Bulgaria Lawmakers Overturn Presidential Budget Veto on New Debt

Bulgaria’s parliament overturned a presidential budget veto, allowing Prime Minister Plamen Oresharski’s 10-week-old cabinet to raise new debt as it works to ease two months of protests.

Lawmakers voted 130 to 93 with no abstentions to back the motion, Speaker Mihail Mikov said today in the capital, Sofia. President Rosen Plevneliev vetoed parts of the bill on Aug. 7, saying the public needed more details on how the government plans to use 1 billion lev ($682 million) of new borrowing.

“We are in a situation of economic stagnation and there’s a possibility we’ll even slide into recession,” Finance Minister Petar Chobanov told lawmakers. “The main reason for this is highly overestimated revenue and overdue payments by the government to businesses. The revision will provide the funds needed to overcome this situation.”

Political leaders are struggling to maintain public confidence as voters grow increasingly upset with what they see as a corrupt political system in the European Union’s poorest member. Oresharski came to power May 29 after anti-austerity protests forced out his predecessor, Boyko Borissov, and triggered snap elections. Plevneliev, elected in 2011, said July 5 that a new ballot may be needed.

The budget revision cuts this year’s economic-growth forecast to 1 percent from 1.9 percent and widens the planned fiscal gap to 2 percent of gross domestic product from 1.3 percent previously to help cover increased social spending, reimbursement of value-added tax receipts and payment for public services to companies.

The new borrowing is necessary to service debt this year and next, helping keep the government’s fiscal reserve above the 4.5 billion-lev legal requirement and avoid borrowing at a higher cost in 2014, according to the Finance Ministry.

The yield on Bulgaria’s euro-denominated bonds due 2017 was 2.358 percent at 1:41 p.m. in Sofia. The cost of insuring the country’s debt against non-payment for five years using credit-default swaps rose one basis point to 112.

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