EC asks Bulgaria to reduce budget deficit

The European Commission (EC) on Tuesday set an end of 2011 deadline for Bulgaria to bring its budget deficit below 3% of GDP, in line with the EU’s Stability and Growth Pact. The EC also asked the government to take active measures to prevent the deficit from widening over 3.8% of GDP, envisioned in the budget revision this year. The recommendation, along with one to launch an excessive deficit procedure against Bulgaria after its budget deficit reached 3.9% of GDP in 2009, will be forwarded to the Council of the EU for a final opinion. To achieve the set fiscal goals, the EC — in part — recommended that the government should complete planned reforms of the pension and health care systems, as well as reforms in public administration and education. The government had originally set its 2010 budget deficit target at 0.7% of GDP, but was forced to revise it partly due to higher expenses, necessitated by outstanding contracts, signed by the previous administration.