The Fiscal Council recommends a more cautious approach in planning the state budget for 2027 due to growing external risks and a global economic slowdown. The institution has reviewed the Autumn Macroeconomic Forecast of the Ministry of Finance and expresses serious reservations about some of the assumptions made in it.
Criticism of the macroeconomic frameworkAccording to the council's analysis, the scenario for the period 2027-2029 is realistic overall, but the expectations for 2026 seem insufficiently justified. The Ministry of Finance is projecting real GDP growth of 3.0 percent for 2026, 2.5 percent for 2027, and 2.4 percent for the next two years.
The body accepts the projected growth for the next two years, but warns that a serious slowdown to 1.5 percent is expected in 2028 due to a cyclical cooling of the external environment. The Ministry of Finance's expectations for an acceleration of the economy in the second half of 2026 are not confirmed by the current data on industrial production, retail trade, and employment in the country.
Nominal GDP is expected to reach 130.5 billion euros in 2026 and 141.3 billion euros in 2027, in the context of Bulgaria's full membership in the eurozone since the beginning of this year. However, the council points out that the sharp decline in the deflator after 2026 has been left unexplained.
Outdated external assumptions and inflationAverage annual inflation is set at 4.8 percent for 2026 and 4.0 percent for 2027. The Fiscal Council defines these expectations as realistic, and unemployment is expected to remain stable at around 3.4 percent.
However, experts point out that some of the ministry's assumptions are already outdated. The price of Brent crude oil is fixed at $90.9 for 2026 and $80.5 for 2027, while real market values currently exceed $101.6.
A serious discrepancy is also noted in interest rate expectations. The ministry is targeting EURIBOR levels between 2.3 and 2.5 percent, which is at odds with the trajectory of the European Central Bank. The Frankfurt-based institution is forecasting a hold of around 3.0 percent for the period 2027-2028, especially after the last increase in key interest rates on September 10, 2026.
Risks facing the treasuryThe current account deficit is set to reach 6.4 percent of GDP in 2026 and to remain permanently above 5 percent in the medium term. According to experts, this creates a risk of accumulating more serious macroeconomic imbalances.
The main threats to economic growth have shifted to the downside and are related to higher energy prices, the upcoming fiscal consolidation under the excessive deficit procedure, and the possible cooling of the credit and housing markets. An additional risk is also created by the delayed absorption of funds under the Recovery and Resilience Plan, which by the end of August 2026 reached only about 70 percent.
In this regard, the institution insists on the compilation of a fully developed quantitative alternative scenario and the provision of a sufficient financial buffer to respond to a possible deterioration in the economic situation in the country.