Court Revokes Controversial Budget Act Provisions

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Court Revokes Controversial Budget Act Provisions

Three out of four controversial provisions in the 2010 Budget Act passed by Parliament in December 2009 have been declared unconstitutional by the Constitutional Court, "Dnevnik" daily reported Tuesday. A decision to this effect was taken on March 31, 2010, and was subsequently published on the Court's website.

Already during the debates at Parliament, the Bulgarian Socialist Party voiced its plans to alert the Constitutional Court about these provisions and the court case itself was instituted on January 14.

Article 17 of the Budget Act, the one which sparked most controversies, reads that the Government may reduce the budget expenditure below the amount fixed in the Budget Act if new and less favourable forecasts about the country's economic development emerge.

The opposition argued that such a provision empowered the Cabinet to change the budget parametres without Parliament's approval.

The Government kept the provision even though it was well-aware that it might be declared unconstitutional, "Dnevnik" writes. According to Finance Ministry sources, no decisions have so far been taken based on Article 17.

Another provision declared unconstitutional by the Court entitles the Government to increase the state subsidy for the judiciary, if needed, even if this results in an increase in the 1,516 million budget deficit.

Under a third provision revoked by the Constitutional Court, the Cabinet is allowed to increase the budget deficit so as to provide additional subsidies to the State Public Social Insurance.

The budgets of the Judiciary and the State Public Social Insurance are autonomous and have their own sources of financing. The state budget, however, subsidizes any deficits which might emerge in these budgets, since it always turns out that their expenditures outstrip revenues.

The provisions just declared unconstitutional allow the Government to offset such deficits with money from the state budget. As that would result in a swelling deficit of the state budget, Article 17 was needed to allow cost-cuts to make up for this. Finance Ministry experts said such cost-cuts would come from capping ministries and municipalities which lack financial discipline.

The opposition claimed, however, that this might be used as a lever to repress municipalities where GERB does not have a majority.

It is still unclear whether the Budget Act will be amended to react to the Court's decision, "Dnevnik" says. Finance Ministry representatives do not rule out such a move.

Source: BTA

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