世界银行-保加利亚公共财政评论2023（英）-2023.12

BulgariaPublicFinanceRev

i

ew2023December,

2023©2023InternationalBankforReconstructionandDevelopment/TheWorld

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Washington,DC20433,USA;fax:202-522-2625;e-mail:pubrights@.Table

ofContentsAcknowledgmentsAbbreviationsvviExecutive

SummaryviiiChapter

1.Fiscal

Policy

Developments

and

ChallengesMacroeconomiccontext12Overallfiscaltrends4Governmentrevenues8GovernmentexpendituresGovernmentdebtFiscalrisksExplicitdirectliabilitiesExplicitindirectliabilitiesImplicitdirectliabilities1015171717192020IndirectimplicitliabilitiesRisksstemmingfrombusiness-cycledynamicsChapter

2.

Government

Revenue

Trendsand

VAT

Gap

AnalysisTotal

revenuetrendsBottom-upestimationoftheVAT

reportinggapinBulgariaVAT

gapestimationmethodologyforBulgariaDatadescription26273638383840VAT

gapestimationresultsPolicytakeawaysfrombottom-upVAT

gapstudyChapter

3:

Fiscal

Spending

Efficiency

and

EffectivenessRecentdynamicsinbudgetspendingFiscalspending:EfficiencyanalysisSpecialFocus3.1.

EfficiencyandeffectivenessofspendingoneducationSpecialFocus3.2:Efficiencyandeffectivenessofsocialspending,includingforaddressingchildpoverty4243454953AnnexesAnnex1:ModelforBulgaria’sDSAAnnex2:OutputGapAssessment596061Annex3:MethodologicalNoteonStudyofEducationSpendingEffectiveness

62Annex4:RigidityClassificationofBudgetExpenditureAnnex5:OptimizingSpendinginBulgarianPublicProcurement:AStrategicSourcingAnalysisAnnex6:MatrixforFiscalRiskAnalysisAnnex7:

HealthTaxes’

SimulationResults67687677iList

ofFiguresFigure

ES.1.Generalgovernment

budgetbalanceoncashbasis(MoF)andaccrual

basis(Eurostat)viiiviii2FigureES.2.Figure

1.1.Figure

1.2.Figure

1.3.Generalgovernmentdebt(ESA

2010)Contributions

toBulgarian

growthBulgaria’s

HICPinflation,monthly

y/y%2Increasedrevenues

havehelpedsupport

the

fiscalbalanceandpartlyoffset

the

dragfromhigherexpenditures5Figure

1.4.Governments

earmarkedfundingtoshieldhouseholdsandbusinessesfromthe

energycrisis,

with

Bulgariaprovidinga

largepackage(September2021to

November2022)59Figure

1.5.Figure

1.6.Figure

1.7.Figure

1.8.Figure

1.9.Figure

1.10.Figure

1.11.Figure

1.12.VAT

gapas%

ofthe

VTTL

inEU-28memberstates,2020and2019Taxes

andbenefitsbydecile,MIPP101112121313GeneralgovernmentexpendituresHighrigidity

versusincomeMomentumbyrigidity

categoriesMomentumbyfunctionalexpendituretypeCyclicalityoffiscalpolicystance,2016–21Generalgovernmentspending–

nationalbudgetandEUfundscomponents141515151618Figure

1.13.Figure

1.14.Figure

1.15.Figure

1.16.Figure

1.17.Figure

1.18.Monthly

budgetexpenditureGrossgovernmentdebtPrimary

balanceDecompositioninthe

changeofpublicdebt-to-GDPratioPublicguaranteeddebtBulgaria’s

gross

governmentdebtscenario

accountingforriseinaging-relatedspending1923282828283030Figure

B1.1.1.

FiscalmultiplierestimatesFigure

2.1.Figure2.2.Figure2.3.Figure2.4.Total

general

government

revenues,2022Revenue

composition,2022Tax

revenues,2022Statutoryrates,2021Figure

B2.1.1.

Decomposed

WAP

andaffordability

ofcigarettesinBulgaria,

2013–22Figure

B2.1.2.

Tobacco

excisetaxrevenueinBulgaria,

2012–21Figure

B2.1.3.

Distilledspirits

excise

taxesinEUmemberstates(40percentABVper750ml),2023313133333434Figure

B2.1.4.

AlcoholexcisetaxrevenueinBulgaria,

2012–21Figure

B2.1.5.

Health

taxes-

simulationresults:salesFigure

B2.1.6.

