BNB Governor on draft state budget 2024: There are discrepancies between fiscal and monetary policy

The draft budget for 2024 creates prerequisites for imbalances in the economy, Bulgarian National Bank’s Governor, Dimitar Radev, announced during the meeting of the budget and finance committee in Parliament on November 28.

Draft budget 2024 tabled in Parliament for discussion by budget and finance committee

In his words, the deficit so set is too large. In the best case, it should be within 1% next year and zero in three years, he believes.

"It is not realistic to achieve it, I am aware. What is realistic, however, is that a clear trend should be set to reduce the deficit in the three-year forecast - something we do not see," Radev explained.

According to him, it is precisely because of the too high spending relative to revenues in the budget that inflation is bound to rise rather than fall. This creates a mismatch between the BNB's policy on money and the finance ministry's policy on the budget.

The BNB Governor also drew attention to the fact that the fiscal buffer set does not meet the regulatory requirements. Its minimum size remains BGN 4.5 billion, as it is currently, but this is a limitation only to the size of the so-called "Silver Fund". There should be more money in it, Radev said.

Another of Radev's criticisms is that there are no necessary buffers in the budget for the planned expenditures.

However, the central bank’s governor noted two positive things related to the draft budget. Firstly, it has been proposed and is expected to be adopted by the end of the year, which will normalise the budget procedure and secondly - there are clear targets set, but there is still a flaw in the way they will be achieved.