The European Commission issued a serious warning to Bulgaria about the state of public finances and the work of the state administration. In its latest report, Brussels indicates that the country faces a risk of deepening the budget deficit, growing state debt and inefficient administration if urgent reforms are not undertaken.
According to the Commission's assessment, the budget deficit is already increasing - from 3% of gross domestic product in 2024 to 3.5% in 2025. It is expected to reach over 4% in the next two years. Therefore, the European Commission is urging Bulgaria to limit the growth of public spending and warns that the country could be placed under enhanced European supervision due to excessive deficit.
The main reasons for the deterioration of finances are the increase in salaries in the public sector, the growth of social spending and pensions, as well as the injection of funds into state-owned companies such as the Bulgarian Energy Holding and the Bulgarian Development Bank.
Brussels also directly criticizes the tax system in our country. The report states that the flat tax of 10% without a non-taxable minimum leads to an unfair distribution of the burden, with people with lower incomes bearing a relatively greater burden. The European Commission also notes that tax revenues in Bulgaria remain below the European Union average, and the shadow economy is among the largest in the Community.
Therefore, the recommendation is that the state strengthen tax collection, limit income evasion and take measures against overdue debts to the treasury.
The report also warns of serious long-term pressure on the budget due to the aging population, growing pension and healthcare costs, as well as increased defense spending. According to forecasts, the state debt could reach over 35% of gross domestic product by 2027.
There is also serious criticism of the state administration. According to the European Commission, it continues to suffer from a lack of capacity, a shortage of qualified personnel and weak coordination, especially at the local level. It is noted that municipalities are experiencing difficulties in attracting experts and managing European funds effectively.
Brussels is pushing for more serious digitalization, reducing the administrative burden and better connectivity between institutions. According to the Commission, electronic services are still too complex and not convenient enough for citizens and businesses.
Sharp criticism has also been directed at the fight against corruption. The report says that Bulgaria continues to lack convincing results in cases of corruption at the highest levels of power. Problems are pointed out with the independence of anti-corruption bodies, the work of the Supreme Judicial Council and public procurement, where practices with direct award and procedures with only one participant continue.
The general conclusion of the European Commission is that without more serious reforms in public finances, administration and control institutions, Bulgaria will face increasing pressure on both the budget and trust in state institutions.