When I stated in the summer that the frightening forecasts for a 5.7% deficit at the end of the year would not come true, the “experts“ were quick to declare me a populist who doesn't understand anything. Well, the Autumn Forecast of the Ministry of Finance and the official data has been released.
This was commented on "Facebook" by the economist from the Confederation of Bulgarian Trade Unions, Lyuboslav Kostov.
Let's look at the facts.
1. An error of nearly 10 billion leva (5.2 billion euros). According to estimates, the nominal GDP in 2026 is projected to reach 130.46 billion euros. This is a growth of 12.4% on an annual basis (or 14.44 billion euros more). Now remember the summer when the 2026 Budget was being prepared and adopted. Then the Ministry of Finance predicted a modest increase of 5.21 billion euros. The difference is almost double! The Ministry of Finance missed the estimated size of our economy by nearly 10 billion leva (5.2 billion euros). This is the first time we have such a massive difference between forecast and report.
2. Where is the catch? This huge difference did not fall from the sky. It is due to seriously underestimated inflation. The general price level in the country (measured by the deflator) is currently estimated at 9.1%, while in the spring it was set at only 5.2%. The good news is that even real economic growth, eliminating the deflator, is projected to be 3% - 0.4 pp above spring expectations.
3. The big myth of the 5.7% deficit. As of the end of September, the deficit according to official data was 2.8% of GDP. The cumulative accumulated negative balance for the 9 months to date is 3.64 billion euros. In order to realize the planned 5.7%, which we were persistently explained to be “completely realistic”, the state must spend over 5 billion euros in additional deficit for the remaining three months (October, November and December). Spending much more in one quarter than in the previous nine months combined is, to put it mildly, absurd. Especially given that the advance payment of corporate taxes is due in November (a serious one-time revenue), and the last tranche of the PVU is expected at the end of December.
In a nutshell. Both the Ministry of Finance, the BNB, and the neoliberals were wrong. The apocalypse is being postponed again. Bravo to the Ministry of Finance itself for really tightening their belts in recent months.
Finally, I want to be understood correctly. This is not an accusation of wrong numbers. On the contrary - I am glad that they were wrong, because the real situation is significantly better than what was predicted. Our economy is proving to be much more resilient than the dark political scenarios. Time and numbers always put everything in its place.