The European Commission has asked Bulgaria to explain how it will comply with the agreed spending limits in 2027. The reason is an accumulated deviation from the fiscal plan undertaken, although the projected growth in net expenditure for next year is below the permissible threshold.
In a letter to the Bulgarian authorities dated October 26, the Commission states that, according to the data submitted by the country, net expenditure will increase by 10.1% in 2026, compared with a recommended maximum of 4.2%. For 2027, the forecast is for growth of 1.3%, compared with an allowable 3.4%.
The problem for Brussels is the accumulated effect compared with the 2025 baseline. It is calculated at 1.1% of gross domestic product. After taking into account the flexibility under the national derogation clause and the planned defense spending, the deviation amounts to 0.6% of GDP.
Warning over the excessive deficit procedure
The European Commission has requested information on the factors driving the increase in net expenditure in 2027, as well as assurances that the recommendations of the Council of the European Union will be implemented. The Bulgarian authorities have been asked to respond by November 2.
The Commission warns that at a later stage it may conduct a comprehensive assessment of the measures taken. If it is established that Bulgaria has not taken effective steps to contain spending, the excessive deficit procedure may be intensified. The European Commission defines the country's status as follows: “Bulgaria is under an excessive deficit procedure.”
What the Finance Ministry proposes
In his response, Finance Minister Galab Donev points out that 2026 began without an adopted state budget. According to him, this limited the possibilities for controlling the growing expenditure.
As a measure for 2027, 10% of the funds earmarked for ministries, agencies and other structures are to be withheld until November. They may be released after that deadline only if doing so does not lead to a further increase in the budget deficit.
Bulgaria must gradually bring its deficit below 3% of GDP by 2029. The European Commission's final assessment of the budget plan is expected on November 24. It will then become clear whether the explanations and measures presented will be accepted or whether additional spending restrictions will be necessary.
Sources: focus-news.net