Health

taxes-

simulationresults:taxrevenuesFigure2.5.Figure2.6.Tax

composition,2021Tax

composition,2021iiFigure

2.7.Figure2.8.Figure2.9.Figure

2.10.ITRs,2021353535DecompositionofITRonconsumption,2020VAT

gap,2019

and2020VAT

accountforaboutone-third

oftaxrevenuesinBulgaria—secondhighestinthe

EUafter

Croatia37Figure

2.11.ChangeinactualVAT

revenue

components(in%,2020versus

2019)showsanimprovementincompliancein202037444445474748Figure

3.1.Figure3.2.Figure3.3.Distribution

ofannualfiscalexpenditure,averagefor2015–22Budgetexpenditures,centralgovernment

budgetCompositionofexpenditurebyfunctions,2015–22

averageFigure

B3.1.1.

Total

savingsassociatedwith

each

intervention,

Bulgaria2007–22Figure

B3.1.2.

Total

savingsassociatedwith

each

intervention,

Bulgaria2007–22Figure

B3.1.3.

Impactofthe

numberofbiddersonrelativeprices,

Bulgaria2007–22Figure

B3.1.4.

Impactofthe

length

ofadvertisementperiod

indays,Bulgaria2007–22

48Figure

B3.1.5.

Averagedecision-makingperiod

onrelativeprices,

Bulgaria2007–22Figure

B3.1.6.

Impactofmarketconcentrationonrelativeprices,

Bulgaria2007–224849Figure

SF3.1.1.

Educationspendingefficiencybyselectedperformance

indicators,DEAfrontieranalysis50Figure

SF3.1.2.

Educationspendingefficiencybyselectedperformance

indicators,DEAfrontieranalysis505151Figure

SF3.1.3.

QualityofeducationsystemFigure

SF3.1.4.

PotentialgainsinqualityofeducationsystemFigure

SF3.2.1.

Income-basedpovertyrate,upper-middleincome(UMI)povertyline($6.85perday,

2017PPP),SelectedEUcountries,

202053535454FigureSF3.2.2.

AROPrate,children

versusadults,2021FigureSF3.2.3.

Socialprotectionspending,averagefor2016–21FigureSF3.2.4.

Socialprotectionspending,averagefor2016–21Figure

SF3.2.5.

ChangeinGinicoefficientasa

resultoftaxesandtransfers,Bulgaria

versusother

EUcountries

(2020,unlessspecifiedotherwise)555757FigureSF3.2.6.

Impactofdifferent

fiscalpolicymeasuresonchild

poverty,2020Figure

SF3.2.7.

Bulgaria

2020:headcountpoverty

bynumberofchildrenFigure

A3.1.FigureA3.2.FigureA3.3.Dynamicimpactofthe

changeinthe

transferallocationrulesinthe

spendingperstudent6464Dynamicimpactofthe

changeinthe

transferallocationrulesinmath

testandlanguagetestrespectivelyfor7th

grade

studentsDynamicimpactofthe

changeinthe

transferallocationrulesinlanguagetestfor12th

grade

students6571Figure

A5.1.FigureA5.2.Total

savingsassociatedwith

each

intervention,

Bulgaria2007–22Total

percentage

savingsassociatedwith

each

intervention,Bulgaria2007–227172FigureA5.3.Impactofthe

length

ofadvertisementperiod

(indays)onrelativeprices,Bulgaria2007–22Chapter1.FiscalPolicyDevelopmentsandChallengesiiiFigureA5.4.

Impactofaveragedecision-makingperiod

length

(indays,perbuyer-year)onrelativeprices,

Bulgaria2007–227273FigureA5.5.

Impactofbiddernumberonrelativeprices,

Bulgaria2007–22FigureA5.6.

Distribution

ofthe

databynumberofbidders(categories),Bulgaria2007–227374Figure

A5.7.

Impactofmarketconcentrationonrelativeprices,

Bulgaria2007–22List

ofTablesTable

2.1.Table2.2.Sampleandpopulationcountsbyauditstatusandfirm

size3839BreakdownofbaselineVAT

reporting

gapestimatesbyrefund/balanceduestatusandtaxpayersize,(BGN,millions)(noncompliancerateinparentheses)Table2.3.BreakdownofbaselineVAT

reporting

gapestimatesbyrefund/balanceduestatusandregion(BGN,millions)(noncompliancerateinparentheses)406263Table

A3.1.

