of a balanced budget set in the December 2005 pre-accession economic programme (PEP) and a projected surplus of 3,2 % of GDP in the Convergence Programme. The substantially better budgetary outcome is mainly the result of higher than projected revenues due to conservative revenue forecasts in the PEP, higher output growth, and improved revenue collection. Compared to the PEP projections, expenditures are also lower by 1 % of GDP, reflecting mainly lower current expenditures. |
(5) |
The medium-term budgetary strategy laid down in the convergence programme aims at maintaining a general government surplus in the range of 0,8-1,5 % of GDP in order to safeguard macroeconomic stability and sustainability of public finances. A strong fiscal loosening is projected in 2007, with the budgetary surplus attaining 0,8 % of GDP, down from 3,2 % of GDP in 2006. In 2008 and 2009, the general government surplus would rise again and stabilise at 1,5 % of GDP. With interest expenditures declining by around
% of GDP over the programme period, the primary surplus is projected to decline from 4
% of GDP in 2006 to 2
% of GDP in 2007 before reverting to around 2
% of GDP in 2008 and 2009. The fiscal loosening in 2007 would be almost exclusively expenditure-driven. Expenditures are projected to increase by 2
% of GDP, with only part of this increase, about
% of GDP, being reversed in 2008. The projected increase in expenditures in 2007 would come mainly from ‘other expenditures ’(+2
% of GDP) and subsidies (+
% of GDP). The increase in ‘other expenditures ’reflects Bulgaria's contribution to the EU (1
% of GDP), an increase in expenditures on EU Structural Fund projects... |
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