Inflation

• Pages: 56-60

Revi ew of com pliance wit h t he Cha rgin g Sche me of t he Si ngle Eur opean Sky in Bulgar ia

2019 56/85

10 . I n flatio n

10 .1. Ov er est ima tio n of infla tio n

Inflation assu m ption s in t he or iginal RP2 p lan, based on IMF forecasts56 , prov ed t o be

signi fican tly at var iance w ith act ual inflat ion a s shown in the t able b elow.

Ta ble 10 - 1 : I n fla tio n r at e5 7 - Ac tua l v s Re vise d a nd Ori gin al P er for ma nce Pla n

I nf lat ion (% ) 2012 2013 2014 2015 20 1 6 2017 2018 2019

Ori ginal Perf orm ance Plan 3.70 2.7 0 3.00 0. 93 1 .7 9 2. 20 2.2 0 2 .20

Revi sed Per form ance Plan 1.10 1. 20 1 .4 0

Actual 2. 40 0 .4 0 -1 .60 - 1.10 - 1.30 1.2 0 2 .60

Dif fere nce Act ual vs Original -1 .30 - 2.30 - 4.60 - 2.03 - 3.09

Dif fere nce Act ual vs Revised 0.10 1. 40

Act ual inflat ion was sig nifican tly lower than th e IMF for ecasts, including som e de flat ion

over 2014 – 2016. This m eant that n om inal cost s were n ot fu lly recovered with

consequent P&L ( Prof it and Loss) and cash flow implications for BULATSA. Also of note

wa s th at at the t ime of the plan’s revision , t here had been a cu mulat ive eff ect of actu al

inf lation being lower t h an t h e IMF forecasts since 2 012. The m agnit ude of this

cum ulat ive effect was t o be similar t o the cost of capit al, wh ich w as therefor e having a

significan t im pact on BULATSA’s r esources. Hence in the r ev ision of t he plan Bu lgar ia

argued t hat inflat ion should be based on the Bulgar ian Gov er nment 2016-20 19

forecast s.

Ta ble 10 - 2 : I n fla tio n i nde x – Act ua l v s Re vise d a nd Orig ina l P erf orm an ce Plan 58

I nf lat ion in dex

(2 009 = 100 )

2012 2013 2014 2015 20 16 2017 2018 2019

Ori ginal Perfo rma nce Plan 111.9 115.0 11 8.4 11 0.1 11 2.1 11 4. 5 11 7. 0 11 9. 6

Revi sed Per form ance Plan 106. 9 1 08. 1 1 09.7

Actual 10 9.1 10 9.5 10 7. 7 10 6. 6 10 5. 2 106. 4 109. 2

Dif fere nce b etween Revised

and Orig inal Perf . Plan -7 .6 - 8.9 - 9.9

Dif fere nce b etween Actua l

and Orig inal Perf . Plan -2.8 -5 .5 -10. 7 -3.5 -6 .9 - 8.1 - 7.8

Dif fere nce b etween Actua l

and Revised Perf . Plan -0 .5 1 .1

56 I nt ern ati ona l Mon et ary Fund Ap ril 20 14 for ecast . S our ce: Dan ube FAB RP2 Perfo rm ance Plan. 18 Jun e 20 14 .

57 ‘O rigin al’ p lan f rom ESSKY Enr oute Report ing tab les fo r Bul gari a dat ed 1 1/1 1/ 2015 , ad ded o n 31 /0 5/2 016

as r ecord D15 6; ‘Revise d’ pl an fr om ESSKY Enrou te r epor ting tab les f or Bu lgari a dat ed 3 1/ 10/ 2018 reco rd

D2336.

58 ESSKY Enrou te Repo rt ing ta bles for Bu lgar ia dat ed 11/ 1 1/ 20 15 (or igi nal per for ma nce plan ) and 31 /1 0/ 20 18

(a ctua l fig ure s).