Associationbetweenspendingperstudentandlearning

for7th

graders

atthe

municipallevelTableA3.2.

Associationbetweenspendingperstudentandlearning

for12th

graders

atthe

municipallevelTableA3.3.

Impactofthe

changeineducationresourcestransferrules

ontesttakerssocioeconomiccharacteristics6566707777TableA3.4.

Sociodemographic

characteristics

ofstudentsTable

A5.1.

Summary

ofsavingsinterventionsTable

A7.1.

Cigarette

excisetaxsimulationresultsTable

A7.2.

AlcoholexcisetaxsimulationresultsList

ofBoxesBox

1.1.Box

2.1.Box

3.1.EstimatingfiscalmultipliersforBulgariaHealth

excise

taxesinBulgaria222947FiscalcostofnoncompetitivepublicprocurementivBulgaria

PuBlic

Finance

review2023AcknowledgmentsThe

Public

Finance

Review

for

Bulgaria

has

been

co-authored

by

Desislava

Nikolova(Senior

Economist,

EECM2)

and

Collette

Mari

Wheeler

(Senior

Economist,

DECPG).Several

background

notes

and

analyses—to

be

published

either

as

separate

docu-mentsorasannexesto

themainreport—fedintoitsfindings:1.

Bottom-Up

Estimation

of

the

VAT

Reporting

Gap

in

Bulgaria,

by

Brian

Erard(Consultant)2.

Reassessing

Welfare

Impacts

of

Bulgarian

Fiscal

Policy

througha

Child

PovertyPerspective,by

MonicaRobayo(SeniorEconomist,EECPV)andMaynorCabre-ra(Consultant)3.

Bulgaria’s

Health

Taxes

-

Overview,

Trends,

and

Simulation

Results

for

PotentialOptimizationofHealthTax

Levels,by

EvanHaroldBlecher(Consultant)4.

Optimizing

Spending

in

Bulgarian

Public

Procurement:

A

Strategic

SourcingAnalysis,

by

Mihaly

Fazekas

(Consultant),

Bence

Tóth

(Consultant),

ZdravkoVeljanov

(Consultant),andViktoriiaPoltoratskaia(Consultant)5.

EducationSpendingandLearninginBulgaria,by

JuanBedoya(Consultant)6.

EstimationsoftheOutputGapandFiscal

Multipliersby

Franz

UlrichRuch(Se-nior

Economist,

EMFTX),

Sergiy

Kasyanenko

(Economist,

ECACE),

Lorez

Qeha-ja(Consultant),andKaltrinaTemaj

(ResearchAnalyst,DECPG).Chapter

3

on

Fiscal

Spending

Efficiency

and

Effectiveness

benefited

from

close

co-operation

with

Massimo

Mastruzzi

(Senior

Economist,

EMFTX)

and

John

Nana

Dar-koFrancois

(Economist,

EMFTX)

who

provided

valuable

dashboard

inputs

and

peercomparisondatabasedontheBOOST1

databaseoffiscaldata.External

communication

was

advised

by

Ivelina

Todorova

Taushanova

(Senior

Ex-ternal

Affairs

Officer,

ECREX),

while

Sylvia

Stoynova

(Operations

Officer,

ECCBG)helped

with

the

internal

process.

Adela

Ivanova

Delcheva

Nachkova

(OperationsAssistant,

ECCBG)

provided

logistical

and

administrative

support.

The

projectwas

guided

by

Gallina

Vincelette

(former

Country

Director,

ECCEU),

Marina

Wes(Country

Director,

ECCEU),

Lasse

Melgaard

Resident

Representative,

ECCBG),Jasmin

Chakeri

(Practice

Manager,

EECM2),

and

the

Country

Management

Unitand

has

benefited

from

both

internal

and

external

reviews.

The

team

is

gratefulto

the

input

provided

by

the

National

Revenue

Agency,

which

made

possible

thebottom-up

estimation

of

the

value-added

tax

(VAT)

gap

in

Bulgaria,

as

well

as

thefeedback

received

from

the

Ministry

of

Finance

(MoF)

which

helped

fine-tune

thefinalsynthesisreport.___________________________________1

BOOST

Open

Budget

Portal:

Facilitating

Accessand

Use

of

Micro

Fiscal

Data

(https://www.worldbank.org/en/programs/boost-portal)Chapter1.FiscalPolicyDevelopmentsandChallengesvList

ofabbreviationsAEAdvancedEconomyAMECOAROPBDACEQCOFOGDEADSAAnnualMacroeconomicDatabaseoftheEuropeanCommissionAt-Risk-of-PovertyBudgetDeviationAnalysisCommitmentto

