The increased state expenses at the beginning of the year are the main reason for the deterioration of the budget balance, and the difficult conversation about limiting the deficit is yet to come.
This was commented on by the senior economist at the Institute for Market Economics (IME) Lachezar Bogdanov.
According to him, the picture at the beginning of the year resembles that of 2025.
In January, the state budget had a surplus of about 212 million euros, but in February a deficit of about 600 million euros was reported.
The main reason for this change is the serious growth in expenses, especially for personnel and maintenance.
„We have an increase in expenses of just over 20% for the first two months of year. Revenues are also growing – by about 13%, but this is not enough to catch up with expenses“, Bogdanov explained.
According to the economist, this means that the next regular budget will have to solve a serious problem – how to control the deficit.
According to him, the absence of a regular budget does not mean that expenses are not growing.
“These rumors that if there is no adopted budget, expenses will not increase are false. If there are adopted regulations to increase spending, they are paid off“, he emphasized.
Bogdanov recalled that in 2023 the state worked for seven months with an extension law before the regular budget was adopted.
Currently, a similar scenario is also possible if the parliament fails to quickly cast a new majority after the elections, he added.
“Whoever starts making a budget will have to control the deficit and bring the growth of spending to some norm“, the economist pointed out.
An additional risk for the budget is the delay in reforms under the Recovery Plan.
According to Bogdanov, the state expects about 2.5 billion euros from the plan, but at the moment:
“A lot of reforms will have to be made. Some require changes in legislation, others - completely new laws, he said.
According to the economist, increasing taxes is not a mandatory solution.
According to him, the first step should be to limit the growth of public sector spending.
“Salaries have increased with inflation - that's it. From now on, there should be increases only with reforms and greater efficiency,“ Bogdanov said.
He also gave an example with the current expenses of the administration.
“Last year, the maintenance costs in the ministries increased by about 25% with inflation of 5%. "There is obviously an inflation of costs," the economist added.
Bogdanov also commented on the effect of the tension in the Middle East on the economy.
According to him, higher oil and gas prices are negative for Bulgaria, since the country is a net importer of energy resources.
“Every jump in the prices of these raw materials is a minus for the Bulgarian economy,“ he said.