ECONOMIC POLICY ANALYSES Fiscal Policy and Management of the Fiscal Deficit Implications and Conclusions for Bulgaria Kalin Marinov The paper elaborates on some basic aspects of fiscal policy and the origins of fiscal deficits, as well as the threats to its management caused by internal or external crisis. It explores the background on how the economic crisis evolved into a fiscal one in the countries of Central and Eastern Europe and looks into the instruments and ap ­proaches of the Bulgarian crisis management. On the basis of the budget proposed for Bulgaria 2011 three possible scenarios are analysed. Despite chances for a moderate economic revival a growing threat of running into a period of constantly high fiscal deficit remains. In the long-term the focus of the fiscal policy should remain on preserving social welfare and additional efforts should be made to strengthen the long-tem planning rather than on balancing the budget. Future outlines of the Bulgarian fiscal policy strongly depend on the indispensable reforms in the pension and healthcare systems. Any further delay in their implementation increase the risk for dampening recovery and growth. November 2010