The state and structure of public finance of the republic of Bulgaria

Abstract

Introduction. The negative effects of the global financial crisis, which reflected in the reduction of external demand; Eurozone debt crisis, which resulted in a reduction in funding of Bulgaria by leading donor countries of the European Union; worsening of domestic economic situation, growing corruption have led to the deregulation of the financial system, actualization of problem of study of the structural elements of public finance, whose role in solving current problems of economic policy has increased.

Purpose. The study of the evolution and current state of the public finances of the Republic of Bulgaria, the identification of weaknesses in the elements of the financial system and development of practical recommendations to improve the structure of the components of the budget system have become the purpose of the study.

Results. Drawbacks and weaknesses are revealed. The features of state and structure of components of public finances of Bulgaria in the crisis and post-crisis period are grounded. Ways of improving the components of the budget system of the country are determined. A short-term budget strategy and main objectives of the current fiscal policy which are focused in consolidation and balance of public finances have been formed. The problems in financing of public spendings and increasing of public debt are grounded. They are determined by the growth in government current expenditure, the decrease in funding for the EU and the need to increase state budget revenues through state external and internal borrowing. The directions of improvement of the mechanism of regulation of public debt are proposed. They have been formed from the position of optimization of practice of borrowing that were formed on the basis of the analysis of public debt structures: currency, geographical and institutional structures. Ways of reduction of the burden on the state budget of the Republic of Bulgaria are proposed. They have been defined through adjustment by new debt terms of use depending on the stage of the economic cycle; coordination and balance of the schedule of auctions of government securities to the schedule of payments on government bonds; increase of the share of financing the budget deficit at the expense of regular, moderate amounts of bonds in foreign currency on international capital markets; achievement of the balance between internal and external public debt.