The Institute for Market Economics proposes cutting 100,000 public-sector jobs over three years and introducing a statutory ceiling on public spending of 38 percent of gross domestic product. The measures are part of the “Alternative Budget 2027 – Exit from the Deficit Spiral” presented in Sofia.
IPI warns that without structural reforms, Bulgaria faces prolonged budget deficits, accelerated debt accumulation and pressure to raise taxes.
“The way out requires reforms, not new taxes,” the Institute for Market Economics said.The 20/10 rule for the public sector
The 20/10 rule is central to the proposal. Under it, public-sector employees should not account for more than 20 percent of all workers, while spending on their remuneration should be capped at 10 percent of GDP.
The plan also calls for the complete removal of automatic mechanisms for increasing salaries in the budget-funded sector. According to IPI’s calculations, this would reduce personnel costs by between 1.5 and 2 percent of GDP. In education, healthcare and the judiciary, the proposal is to move from automatic funding of positions and structures to payments based on measurable results and accountability.
IPI is also calling for changes to social payments. The organization proposes ending the current personal-assistance program, with part of the resources redirected to support services for people who are genuinely in need.
Different debt projections
According to IPI’s analysis, the government’s plan for 2027 envisages a deficit of 4.3 percent of GDP, despite new revenue measures worth nearly 2 billion euros. The document states that government debt will reach 33.3 percent of GDP in 2027, while interest expenses will rise from 516 million euros in 2024 to nearly 1.8 billion euros in 2028.
The Finance Ministry’s autumn macroeconomic forecast gives a higher debt estimate – 35.5 percent of GDP in 2027. At the same time, the ministry also projects a deficit of 4.3 percent of GDP.
Privatization and more funds for municipalities
The alternative budget envisages the public offering of stakes in the Bulgarian Energy Holding, the Bulgarian Development Bank, “Bulgarian Posts,” the State Consolidation Company and other state-owned enterprises. IPI also proposes the full privatization of “Toplofikatsia Sofia.”
In infrastructure, the plan calls for attracting private capital worth at least 2 percent of GDP annually. The proposals include concessions for transport links, railway lines and ports, with priority given to Northern Bulgaria.
The plan also includes financial decentralization. According to IPI, municipalities should receive 2 percentage points of personal income tax directly, as well as access to a new financing model for local investments worth more than 4 billion euros.
Sources: dunavmost.com