The draft law on the State Budget of Bulgaria for 2026 was adopted on the first vote by the Budget and Finance Committee of the Parliament with 14 votes "for", 9 votes "against" and not a single vote "abstain", BTA reported.
The bill was presented by Deputy Prime Minister and Minister of Finance Galab Donev. The texts foresee a deficit under the consolidated fiscal program for this year of 5.7 percent of gross domestic product (GDP), with Donev emphasizing that this is not a deficit of the current government, but "a deficit accumulated over the last few years".
The revenues, grants and donations set out in the draft budget amount to 49.6 billion euros, and total expenditures amount to 56.8 billion euros. The draft was prepared with an expected economic growth of 2.6 percent and an average annual inflation of 4.3 percent according to the harmonized index of consumer prices (HICP).
According to the draft, the maximum amount of new government debt that can be taken on in 2026 is 10.1 billion euros. This amount includes a loan of up to 3.261 billion euros under the European instrument "Measures for the Security of Europe" (SAFE) to strengthen the defense industry. The state debt is expected to reach 37.7 billion euros, or 30.1 percent of GDP.
It is planned that the total funds for capital expenditures in 2026 will reach 9.360 billion euros, including those with national funding of 4.028 billion euros and with European funding of 5.331 billion euros (including the National Recovery and Resilience Plan).
The draft law provides for a reduction in personnel costs by 10 percent, effective September 1, with the exception of municipalities, military personnel, persons employed under the Ministry of Interior Act, the State Security Service Act, the National Security and Defense Agency Act, the State Intelligence Agency Act, the Execution of Sentences and Detention Act, medical institutions under Art. 5 of the Medical Institutions Act.
No increase in personnel costs is envisaged (including for the so-called “elective positions“ - positions that are filled on the basis of election), under mechanisms, policies and regulatory provisions related to the determination, recalculation or indexation of remuneration based on the growth of the average gross salary/minimum salary or through a collective labor agreement, which will save the budget over 560 million euros.
A reduction in the state subsidy for religious denominations and political parties is envisaged.
The draft law proposes an increase in revenues from operating the toll system and an increase in vignette fees by 30 percent - as of August 1, 2026.
Among the measures of the government are also the accelerated implementation of the already introduced excise calendar for the period 2025 - 2029 in the Excise and Tax Warehouses Act for a phased increase in excise duty rates on tobacco products. It is planned that excise duty rates on tobacco and tobacco products will also be changed from August 1, 2026.
It is envisaged to introduce a licensing regime in the Gambling Act for affiliate operators who promote gambling games of licensed operators on the territory of the Republic of Bulgaria, as well as to introduce a two-component state tax on the commission fee of affiliate operators based on previously agreed performance indicators.
The draft law also envisages revenues in the amount of 50 million euros from concession fees from “Sofia Airport“. It is proposed to optimize current and capital subsidies for BDZ, NRIC, Bulgarian Posts and others.
From August 1, 2026, it is planned that civil servants under the Civil Servant Act and those employed under the Judiciary Act will pay personal insurance contributions. From this date, social security contributions are distributed between the insurer and the insured person in a ratio of 80:20, and from January 1, 2027 - in a ratio of 60:40, as provided for other workers.
A review of the mechanism for determining the minimum wage is planned, and until a new mechanism is determined, the minimum wage is expected to remain at its current level of 620 euros.
The Deputy Governor of the Bulgarian National Bank, Petar Chobanov, stated that the economic growth model, based primarily on consumption, must be accompanied by measures to stimulate supply, including in the areas of labor, capital and technology. Chobanov stated that the central bank expects a clearer link between the budget and economic development with the draft budget for 2027, adding that, according to the central bank, a line of fiscal discipline must be followed.
The member of the Fiscal Council Lyubomir Datsov stated that our country is in a situation that is suitable for implementing structural reforms and a policy to achieve macroeconomic stabilization. According to him, with the current level of budget expenditures, it is impossible to achieve the requirements for the deficit level in the coming years.
Donka Mihaylova, Deputy Chairwoman of the National Association of Municipalities in the Republic of Bulgaria and Mayor of Troyan, pointed out that it is necessary for the capital expenditures for municipalities to be included in the bill, so that projects are financed in the long term, and not determined only for the current year. Regarding the garbage fee, the association proposes extending the transitional regime for the transition to the “polluter pays“ model.
Stanislav Popdonchev, Deputy Chairwoman of the Bulgarian Industrial Chamber stated that the size of the deficit and the increase in the state debt are disturbing. He added that the increase in the maximum social security income and the minimum social security thresholds from August 1 will be detrimental to businesses that have already planned their expenses for the current year. Popdonchev called for not proceeding with a new increase in social security income with the 2027 budget.
