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Statement by the President of the Republic on the occasion of his veto imposed on provisions of the Law amending the State Budget Act for 2013

Today I signed a Decree by which I return for reconsideration in Parliament some provisions of the Law amending the State Budget Act for 2013. The full text of my motives for the veto, as always, can be found on the website of the presidential institution.

I respect the right of any government to pursue policies that are considered beneficial for the country and for which they were entrusted by the public. I do not mind if these policies are implemented by a revision of the budget and even by incurring new debt. I support the projected increase of funds by which the State supports families of children with disabilities, I even happen to believe that it is not sufficient enough. However, I categorically refuse to agree with any arguments or attempts to speculate with our fellow citizens who live in dire material and social circumstances. The public must not be led to believe that this is the sole purpose of the revision as the social package included in it is a very small segment of the estimated expenditure.

We want to know more about all expenditures and about the intended new debt and, of course, how this public resource will be managed in the remainder of the year.

At the same time, I do not see in the Law amending the budget, adopted by the National Assembly a serious statement of intent for major policies and reforms to promote employment, growth and the competitiveness of the Bulgarian economy. It is not spending and the deficit that needs to grow, the economy needs to grow, so that we can all live better. Hence in a sustainable way we will produce more, and the government will be able to allocate more funds through the budget for wages, pensions and social programs.

I decided to impose a partial rather than a complete veto to emphasize clearly that I support the planned extra 40 million Lev for implementing social measures. I would remind you that in its first days the interim government allocated an additional 41 million Lev targeted at the most vulnerable groups of our people, not by increasing expenditure but by finding ways to save and optimizing public spending. I reiterate that the veto imposed by me today is partial and I am returning for reconsideration texts relating to revenue, expenditure and the planned new debt.

I believe that the revision of the revenue component is premature and un-ambitious, since in practice the State is lowering the bar in the middle of the year as well as the requirements for the revenue administration. During the political consultations to form a government I emphasized to the parties that declared themselves ready to govern that they have undertaken specific obligations to their constituents and that these are not empty words, which can be conveniently forgotten immediately after the formation of the government.

If we look at the pre-election promises of government to combat the shadow economy and smuggling and to have more revenue, this budget revision reveals the opposite. Moreover, the Customs Administration and the National Revenue Agency have been working without full staff in place for more than a month and a half and even without Management, and SANS and CDCOC are in the process of transformation, which is planned to continue until the end of October.

I expect the government to make the necessary effort to improve the performance of revenue administrations before relieving them of the responsibility for more revenue. I hope that sectors that have been proven ineffective and are sinking billions will be reformed rather than just provided with more and more public money.

In respect of expenditure, this component lacks transparency in general or arguments, backed by figures and written in the law. It must be made clear to everyone that the Expenditure component of this law, which the National Assembly adopted, revises only the reserve for unforeseen and urgent expenditure. What does this mean? It means that nothing written in the motives or spoken in parliament and in the public domain relating to the revision, is enshrined in this law, and that the government can spend the increased expenditure as it sees fit. Even the social package, which I strongly support, is not in the budget of the Ministry of Labour and Social Policy.

This is not the right approach. Expenditures must be transparent and the law must clearly state who will receive additional funds and for what purpose. This is the logic to have a budget adopted by law, and not for all public money to be handed to the government at the beginning of the year and the government to be left to spend 30 billion during the year, as it sees fit. That is the reason why we have laws and budgets, to have a clear account of who is spending what.

I support the idea that the State should make timely payments to business. Anyone who has done his job properly should get paid on time. But not only the State but municipalities are important because they owe much more and it is small and medium-sized companies they owe and these suffer the most in times of crisis.

What is indicative of this law? The most apparent lack is precisely in relation to the obligations of the municipalities. There is not a word about them neither in the motives, nor in the Government interpretation. To me this is rather strange and illogical, and I believe that it is also contrary to the intentions announced by the State to repay the business. I therefore ask the question - what business? The law does not provide the answer.

This issue has received the same treatment. Some additional funds are allocated for unforeseen costs which will be distributed by the Council of Ministers as it sees fit. This circumvents one of the most important principles of the rule of law. Costs of public authorities must be allocated according to legislation so that the general public is aware of how much is spent and for what purpose. I hope that the National Assembly will write how much a particular government body owes to business as well as the necessary funds to be provided under the relevant items in the budget.

Without repeating the same arguments, I confirm that they are also valid in respect of obligations for VAT refunds. It is not that complicated The Ministry of Finance announces how much is due for VAT and these funds are allocated respectively in the budget of the Ministry. Otherwise, we can hardly talk about transparency. Accumulation of hundreds of millions in contingency reserve gives reasons for doubt.

What are the motives stated by the inscribers of this law? More money is needed for VAT repayment to business and for social needs. Okay, tell me which of these costs are additional and which can be classified as unforeseen? Which of these? VAT refund is payment to business, is it not? I believe that when expenditures are set out in the specific items, it will be much better in terms of transparency and reliability in the management of public resources.

I am also imposing a veto on texts that are related to the statutory opportunity to take a new government loan amounting to 1 billion Lev I do not object to taking a loan of 1 billion or maybe 2 billion, however I object if this debt is not used to generate economic growth and to create jobs, i.e. it is not used for policies and reforms for employment and competitiveness, but this loan of 1 billion used to finance current expenditure only. Then I object.
 
I believe that the path we need to follow in order to accumulate wealth and earn the money to pay back the debt is not to simply transfer it to the next generation, but to earn it through competitiveness and reforms. I believe that funding current expenditures with this loan is detrimental in the long run. There are many countries in crisis, which can serve as an example. It is not good to follow this path. So I object not to taking a loan of One billion, but to the way it is planned to be spent, namely to finance current expenditure.

I believe that the main task of each of us as responsible statesmen is to work, not towards increased spending and deficit and debt, but towards the growth of our economy and gross national product. And, of course, spending and deficit must be kept under control. This is the right approach. I believe that we will all unite around this, and I believe that the culture of stability in Bulgaria will be preserved.

These are my arguments. They are principled. They are not the result of any political games or hidden intentions. With this veto I strictly adhere to my constitutional powers. In recent days I have heard analyzes of what is right and what isn’t, what can be done and what should not be done. I heard, of course “territorial interests” being mentioned – what is the prerogative of the government and what isn’t. Our constitution provides clear answers to all these questions, namely that the President has the right to veto all laws not only when they are in conflict with the Constitution, but also where appropriate.

The Constitution provides for the separation of powers and the principle of power deterring power. Not as an end in itself, but as the only way to guarantee the interests of the people, who have been protesting since February. The people have been protesting since February against monopolies, including, I trust, against the monopoly of power. It is better to have a balance of power and it is good to hear the arguments of each and everyone. And eventually everyone will be responsible within their own competence.

Despite attempts in recent months to transfer to me the responsibility for many issues and almost everything with which the government is currently unable to cope, I will not hesitate and will continue to work in future with arguments and according to the Bulgarian Constitution. Today a campaign of vilifying, and delegitimizing of the head of State is taking place. I will bear all this in the name of the people, in the name of an active civil society that has the right to be informed when the State is spending billions of its money.

Returning the budget for reconsideration is not a precedent. President Zhelev also made a similar action in 1996 I trust that my arguments will be heard without hysteria and unnecessary confrontation and that reconsideration will take place in parliament to finalize the revision with responsibility and transparency.
    
Thank you!