Bulgaria likely to end 2018 at least with balanced budget - minister

* Better revenue, delayed spending to avert budget deficit in 2018

* Public wages to be increased by 10 percent from 2019 - PM (Adds government to discuss public wages raise on Wednesday)

SOFIA, Sept 11 (Reuters) - Bulgaria is likely to end 2018 with a balanced budget or a surplus, outperforming initial plans for a deficit and allowing for a 10 percent increase of state salaries next year, senior government officials said on Tuesday.

The finance ministry expects a fiscal surplus equal to 2.4 percent of annual gross domestic product from January to the end of August, but spending usually accelerates in the final quarter.

Finance Minister Vladislav Goranov said a third of the accumulated surplus was due to better tax collection, while the rest was a result of delayed spending, mainly on European Union-funded projects.

"Part of the planned spending will be carried out by the end of year, part of it will not, and my expectations are that the budget will not come out as planned, meaning that it will not end with a deficit," he told private television channel NOVA.

The finance ministry is expected to come out with a detailed budget plan for 2019 in October, but its spring mid-term forecasts projected a shortfall of 0.5 percent next year and balanced budgets for 2020 and 2021.

Goranov said the economic development for the time being will allow for a 10 percent increase in public salaries as of next year, delivering on a promise by the ruling centre-right GERB party to boost incomes in the EU's poorest member state and raise the average salary by 50 percent by 2021.

Prime Minister Boyko Borissov confirmed the plan and said his government will discuss it on Wednesday.

"I think that from January 1 we can raise the salaries in the public sector by 10 percent. That will push up all other salaries," Borissov told reporters during a visit to the city of Varna.

"We will discuss it tomorrow, but our calculation allow for it and we will do it from January 1," he said.

The announcement comes at time when inflation is accelerating and hikes of prices of natural gas and heating are expected in a country where electricity and heating bills in winter eat up a big chunk of people's incomes.

The government increased the salaries of teachers and other public servants as well as pensions in 2018.

Bulgaria ended 2017 with a surplus of 0.9 percent of GDP, after initially planning a shortfall of 1.4 percent, prompting some economists to say the finance ministry was lowering its revenue projections so that it could boast it had outperformed its targets. (Reporting by Tsvetelia Tsolova; editing by David Stamp and Ed Osmond)

First Published: 2018-09-11 11:22:03
Updated 2018-09-11 13:12:52


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