DSB warned that the government is removing some of the national limits on the structural deficit without having demonstrated that the new model will protect public finances just as effectively. The position was released after the National Assembly’s Budget and Finance Committee approved amendments to the Public Finance Act at first reading.
The bill was supported by 12 votes “for”, 6 “against” and 3 “abstentions”. It provides for the growth of net primary expenditure to become the leading indicator in fiscal monitoring, while the provisions related to the medium-term budgetary objective for the structural deficit would be removed. The automatic corrective mechanisms would also be abolished.
According to the Council of Ministers, the amendments are necessary to align national legislation with the updated European economic governance framework. The government approved the bill on October 21. The sponsors’ rationale is that the European model now focuses on controlling net primary expenditure, making the parallel application of the old national mechanisms inappropriate.
DSB: This is a political choice
The party says that European rules do not require Bulgaria to abandon its additional national restrictions. “Bulgaria has already paid a catastrophic price for irresponsible fiscal policy,” DSB said, describing the change as a political choice by the cabinet rather than an inevitable European requirement.
The party links the existing system of fiscal rules to the financial crisis of 1996–1997 and the subsequent introduction of the currency board. According to DSB, these restrictions were created to limit the possibility of financing current expenditure through future debt.
DSB warns that removing the safeguards without equivalent guarantees could increase the risk of persistent deficits, rising public debt and higher debt-servicing costs. The party insists that the government explain why it is changing the rules before demonstrating how the new mechanism will prevent the accumulation of imbalances.
What is changing
Under the current regime, a deviation from the medium-term budgetary objective for the structural deficit may trigger a corrective procedure. The Fiscal Council is among the bodies that can establish such a deviation, while the finance minister must prepare a corrective plan within two months. Under the amendments, this mechanism will be replaced by monitoring the dynamics of net primary expenditure.
The debate is taking place against the backdrop of serious pressure on the budget. The Fiscal Council assessed the deficit under the consolidated fiscal programme for 2026 at 5.7% of GDP and forecast that government debt would reach €51.1 billion, or 35.7% of GDP, at the end of 2028. According to the council, rising interest payments will limit resources available to other public sectors.
The next step is for the bill to be considered in plenary. DSB insists that the debate include specific guarantees that replacing the national rules will not lead to a weakening of budgetary discipline.