October 31, 2019 / 10:32 AM / 12 days ago

UPDATE 1-Bulgaria targets balanced budget next year

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SOFIA, Oct 31 (Reuters) - Bulgaria will aim to balance its budget next year while boosting public wages and earmarking more funds for education, the government said on Thursday after approving the 2020 budget draft.

The European Union country is currently running a budget surplus, but planned spending in the last quarter, plus a $1.26 billion deal to buy eight new F-16 fighter jets, will tip the country towards a budget shortfall of 2% of GDP in 2019.

Bulgaria, which hopes to join the two-year waiting room for euro zone membership next spring, plans to run balanced budgets through 2022 and keep decreasing its public debt, already the third lowest in the EU, to 17% of GDP in 2022.

Amid growing economic gloom in the euro zone, Bulgaria’s main economic partner, Finance Minister Vladislav Goranov has said that targeting a zero deficit and keeping low debt levels are the budget’s main protection measures against external risks.

The government plans to increase all public salaries by 10% and boost teachers’ pay by 17% next year, delivering on pledges to boost incomes in the EU’s poorest member state and achieve an average monthly pay of about 1,500 levs ($853) in 2021.

The draft is pending parliament approval.

Bulgaria sees the economy slowing only slightly to 3.3% next year, driven mainly by domestic demand from an expected acceleration rate of 3.4% in 2019.

Goranov has said that the zero deficit goal gives it fiscal leeway to stay within the EU-deficit threshold of 3% of GDP if the economic slowdown turns out higher than anticipated and did not plan to boost public spending for the time being in anticipation of a crisis. ($1 = 1.7583 leva)

Reporting by Tsvetelia Tsolova; editing by John Stonestreet and Angus MacSwan

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