The Government approved the draft Law on the State Budget of the Republic of Bulgaria for 2026, as well as the Updated Medium-Term Budget Forecast for the period 2026-2028 (AMBF 2026-2028), representing the reasons for the draft law on the State Budget of the Republic of Bulgaria for 2026.
The 2026 Budget was prepared in accordance with the adopted first National Medium-Term Fiscal and Structural Plan of the Republic of Bulgaria for the period 2025-2028, which contains policies, priorities, reforms and investment plans in the medium-term horizon, respectively, the same were also reflected in the national budget documents. In terms of fiscal policy, the priority remains to ensure the long-term sustainability of public finances in order to increase confidence in the country and create a predictable investment and business environment.
In connection with the introduction of the euro from January 1, 2026, the information and documents on the budget procedure for 2026 have been prepared in euros at the official exchange rate in accordance with Art. 5 of the Law on the Introduction of the Euro in the Republic of Bulgaria - 1.95583 leva for 1 euro.
The estimates for the period 2026-2028 reflect the trends in the autumn macroeconomic forecast for the development of the national economy, the main assumptions and the estimates of the effect of revenue and expenditure discretionary measures.
The macroeconomic forecast for the period, prepared by the Ministry of Finance (MoF), predicts economic growth of up to 2.7% in 2026. In the period 2027-2028, GDP growth is expected to be within 2.5-2.4%. Average annual inflation for 2026 is expected to be close to that in 2025 - 3.5%. Average annual inflation will slow down to 2.9% in 2027 and to 2.5% in 2028.
The size of the budget balance under the consolidated fiscal program (according to the national methodology on a cash basis), expressed as a share of GDP, for 2026 is a deficit of 3.0% of GDP. Maintaining the deficit level within the limits guarantees the provision of a number of spending policies, backed by the relevant revenue measures. The deficit of the “General government“ is also 3.0% of GDP for 2026.
Based on the assumptions for the period 2026-2028, the government debt is projected to reach EUR 37.6 billion (31.3% of GDP) in 2026, EUR 43.5 billion (34.2% of GDP) in 2027 and EUR 49.0 billion (36.6% of GDP) in 2028. In 2026, the maximum amount of new government debt that can be assumed is up to EUR 10.44 billion, incl. up to 3.2 billion euros under the SAFE instrument to strengthen the European defense industry.
The minimum size of the fiscal reserve as of 31.12.2026 is set to be 2.4 billion euros.
During the period 2026-2028, revenues, grants and donations under the CFP as a share of GDP are respectively 42.8% of GDP in 2026 and 40.5% of GDP in 2027 and 2028, with the growth in 2026 compared to the expected level of 39.6% of GDP in 2025 being mainly due to the new revenue measures envisaged and the expected effect of such measures adopted in 2025. Tax policy will be oriented towards achieving macroeconomic and budgetary stability in the medium and long term and ensuring the necessary financial resources for the implementation of the government's spending policies. The main objectives of tax policy for the period are again aimed at maintaining economic growth, improving the business environment, combating tax abuse and increasing fiscal sustainability.
When forecasting tax revenues, the following proposals for amendments to tax legislation have been taken into account:
• Increase in the tax rate of the withholding tax withheld on income from dividends and liquidation shares from 5 percent to 10 percent in the Corporate Income Tax Act and the Personal Income Tax Act;
• Expanding the scope of goods subject to fiscal control, for which there is an obligation to pre-declare transport data;
• Expanding the system for electronic tracking of the movement of vehicles transporting goods with a high fiscal risk;
• Introducing an obligation for electronic reporting of sales revenues through the use of sales management software approved by the NRA in retail outlets;
• Continuing the effect of measures in tax legislation such as the new excise calendar for excise rates on tobacco and tobacco products introduced from 01.05.2025 in order to continue the practice of a balanced, phased increase in excise rates on tobacco and tobacco products;
• Continuation of the policy of using tax breaks for children and children with disabilities in 2026;
• Providing the opportunity for a more favorable depreciation regime for tax purposes for electric cars.
