The 2027 budget has been planned with such a small reserve that even a limited deviation could lead to the failure to meet the set targets. This was stated by former Deputy Finance Minister and Fiscal Council member Lyubomir Datsov on NOVA NEWS’s “The Day Live” program.
According to him, Bulgaria’s main challenge in the coming years will be reducing the budget deficit because of the excessive deficit procedure. Datsov stressed that it is important not only whether the financial indicators will be achieved, but also how this will happen.
“The major problem is that there is no visible reform,” said Lyubomir Datsov.He described the government’s actions as a sign of movement in the right direction, but deemed them insufficient for a sustainable result. In his view, a deviation of €200–300 million annually could jeopardize the achievement of the budget targets. Additional risks include the international economic environment, oil and food prices, and their impact on inflation.
One-Off Revenue and New Debt
Datsov expressed concern that the planned reduction of the deficit relies primarily on one-off revenue and limiting capital expenditure, rather than on long-term structural changes. According to him, the deficit will be financed through new government debt, while part of the additional financing is linked to increasing the capital of state-owned companies.
He cited the state administration as an example of the lack of reform. According to the data he cited, since 2020 it has grown by around 11,000 staff positions, while approximately 12,000 positions remain vacant. Datsov believes that mechanically cutting vacant positions cannot replace a change in the way the administration operates.
Discrepancy in Expected Revenue
The proposal for a 33% tax on excess profits was also discussed during the conversation. The government expects the measure to generate around €800 million, while the estimates of the Fiscal Council, cited by Datsov, stand at approximately €211 million.
According to him, the difference is due to the forecasts for corporate profits, which are not sufficient to generate the planned revenue. Datsov called on the state to focus on limiting inefficient spending and implementing genuine reforms, rather than relying primarily on additional tax revenue to cover budget problems.