The Fiscal Council sent to the media a statement on the draft Law on the State Budget of the Republic of Bulgaria for 2026 and the State Budget and Budgetary Plan 2026-2028.
Here are the main emphasis of the document:
1. Large deficit and lack of fiscal consolidation: The planned deficit under the CFP of 5.7% of GDP (7.19 billion euros) for 2026 worsens the country's fiscal position. The draft budget legitimizes the permanent exceeding of the Maastricht criterion of 3%.
2. Lack of real structural reforms: The government is not undertaking sufficient reforms to optimize inefficient spending in the public sector. The planned 10% reduction in personnel costs from September 2026 saves only 85.0 million euros.
3. Inconsistent social security reform: The partial transfer of personal social security contributions to civil servants and magistrates (in a ratio of 80:20) is accompanied by a gross salary compensation mechanism. This completely neutralizes the fiscal effect in 2026 and in practice postpones the actual restructuring for future periods.
4. Shifting the burden to business: The nominal growth in tax and social security revenues in 2026 is due to revenue measures that directly burden the real economy. These include raising the maximum social security income to 2,300 euros, the ex officio increase in social security thresholds, the acceleration of the excise calendar and the 30 percent growth in vignettes. The reserves from the lightening of the gray sector are overestimated in the estimates.
5. Debt spiral: The refusal to reduce current spending leads to the accumulation of new debt, which is expected to reach EUR 51.1 billion (35.7% of GDP) by the end of 2028. Interest payments are increasing sharply, taking resources from key sectors such as education and healthcare and turning the debt burden into a structural defect of the budget.
Conclusion: The draft Law on the State Budget of the Republic of Bulgaria for 2026 lacks a strategy for implementing the necessary structural reforms in the public sector. Instead of decisive consolidation actions, the draft relies on expenditure adjustments and debt financing, which worsens the country's long-term fiscal sustainability and puts public finances at risk.