The draft budget for 2027 could lead to recession and impoverishment, Democratic Bulgaria MP Vladislav Panev warned on bTV’s “Face to Face” programme. According to him, Bulgaria’s economic growth is supported by consumption and investment, but the country relies primarily on consumption.
Panev said that the increase in remuneration in the public sector had far outpaced the growth in labour productivity. “The growth in public-sector wages far outpaced the growth in labour productivity. This led to a significant increase in imports and the trade deficit,” he said.
As an argument highlighting the weaknesses in the manufacturing sector, Panev pointed to the 8.9% year-on-year decline in industrial production in September. According to data from the National Statistical Institute, the decrease in manufacturing was 9.4%, while the overall index fell by 0.5% compared with August. The data is preliminary.
Criticism of the Tax Changes
Panev criticised the planned changes to taxation and social security thresholds. According to him, they will withdraw funds from the private sector that could be invested in production and investment.
The government’s draft provides for a 33% tax on excess profits in certain sectors in 2027. These include food retailers with net sales revenue of at least €5 million in 2026, banks, insurers, telecommunications companies, currency exchange offices and payday lenders. It is envisaged that 30% of the tax may be waived for investment or the creation of reserves.
According to Panev, the measure now covers a wider range of retailers than had initially been envisaged. He also said that “Lukoil Neftochim” remains outside the scope of the tax, despite what he described as significant profits from diesel fuel processing.
Panev’s Proposals
The MP called on the state to limit spending and not further increase the tax burden on companies from which investments are expected. As a possible measure, he pointed to the listing of some state-owned and regional companies on the stock exchange. According to him, the presence of private shareholders would strengthen oversight of their management.
Panev also commented on the increase in natural gas prices and the possibilities for compensation for household consumers. He said that Bulgargaz’s financial condition limited such measures, claiming that the company’s liabilities exceeded its assets and that some of its receivables were difficult to collect.
As additional risks, Panev pointed to wars, disruptions to economic activity in the Black Sea region, interest rates and the high indebtedness of some eurozone countries. According to him, in the event of a recession, budget revenues could turn out to be lower than planned, while spending on social measures and compensation would increase.
Sources: btvnovinite.bg