Budget 2026 entered the parliament: Record deficit and sharp criticisms portend a hot political summer OVERVIEW

How did the latest discussions go?

The draft budget for 2026 went through a series of tense discussions before being approved by the government. Within the framework of the National Council for Tripartite Cooperation (NCTC), the social partners expressed strong dissatisfaction with the parameters. The unions and employers did not reach a consensus, with the main disputes related to the planned increase in living expenses by over 1 billion euros and the drastic increase in the state debt. Despite resistance and warnings of economic risks, the Council of Ministers moved the document to the plenary hall without fundamental changes to the macro framework.

Comments from key institutions and experts

Bulgarian National Bank (BNB): Governor Dimitar Radev came out with an extremely harsh position, stating that Budget 2026 deepens the negative fiscal trends in the country. According to the central bank, the high deficit threatens long-term financial stability. Fiscal Council: The institution criticized the draft budget for the complete lack of fiscal consolidation and real structural reforms that would optimize public spending. Business (Employers' Organizations): Business representatives, including the Bulgarian Chamber of Commerce and Industry and the Bulgarian Industrial Association (BIA), reacted negatively to the increase in the maximum insurance threshold and the 30% increase in vignettes. They emphasized that cost-cutting reforms are being unjustifiably postponed to 2027. Trade unions: The Confederation of Bulgarian Trade Unions (CITUB) expressed moderate satisfaction with the increase in the maximum social security income, but they insist on more serious changes in the tax system starting in the fall in order to reduce the burden on the lowest-paid workers. The political opposition: The parliamentary opposition forces have issued sharp criticism, defining the financial framework as "wasteful". According to political analysts, the budget debate is already intertwined with preparations for the upcoming presidential elections.

Main parameters and expectations

Budget deficit: Set at a record level of 5.7% of GDP (around €7.2 billion), almost double the eurozone limit. New government debt: New debt is expected to exceed 10 billion euros by the end of the year. Indebtedness: The medium-term framework forecasts that government debt will increase to over 35% of GDP by 2028. Living expenses: Increase by over 1 billion euros compared to the previous period.

Economists expect extremely tough debates in parliamentary committees. The main challenge for MPs will be to find a balance between social payments and the European Commission's requirements for fiscal discipline, as Bulgaria is in an excessive deficit procedure.

Sources: Economic.bg, NOVA, BNT, Forbes Bulgaria.