Bulgarian parliament OKs joining EU pact with conditions

(SOFIA) - Parliament in non-eurozone Bulgaria voted Friday to join an EU budget pact for tighter discipline but with conditions regarding tax policy and exemption from certain financial obligations.

"Bulgaria's parliament supports joining the treaty on stability, coordination and governance in the economic and monetary union... without financial obligations and engagements to harmonise its tax policy with its other signatories until joining the eurozone," the parliamentary decision read.

Another "key issue" for Sofia was for all non-member countries who join the treaty, like Bulgaria, to obtain observer status in eurozone talks, Foreign Minister Nikolay Mladenov told lawmakers.

However, this was not listed as a condition in the parliamentary decision.

Mladenov said earlier this month that Bulgaria would not undertake any obligations which require additional contributions to the IMF or other mechanisms linked to the stability of the euro.

Mladenov insisted that observer status was important for Bulgaria's further integration within the European Union and highlighted the country's good fiscal record, which could benefit the eurozone.

Bulgaria wrapped up 2011 with one of the best ratios of national debt to economic output in the 27-member EU, at 16.0 percent.

The budget deficit also fell to just 2.1 percent of output last year, with the government aiming to lower it further to 1.3 percent in 2012, followed by a balanced budget in 2013.

In a move to buttress fiscal stability, parliament also adopted last year new rules to limit government expenditure to 40 percent of output and cap the public deficit at 2.0 percent as of 2012.

The EU's poorest member, Bulgaria has held firm on a pledge to keep unchanged its 10-percent income and corporate tax rate -- the lowest in the EU -- in an attempt to boost foreign investment and raise living standards.