The draft Law on the State Budget of the Republic of Bulgaria for 2026 has been approved, the government press service announced.
In addition to approving the draft Law on the State Budget of the Republic of Bulgaria for 2026, the government also updated the medium-term budget forecast for the period 2026-2028, which constitutes 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, they are reflected in the national budget documents. With regard to 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 economic 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 initially developed draft budget laws for 2026, which were approved by the Council of Ministers and submitted for consideration to the National Assembly in November this year, were withdrawn by Decision No. 839 of December 2, 2025 of the Council of Ministers.
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 autumn macroeconomic forecast for the period, prepared by the Ministry of Finance (MoF), projects economic growth to reach 2.7% in 2026. In the period 2027-2028, GDP growth is expected to be within 2.5-2.4%. The average annual inflation for 2026 is expected to be close to that in 2025 - 3.5%, and will slow down to 2.9% in 2027 and to 2.5% in 2028. The forecast has also been confirmed by the Fiscal Council. It is close to the expectations of international institutions such as the EC, OECD and others.
The size of the budget balance under the consolidated fiscal program (CFP), expressed as a share of GDP, during the forecast period 2026-2028 is a deficit of 3.0% of GDP in 2026, 2.8% of GDP in 2027 and 2.4% of GDP in 2028. Maintaining the deficit level within the limits guarantees the provision of a number of spending policies, backed by the relevant revenue measures.
Based on the assumptions during 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 49.0 billion euros (36.6% of GDP) in 2028. In 2026, the maximum amount of new government debt that can be assumed is up to 10.0 billion euros, including up to 3.2 billion euros under the SAFE instrument for strengthening the European defense industry.
The minimum amount of the fiscal reserve as of 31.12.2026 is set to be 2.4 billion euros.
From 1 January 2026, the minimum social security income for self-insured persons is 620.20 euros. The maximum social security income for all insured persons is 2,300 euros for 2026, 2,505 euros for 2027 and 2,659 euros for 2028.
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 the tax policy for the period are again aimed at maintaining economic growth, improving the business environment, combating tax abuse and increasing fiscal sustainability.
The amount of revenues, grants and donations under the CFP is respectively - 50,402.3 million euros in 2026, 51,546.9 million euros in 2027, and 54,745.6 million euros in 2028, with the growth in 2026 compared to the expected level of 44,499.2 million euros in 2025 being mainly due to the new revenue measures envisaged and the expected effect of those adopted in 2025, which did not manifest themselves in full due to the later adoption of the 2025 Budget.
When forecasting tax revenues, the following proposals for amendments to the tax legislation:
• Expanding the scope of goods with high fiscal risk;
• Expanding the system for electronic tracking of the movement of vehicles carrying goods with high fiscal risk;
• Introduction of a tax relief in the Corporate Income Tax Act for carrying out research and development activities (R&D), whereby taxpayers carrying out R&D will be recognized for tax purposes an additional 25 percent of their R&D expenses in the year of their reporting, when certain conditions are met. In the event that a long-term intangible asset is formed as a result of development activities, it is proposed that the taxpayer be entitled to increase the tax amortizable value of this asset by 25 percent;
• Continuing effect of the new excise calendar for excise rates on tobacco and tobacco products introduced from 01.05.2025 with the aim of a balanced, phased increase in excise rates on tobacco and tobacco products;
• Continuation of the policy of using tax breaks under Art. 22c and 22d of the Personal Income Tax Act (for children and children with disabilities) in an increased amount in 2026;
• Providing an opportunity for a more favorable depreciation regime for tax purposes of electric cars.
From January 1, 2026, an increase in the variable part of the fee under Art. 30, para. 3 and 4 of the Gambling Act for licenses to organize gambling games from 20 percent to 22 percent is provided.
The parameters of the expenses 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. The amount of total expenditure under the CFP by years of the period is respectively 54,051.9 million euros in 2026, 55,091.2 million euros in 2027 and 58,007.1 million euros in 2028.
According to the national rule under Art. 28, para. 1 of the Public Finance Act, the expenditures amount to 40.1% of GDP for 2026, 39.9% of GDP for 2027 and 40.0% of GDP for 2028. It should be noted that when applying the activated derogation clause with respect to increased defense spending, there is an effect that leads to a decrease in these expenditures below 40 percent.
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.
• Updating 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“;
• 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 up to 2028 inclusive;
• 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 up to 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 Security 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 for non-use of leave for adopting a child up to 5 years of age under Art. 53d of the Social Security Code;
• Implementation of a general income policy by increasing personnel costs in the budgetary sphere for 2026 by 10% and eliminating the automatic mechanisms for determining the amount of remuneration in certain sectors, tied to the average salary;
• Preservation of the income policy for pedagogical specialists in the system of preschool and school education;
• Launch of a Program for supporting resident doctors with funds in the amount of 30.0 million euros for 2026;
• The funds in the budgets of the municipalities have been increased as a result of the changed natural indicators in the sphere of activities delegated by the state in the field of culture, social services, healthcare, etc. Budgetary relations with the municipalities amount to 5,077.8 million euros for 2026 compared to 4,563.7 million euros for 2025, or an increase of 11.3%.
Policies and measures for cost optimization:
• For the period 2026-2028, the Council of Ministers and the mayors of municipalities, after review and assessment, shall optimize the total number of personnel of the executive administration under Art. 36-38 of the Administration Act in order to achieve a reduction in the total number of not less than 5,500 permanent positions, permanently vacant for more than six months, distributed proportionally for the period;
• In 2026, the amounts of the individual basic monthly salaries of the central and territorial bodies of the executive power, as well as of the single-person bodies specified in Art. 19, para. 4 of the Administration Act and their deputies shall be determined in the amount of the last individual basic monthly salary, determined as of December 31, 2025, unless otherwise provided by law. Changes in the individual salaries of these bodies after December 31, 2026 shall be determined within the framework of personnel costs and in accordance with the percentage increase in the salaries of employees in the public sector.
The funds for capital expenditures in 2026 amount to EUR 7.020 billion, including those with national funding of EUR 3.165 billion and with European funding of EUR 3.855 billion (including NLF).
The Investment Program for Municipal Projects is planned to be continued, with the total maximum value of the funds provided in 2026 under concluded agreements for projects 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 division, amounting to up to EUR 920.3 million. Payment will be made by the Bulgarian Development Bank under the terms and conditions and in accordance with the procedure determined by an act of the Council of Ministers.