EquityClassificationoftheFunctionsofGovernmentDataEnvelopeAnalysisDebtSustainabilityAnalysisEBRDECEuropeanBankforReconstructionandDevelopmentEuropeanCommissionECBEuropeanCentralBankEDISEMDEsEUEuropeanDepositInsuranceSchemeEmergingMarketsandDevelopingEconomiesEuropeanUnionGCSGlobalCompetitivenessSurveyGrossDomesticProductGDPGFCGlobalFinancialCrisisGMIGuaranteedMinimumIncomeHumanCapitalIndexHCIHICPIBRDIMFHarmonizedIndexofConsumerPricesInternationalBankforReconstructionandDevelopmentInternationalMonetaryFundImplicitTax

RateITRMIPPMoFMNENACENRANRRPOECDOLSMarketIncomePlusPensionsMinistryofFinanceMultinationalEnterpriseNomenclatureofEconomicActivitiesNationalRevenueAgencyNationalRecoveryandResiliencePlanOrganizationforEconomicCo-operationandDevelopmentOrdinaryLeastSquaredPFRPublicFinanceReviewPIMPublicInvestmentManagementviBulgaria

PuBlic

Finance

review2023PITPersonalIncomeTaxPPPPurchasingPower

ParityRelativeIncomePriceRIPRRFSFARecoveryandResilienceFacilityStochasticFrontierAnalysisSmallandMediumEnterprisesState-OwnedEnterpriseSingleResolutionMechanismSugar-SweetenedBeverageSingleSupervisoryMechanismTenders

ElectronicDailyUpper-Middle-IncomeSMEsSOESRMSSBSSMTEDUMIUMICVARVATUpper-Middle-IncomeCountryVector

AutoregressionValue-AddedTaxVTTLWAPWDIWEFWEOVAT

True

Tax

LiabilityWeightedAverage

PriceWorld

DevelopmentIndicatorsWorld

EconomicForumWorld

EconomicOutlookviiExecutive

SummaryBulgaria

has

traditionally

adhered

tofiscal

discipline

and

prudent

fiscal

policy

sincethe

introduction

of

its

currency

board

arrangement

in

mid-1997.

After

a

gradualdecline

in

the

2000s,

public

debt

has

remained

among

the

lowest

in

the

EuropeanUnion(EU),

hoveringin

a

narrow

band

between17

and

29

percent

of

gross

domes-tic

product

(GDP)

for

the

last10years

(figures

ES.1

and

ES.2).

The

low

level

of

pub-lic

debt

has

been

supported

by

relatively

low

fiscal

deficits

or

even

surpluses

in

someyears.

This

has

helped

the

fiscal

system

absorb

recent

shocks

relatively

unscathedand

provided

sufficient

fiscal

space

to

address

emerging

crises

and

limit

the

scarringoneconomicactivity,thelabormarket,andincomes.Figure

ES.1.

GeneralgovernmentbudgetbalanceFigure

ES.2.

Generalgovernmentdebtoncashbasis(MoF)andaccrualbasis(Eurostat)3.33.12.82.72.767.52.11.81.61.61.5

1.6

1.70.81.31.11.40.70.20.20.10.00.00.30.00.1-0.4-0.7-0.6-0.6

-0.6-1.1-0.9-0.8-1.0-0.8-1.7-1.8-1.8-1.9-2.8-2.9-2.7-2.922.6-3.7-3.8-3.7-3.8-4.0-4.4-5.4a

ccrualbasis

(eSa2010,eurostat)cash

basis

(MinFin)Source:

Eurostat,

MoF,

NSI,

owncalculations.Source:

ESA(2010);

Eurostat.Note:

MoF

=

Ministry

of

Finance.

The

MoF’s

budget

execution

data

are

compiled

on

acash-basis

methodology;

Eurostat’s

statistics

use

accrual

basis.Similar

to

its

EU

peers,

Bulgaria

saw

its

fiscal

position

worsen

following

theCOVID-19

outbreak

and

the

ensuing

Russian

invasion

of

Ukraine,

which

called

forfiscalsupport

measurestomitigatethe

pandemicandcost-of-livingshocks.

Yet,

thedeterioration

of

the

fiscal

stance

was

moderate

by

EU

standards

as

the

deficit

didnot

exceed

4

percent

of

GDP

in

any

of

thecrisis

years.