Plamen Dimitrov, President of the Confederation of Bulgarian Trade Unions (CITUB), indicated that the trade union supports all measures in the revenue part of the budget, adding that there is room for the implementation of even more measures with regard to the shadow economy. Dimitrov said that the CITUB proposes that the coverage of social security contributions by civil servants be done at once for all employees from 2027, with compensation applied so as not to reduce the net income of those employed in the public sector.
Boryana Abadjieva from the BCCI said that in the 2027 budget, measures to control the debt and deficit should be considered. The organization supports the implementation of the election promises to maintain the tax burden, but does not support the increase in the minimum social security thresholds.
Atanas Katsarchev, chief economist of the Trade Union "Podkrepa", pointed out that the trade union insists on an adequate increase in wages. The union supports the increase in the minimum social security thresholds, believing that this could happen at an even more aggressive pace.
Boyan Mitrakiev from KRIB said that the organization supports the budget, since the bill identifies the problem of the Bulgarian economy and represents a statement that the government will make efforts to solve the problem in the future.
Vladislav Panev from "Democratic Bulgaria" stated that the set deficit of 5.7 percent poses a risk for the country in the event of a possible reversal of the economic cycle.
Atidje Alieva-Veli from the MRF pointed out that the bill does not comply with the Public Finance Act and sets a deficit that is too high and does not comply with the recommendations of the European Commission. She indicated that the MRF will propose dropping the proposal to reduce subsidies for religious denominations. Alieva-Veli stated that the MRF will still support the budget at first reading, as it represents an attempt to guarantee the normal functioning of basic services in the country.
Temenuzhka Petkova from the GERB-SDF also stated that the draft budget grossly violates the Public Finance Act with the set deficit of 5.7 percent of GDP and by adopting a budget in violation of the law, the ruling party risks creating a dangerous precedent.
According to Martin Dimitrov from “Democratic Bulgaria“ It is not a budget crisis, but rather a complicated budget situation. He noted that record capital expenditures have been set within just 5 months, expressing doubts that there is project readiness for actual payment of these expenditures. Dimitrov suggested that part of the planned capital expenditures could be used to reduce the budget deficit.
Finance Minister Galab Donev responded that he did not see a realistic possibility of reducing expenditures in the capital expenditures and maintenance part, so as to reduce the deficit to 3 percent.
According to Donev, changes to the Public Finance Act would be necessary to achieve full synchronization with the Treaty on the Functioning of the European Union, so that Bulgarian legislation reflects all aspects that the European Commission monitors in relation to the requirements for the size of the deficit.
Donev also indicated that the government will follow the line of achieving fiscal consolidation, including achieving a balanced budget in the future. The Deputy Prime Minister stated that the government has no intention of raising the tax and social security burden in pursuit of the goal of reducing the deficit and government debt.
Assen Vassilev from “We Continue the Change“ calculated that the budget includes capital expenditures and maintenance expenditures for which there is no description of what they will be used for, amounting to about 2 percent of GDP, and they could be transferred to the “reserve“ item of the budget. According to him, the budget was prepared based on underestimated macroeconomic indicators. This budget in this form cannot be supported, but it can be revised, he added.
Galub Donev pointed out in response that for every euro in the draft budget there is a specific expense, including for past periods, and there can be no talk of hidden buffers or reserves.
According to Vladislav Goranov from GERB-SDF, the government should be careful with the accusations that there is hidden data on the state of public finances, as they could cause a problem for the country. According to him, when the country is in a period of organic growth, additional fuel should not be poured into the engine of economic growth. Goranov said that the government should have been bolder in its efforts to consolidate the budget.
According to Slavi Vassilev from “Progressive Bulgaria“, the draft law reflects the policies pursued in previous years. Budget practices in previous years have artificially inflated revenues and suppressed expenditures in order to reach this 3 percent deficit, he said, adding that the proposed draft budget aims to get out of this trap.
The chairman of the budget committee, Konstantin Prodanov from “Progressive Bulgaria“ stated that the budget proposes several reforms, including the elimination of automatic mechanisms for the amount of remuneration, the tax on gambling operators, measures to lighten the economy and others.
He expressed the opinion that the participants in today's discussion have demonstrated understanding that this is a transitional budget, since it is adopted after the middle of the year. According to him, there are no quick solutions to achieve consolidation, adding that in the next budget for 2027, the government will be able to show more ambitious policies.
The Budget Committee rejected the State Budget Law with the included draft budget of the Supreme Judicial Council.