The preparation of Budget 2027 will be carried out under new rules and with more enhanced European control over public finances. By Monday, the Ministry of Finance must summarize the proposals of budget organizations for their budget plans for next year and updated forecasts until 2029.
What do the new requirements mean and where should the state look for opportunities to limit spending? The topic on the air of the program “Your Day“ on NOVA NEWS, former Social Minister Hristina Hristova and Executive Director of the Association of Industrial Capital in Bulgaria Dobrin Ivanov commented.
Hristova explained that the changes are not only related to Bulgaria's membership in the eurozone or the size of the budget deficit. They are part of the new European framework for monitoring public finances, which also requires changes in Bulgarian legislation.
“For a year now, we have been in a situation of a new supervisory framework for the finances and budgets of the European Union countries“, she pointed out. According to her, Bulgaria must reflect European rules through changes to the Public Finance Act and the Fiscal Council Act.
One of the significant changes is related to the way the state plans its finances for several years ahead. The previous three-year medium-term budget forecast is being replaced by a medium-term fiscal-structural plan.
„Every country in the European Union is now obliged to provide a fiscal-structural plan with a perspective for the period of the government. When a government takes office, it must present such a plan by the end of its mandate“, explained Hristova.
Dobrin Ivanov specified that for Bulgaria this period is four years and the document must set out the main policies of the government, as well as the forecasts for revenue, expenditure and the budget deficit.
„We are no longer preparing a medium-term budget forecast, which was three years. We are preparing a medium-term fiscal-structural plan - a four-year one, in which we indicate the main policies of the government and the projections for the growth of revenues and expenditures and, accordingly, the budget deficit“, said Ivanov.
According to him, the new rules also change the deadlines for Budget 2027. The project must now be submitted to the National Assembly by October 15 instead of October 30, as coordination at the European level is pending before that.
The European Commission will monitor the budget deficit and the development of expenditures particularly carefully, Ivanov pointed out. According to him, the new system provides greater flexibility compared to the old approach, but at the same time, European control over revenue, expenditure and public finance policies remains essential.
Hristova added that the assessment of expenditures will also take into account which of them are actually under the control of the government. According to her, for example, interest expenses and part of the funds related to European financing are considered differently.
According to Dobrin Ivanov, the biggest question is what reforms will be included in the new budget. “A big mystery is what will be presented in Budget 2027. We hoped and expected to see the main reforms that were promised in the election campaign and that we saw in the government program in Budget 2026,“ he commented.
Ivanov pointed out that Budget 2026 was presented with a deficit of 5.7% and almost no reforms. Therefore, according to him, expectations for the next budget plan are significantly higher.
He gave a positive assessment of the agreement reached on the mechanism for determining the minimum wage, since its amount affects both the state's revenues and expenditures. As another positive step, Ivanov pointed out the work on the National Recovery and Sustainability Plan. According to him, the expectations for the loss of funds under the plan have decreased significantly compared to the forecasts of a few months ago.
Among the sectors in which, according to employers, serious changes are needed, Ivanov put education in first place. He referred to the latest results of the PISA study and warned that problems at school are subsequently transferred directly to the labor market and the economy.
“These people enter the labor market or enter universities three years later. These are the people who then create the gross product, and they are not competitive with their peers and as workers are not productive and productive enough“, said Ivanov.
According to him, it is the educational reform that will have a long-term effect on the economy, incomes, living standards and development of the country. Changes are also needed in healthcare and state administration.
Kristina Hristova defined the task before the government and the Minister of Finance as extremely difficult. According to her, the main problem is the size of public spending. “A major contraction, a major reduction in state spending must be made. This is the biggest problem. For the last five or six years, we have been spending funds that we have not produced, that we do not have“, said the former Minister of Social Affairs.
According to her, serious imbalances have accumulated in the state administration during this period, including in remuneration in individual structures. Hristova believes that the mechanisms under which certain salaries are automatically increased should also be reviewed.
In addition to the administration, she highlighted education, healthcare and the pension system as areas in which changes are needed. “We are no longer producing people with the qualities necessary for our economy and social development. This is a very big problem”, said Hristova about the state of education.
The former social minister also raised the issue of the sustainability of the pension system. According to her, the so-called Swiss rule for updating pensions is being retained for now, but a broader analysis of the way the system functions should be carried out.
Hristova believes that the scope of early retirement should also be reviewed. She recalled recommendations from European experts that it should be limited primarily to professions in which people are actually exposed to serious risks - for example, when working underground, in the air and under water.
According to her, the problem is not only financial. Low trust in public systems and a sense of injustice also create serious public tension.
Dobrin Ivanov believes that the first steps in the right direction have already been taken through the reorganization of individual ministries and departments, staff reductions and the closure or unification of structures with overlapping functions.“A major administrative reform is coming“, he predicted and admitted that there are opportunities for unification even in some ministries.
According to the executive director of AIKB, serious changes are also needed in the “Security“ sector, including the Ministry of Internal Affairs. “There we have an expectation that significant reforms will really be carried out, since in recent years the budget has been huge and this weighs like a millstone on the state's public finances“, Ivanov concluded.