Bulgarian Finance Minister Simeon Dyankov said Wednesday there was no cause for worry about the EU's planned audit of its finances, despite the government's plans to revise its 2010 budget deficit upward.
Bulgaria in April informed the EU's statistics agency, Eurostat, that it was nearly doubling last year's deficit projection — to 3.7 percent, from 1.9 percent of gross domestic product — and was suspending its bid to adopt the euro currency by 2011.
Brussels voiced concern Tuesday about the Balkan country's finances, and urged EU officials to check its data reporting.
The finance minister said the audit came as no surprise.
"I would have demanded a check of data if I were in Eurostat," Dyankov said.
The center-right government will now revise its 2010 budget deficit forecast from zero percent of GDP to 3.8 percent, Dyankov said, explaining that the recession had cut into revenues. Parliament is expected to approve the budget change next week.
The government, which came to power last year, blamed its Socialist-led predecessors for a low spending estimate, saying they had concealed over 2.2 billion leva ($1.3 billion) worth of contracts for arms, telecoms and construction.
Prime Minister Boyko Borisov said his government had been unaware of the discrepancy when it announced Bulgaria would be ready to join the euro zone next year, and has since stepped back from that goal.
Analysts criticized the planned deficit revision, and instead urged speedy reforms and public sector spending cuts.
The government should spend only what it has, without using reserve funds, said analyst Peter Ganev, of the independent Institute for Market Economics. Instead, the revised budget would lower estimated revenues by 1.4 billion leva ($860 million) while increasing spending by 850 million leva ($520 million).
"This country has two options: either to follow Greece in increasing its government debt and undermining investors' confidence, or to follow Estonia, where expenses are being cut and reforms implemented to stabilize the budget and boost economic growth," Ganev said.
Bulgaria has one of the European Union's lowest public debt levels, which in 2009 stood at 14.7 percent of GDP.
First quarter figures released by the statistical service Wednesday showed that output fell by 3.6 percent in the January-March period, slightly up from the 5.9 percent drop in the previous quarter.
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