Nevertheless,

theslow

phas-ing

out

of

certain

crisis

mitigation

measures

has

kept

the

fiscal

deficit

relatively

highin

2022

(at

2.9

percent

of

GDP)

and

is

settokeepexerting

pressure

in

2023

as

well.Going

forward,

fiscal

policy

would

need

to

remain

prudent

in

view

of

Bulgaria’smedium-termeurozoneaccessiontargetandfiscalrulesintheEUmorebroadly.viiiBulgaria

PuBlic

Finance

review2023Bulgaria’s

public

finances

will

need

to

be

placed

on

stronger

footing

to

weather

thesharp

slowdownin

growth

that

is

under

wayandtomeetfiscal

targetsrelatedtoeu-rozone

accession.

However,

medium-term

consolidation

plans

will

need

to

be

care-fully

balanced

with

longer-term

development

and

public

service

needs.

To

this

end,consolidation

in

the

medium

run

would

require

rapid

withdrawal

of

the

remainingsupport

measures

and

renewed

attention

to

strengthening

revenue

collection

andexpenditure

efficiency.

Paced

absorption

of

a

significant

EU

fund

envelope

for

Bul-garia

under

the

NextGenerationEU

facility

and

the

Multiannual

Financial

Frame-work

would

also

help

generate

much-needed

resources

for

public

investment

in

do-mainswith

highneedssuch

asthe

green

anddigitaltransition.InBulgaria,meetingfiscal

deficit

targets

has

often

come

at

the

expense

of

capital

spending,

which

haslikelyhindereddevelopmentgoalsandprolongedincomeconvergencewiththe

EU.Over

the

longer

term,

fiscal

policy

in

Bulgaria

will

face

the

challenges

of

slowing

eco-nomic

growth

and

adverse

demographic

trends,

which

will

require

deeper

structuralreforms

to

sustain

the

growing

bill

of

some

of

the

most

expensive

public

sectors—thepay-as-you

go

pension

system,

health

care,

long-term

care,

and

education.

The

ma-terialization

of

certain

sources

of

fiscal

risks—such

as

large-scale

natural

disasters—could

also

trigger

fiscal

sustainability

concerns

and

call

for

urgent

operationalizationofpreventive,earlywarning,andmanagementsystems.This

report

provides

fresh

evidence

on

Bulgaria’s

fiscal

landscape

and

some

of

thekey

issues

that

fiscal

policy

may

need

to

address

going

forward.

To

start

with,

thereport

looks

at

opportunities

to

increase

revenue

collection

with

two

special

focus-es—the

value-added

tax

(VAT)

compliance

gap

and

health

taxes

(excises

on

tobac-co

and

alcohol

products).

A

novel

bottom-up

study

on

Bulgaria’s

VAT

gap

indicatesthat

top-down

VAT

gap

estimates

for

Bulgaria

may

be

too

low

and

there

may

be

agreater

scopeforincreasingVAT

revenuesthrough

improvementstoauditprocessesand

other

compliance-oriented

activities.

The

bottom-up

estimates

provide

evidenceon

taxpayer

groups

for

which

the

rate

of

VAT

noncompliance

is

relatively

high.

Forinstance,

taxpayers

reporting

a

net

balance

due

tend

to

have

a

higher

estimatedrateofnoncompliancethanthosewhoclaimarefund.Amongthosereportinganetbalance

due,

theestimated

rate

of

noncompliance

is

particularly

high

among

medi-um-size

businesses

and

companiesthat

operate

in

certain

sectors(including

variousservices;

professional,

scientific,

and

technical

activities;

agriculture,

forestry,

andfishing;

and

companies

that

fail

to

report

their

sector

of

operation).

The

bottom-upstudy

indicates

thataudits

are

already

effectively

addressing

certainpockets

of

VATnoncompliance,thoughtherearepotentialwaysto

refineauditprogramsandothercompliance

activities

both

to

achieve

a

higher

voluntary

rate

of

compliance

and

torecoveralargershareofunreportedtaxes.Health

taxes

represent

another

source

of

tax

revenue

thatis

currently

not

exploitedoptimally

in

Bulgaria.

Even

if

health

taxes

are

a

relatively

significant

contributor

totaxrevenueinBulgaria—accountingfor2.3percentofGDPand7.1

percentoftotaltax

revenues—Bulgaria

ranks

at

the

bottom

in

the

EU

in

terms

of

its

excise

rateson

tobacco

products,

spirits,

and

beer

аnd

zero

taxation

on

wine.