• Introduction of a tax relief, which recognizes for tax purposes an additional 25% of the costs of research and development under certain conditions.
From January 1, 2026, an increase in the taxation of gambling (of the variable part under Art. 30, para. 3 and 4 of the Gambling Act from 20 percent to 25 percent) is provided.
In order to ensure the sustainability of the social security system, it is provided from January 1, 2026:
• Increase in the insurance contribution to the "Pensions" fund of the state social security by 2 percentage points and from January 1, 2028 - by 1 percentage point.
• Increasing the minimum social security income for self-insured persons from 01.01. 2026 to 620.20 euros;
• Increasing the maximum social security income for all insured persons from 01.01. 2026 to 2,352 euros.
The expenditure parameters for the forecast period are consistent with the budget's capabilities for financing policies, as well as with the prospects for development of the public spheres, the fiscal goals and priorities of the government. Total CFP expenditures as a share of GDP are respectively 45.8% of GDP in 2026, 43.6% of GDP in 2027 and 43.5% of GDP in 2028, with the growth in 2026 compared to the 2025 program, which is at a level of 44.9% of GDP, being mainly due to the effect of spending policies, incl. of such from 2025.
The main spending policies leading to an increase in the expenditure part of the budget for the period 2026-2028 are as follows:
Increase in the minimum wage from January 1, 2026 from EUR 550.67 to EUR 620.20.
Update of pensions for work activity, granted until December 31 of the previous year, as of July 1 of the relevant year under the so-called “Swiss rule“ by 7.6% or 491 million euros;
Increase in the amount of the benefit for raising a child up to 2 years of age from 398.81 euros to 460.17 euros for the entire period until 2028;
Increase in the amount of the cash benefit for raising a child up to 8 years of age by the father (adoptive parent) from 398.81 euros to 460.17 euros for the entire period until 2028 inclusive;
Increase from 50 percent to 75 percent of the cash benefit for non-use of pregnancy and childbirth leave under Art. 50a of the Social Insurance Code, for non-use of leave for raising a child up to 2 years of age under Art. 54 of the Social Security Code and in case of non-use of leave upon adoption of a child up to 5 years of age under Art. 53d of the Social Security Code;
Increase in personnel costs for 2026 by 5%, and for certain sectors - in accordance with the current legislation;
Increase in funds for delegated activities in education in connection with the continuation in 2026 of the policy of increasing the salaries of pedagogical specialists to reach an average salary of not less than 125 percent of the average salary for the country in order to stimulate the entry of young and qualified teachers into the system of preschool and school education;
Updating the salaries of the academic staff and the persons under Art. 53, para. 1 of the Law on Higher Education in State Higher Education Schools and Scientific Organizations for 2026, in connection with adopted amendments to the Law on Higher Education (SG, issue 25 of 2024), in accordance with the achieved amounts of the average gross salary for the country for the last 12 months, published by the National Statistical Institute;
Increase in the remuneration of personnel in the field of hospital medical care for specialist doctors and nurses and midwives by 260 million euros, an additional transfer from the central budget to the NHIF budget.
Increase in the funds for personnel in the “Defense and Security“ sector in accordance with the regulatory procedure.
The funds in the budgets of the municipalities have been increased as a result of the changed natural indicators in the field of activities delegated by the state in the fields of culture, social services, healthcare, etc. Budgetary relations with municipalities amount to 5.107 billion euros for 2026, with an increase of 544 million euros compared to 2025.
The funds for capital expenditures in 2026 amount to 7.76 billion euros, including those with national funding of 3.605 billion euros and with European funding of 4.155 billion euros (including NPLs).
The Investment Program for Municipal Projects is planned to be continued, with the total maximum value of the funds provided in 2026 under concluded project agreements under Annex No. 3 to the draft law on the state budget for 2026, including for projects that are assigned and implemented by the mayors of districts in cities with district divisions, amounting to up to 920.3 million euros. Payment will be made by the Bulgarian Development Bank under the conditions and in accordance with the procedure determined by an act of the Council of Ministers.