Modern Diplomacy
Published 5 hours ago
Getting to know Bulgaria’s “Fiscal Reserve”
Recently, Bulgarian commentators and policymakers have been whispering on the status of the “Fiscal Reserve”. This financial instrument is amongst the main indicators of Bulgaria’s economic stability. It is also a source the government draws from to finance extraordinary expenses without recurring to debt. Given the reserves’ importance, it is unsurprising that some wonder whether the government is wasting precious resources now and then.
It is important to notice that Bulgaria’s fiscal reserve is actually an aggregate indicator which includes heterogenous sorts of components. Such a detail is actually essential because the government cannot earmark all of these resources freely for current expenditure. Thus, doubts relating to the fiscal reserve regard not just its level, but also its composition. To get a clearer picture, one may simply say that there are three main categories of assets in the fiscal reserve. First, budgetary institutions’ bank-account balances — which make up the lion share of the total. Second, the ‘Silver Fund’, a reservoir of assets meant to ensure the pension system’s sustainability, which is also quite significant. Finally, accounts receivable from European Union funds for certified expenses and advances, which have been rising steadily. On average, in 2019–2021 these three sources have provided the fiscal reserve with 99% of its value (Figure 1).