The Council of Ministers discussed a report of Finance Minister Plamen Oresharski on the reasons for price increase, on the measures taken against inflation and on compensations of socially weak citizens, the Government Information Service said on Thursday. Prime Minister Sergei Stanishev will submit the report to Parliament.

The document points out that the main factors affecting the size of inflation include increase of fuel and food prices. The current high levels are discussed as temporary and the inflation is expected to gradually be reduced to one-digit levels if no additional external shocks occur.

To improve the flexibility of economy and adjust it to possible shocks, measures are taken in the following areas: fiscal and economic; curbing of grey economy; competition and well-functioning markets of goods and services; improving communication with consumers aiming at increasing their awareness, improvement of energy efficiency.

The analysis shows also that the average real incomes of households are growing despite increase in prices. The gross income per capita increased by 4.4. per cent year-on-year in July. The average wage for the second quarter of 2008 rose 7.9 per cent, and the July average pension went up 6 per cent year-on-year.

The Government has decided to allocate additional funds to compensate the most vulnerable part of the population. On September 19, the Council of Ministers decided to propose to Parliament to approve additional budget credits of 1,206.2 million Bulgarian leva.

Of them, 90 million leva will be used to recalculate pensions based on contributory income by December 31, 2007. The measure will involve about 1.1 million retired and the average pension will grow to 235,87 leva, up 24 per cent compared to January 2008. A total of 337.5 million leva will be used for a lump sum increase of every pension in December.

A total of 29.53 million leva are allocated for energy allowances for the most vulnerable groups; 36 million leva for additional one-off compensation to people with the lowest incomes. About 360,000 will be supported under this measure. A total of 1.2 million leva were earmarked for one-off aid to first-graders and 40,000 children from poor families will be supported in this way. Schools are to receive 21 million leva; 20 million leva will be spent on buying school buses; dormitories will receive 10 million leva for repairs. Universities will receive 25 million leva to improve the educational and scientific infrastructure and 10 million leva will be used to compensate the deficit under the Optimization of School Network national program.

Source: BTA