Bulgaria Plans Record Deficit in Its 2026 Budget

The Bulgarian government’s draft budget for 2026 is already sparking heated political debate even before it has been approved. With a planned budget deficit of 5.7% of gross domestic product, the draft significantly exceeds the 3% deficit limit set by the European Union in the Stability and Growth Pact. Opposition parties accuse the government of breaking its promises of fiscal discipline and reforms.

The draft budget, presented on June 24 by Finance Minister Galab Donev, is the first major fiscal policy initiative of Prime Minister Rumen Radev’s government, which took office after the April parliamentary elections with a promise to chart a new course away from that of previous governments.

The draft calls for a budget deficit of 7.2 billion euros—nearly twice as high as in the previous government’s controversial budget proposal. According to current projections, Bulgaria is not expected to return to compliance with the EU deficit limit until 2028.

Since the country has not yet passed a budget for 2026 following the collapse of the previous government, it continues to operate on the basis of the 2025 spending plan.

Finance Minister Donev defended the draft. According to government figures, without countermeasures, the deficit would have reached as high as 7.4% of GDP this year. Nevertheless, the new target is significantly higher than the European Commission’s forecast of 4.1% and represents a deterioration compared to the 3.5% deficit in 2025.

According to government plans, the deficit is set to fall to 3.8% in 2027 and will not drop below the EU limit of 3% until 2028. Bulgaria is thus likely to remain under heightened fiscal scrutiny by Brussels for several more years.

Rising Debt and Criticism from the Opposition

The budget calls for revenues of 49.6 billion euros and expenditures of 56.8 billion euros. According to Donev, part of the increase in spending is attributable to obligations that have already arisen but have not yet been settled—including liabilities of the Road Infrastructure Agency totaling more than 1.1 billion euros.

Public debt is projected to rise to 37.7 billion euros, or about 31% of gross domestic product, by the end of 2026. By 2028, it could exceed the 50 billion euro mark for the first time.

The opposition reacted immediately with sharp criticism. Ivaylo Mirchev, co-chair of the Democratic Bulgaria party, described the draft budget as lacking reforms and inflationary. His party is calling for the draft to be withdrawn and for a new budget to be presented with a deficit of no more than 3% of GDP.

The conservative GERB party also accused the government of hypocrisy. They pointed out that these same political forces had themselves sharply criticized similar budget plans in the past.

Few Reforms on the Revenue Side

The draft contains only limited measures to increase government revenue. The government expects additional revenue from, among other things, a new tax on online gambling intermediaries, as well as from higher tolls and an increase in the tobacco tax.

Despite earlier announcements to streamline the government apparatus, personnel expenditures remain virtually unchanged at around 12.4 billion euros.

Instead, savings are to be achieved through changes to public sector compensation systems, stricter controls on social benefits, and cuts to certain government subsidies and procurement expenditures.

The draft budget will now be submitted to parliament. There, an intense debate is likely to ensue over how Bulgaria intends to reconcile its growing expenditures with the European Union’s fiscal rules.