Moreover,

realincome

growth

and

few

changes

in

the

excise

rates

in

recent

years

have

resulted

inincreased

affordability

of

such

products,

undermining

health

goals.

Our

simulatione

xecut

ive

Summaryixresults

show

that

under

an

ambitious

health

tax

reform

scenario,

reformed

healthtaxes

could

bring

0.3

percent

of

GDP

more

revenue

while

reducing

consumption

ofalcoholandtobaccoproducts.In

parallel

to

potential

measures

to

strengthen

tax

revenue

collection,

Bulgaria’spublic

financial

management

could

benefit

from

improved

efficiency

and

effective-ness

of

spending.

Noncompetitive

practices

in

public

procurement

are

a

significantsource

of

inefficiencies

and

squandering

of

public

resources.

New

World

Bank

anal-ysis

estimates

potential

savings

of

5.3

percent

of

the

total

value

of

public

procure-ment

contracts

(2007–22)

if

competition

in

procurement

is

enhanced

and

the

tenderprocess

is

improved.

The

largest

impact

in

terms

of

potential

savings

can

be

achievedby

increasing

the

number

of

bidders

who

participate

in

the

bidding

process.

Otherpolicy

interventions

that

could

help

increase

competition

and

achieve

better

priceoutcomes

in

public

procurement

are

the

increase

of

small

and

medium

enterprise(SME)

participation,

elimination

of

short

advertisement

periods,

optimization

ofdecisionperiods,andexpansionofthe

supplierbaseby

breakingupmarketconcen-tration.In

addition

to

curbing

inefficiencies,

fiscal

policy

also

needs

to

improve

the

effec-tiveness

of

spending

in

key

public

domains,

such

as

education.

A

new

study

on

theeffectiveness

of

fiscal

spending

in

termsof

student

results

shows

a

negative

relationbetween

student

test

scores

and

the

amount

of

fiscal

spending

on

education

(percapita).

This

result

reinforces

earlier

findings

on

the

input

approach

of

Bulgaria’seducation

spending,

in

contrast

to

the

concept

of

results-based

or

output-orientedfinancing

of

education.

The

scheme

of

transfers

to

municipalities,

adjusted

in

2018to

address

inequities,

is

based

on

criteria

that

reflect

the

challenges

in

the

provi-sion

of

the

educational

service

(input

approach).

As

a

result,

municipalities

with

themost

socioeconomic

difficulties

receive

the

greatest

allocation

of

resources

per

stu-dent.

Moreover,

thesocioeconomic

characteristics

of

thestudents

and

their

contextare

solid

predictors

of

learning,

meaning

that

students

in

municipalities

with

morechallenges

in

providing

the

educational

service

have

lower

learning

outcomes

onaverage.

The

study

also

demonstrates

thelackof

improvement

in

student

outcomesdespite

the

recent

increase

in

education

sector

spending,

with

the

results

being

ro-bustacrossdifferentmeasuresoflearning.Socialspendingeffectivenessinreducingheadlinepovertyandchildpovertyinpar-ticular

also

requires

urgent

attention

from

policy

makers.

An

updated

fiscal

incidenceanalysis

shows

that

Bulgaria’s

fiscal

system

has

a

limited

impact

on

overall

poverty;neitheris

it

effective

in

addressing

childpoverty,

as

it

reduces

it

by

just

0.3

percent-agepoints.

Some

household

types

face

heightened

vulnerability

as

they

do

not

seemto

receiveoptimalsupportfromfiscalmeasures,includinghouseholdswiththreeormore

children

and

lone-parent

households,

especially

those

headed

by

lone

females.Yet,

some

social

programs,

such

as

the

means-tested

programs

targeting

families

andchildren,

play

a

significant

role

in

mitigating

child

poverty.

Microsimulation

resultssuggestthat

increasing

child

income

tax

deductions

among

low-incomeparents

andrefiningthe

designofchildbenefitstoimprovetargetingeffectivenessandgenerosi-tycannotablycontributeto

childpovertyreduction.xBulgaria

PuBlic

Finance

review2023Chapter

1.FiscalPolicyDevelopmentsandChallengesChapter1.FiscalPolicyDevelopmentsandChallenges1Macroeconomic

contextBulgaria’s

recovery

from

the

pandemic

slowed

in

the

ongoing

effects

of

monetary

policy

tightening

in2022

alongside

weakening

ext