The Fiscal Council is against the increase in defense spending. This is clear from a publication on the institution's website in connection with the Annual Progress Report for 2025 on the implementation of the National Medium-Term Fiscal-Structural Plan of the Republic of Bulgaria for the period 2025 – 2028, quoted by "Focus".
The position cites the possibility for our country to benefit from the activation of a national derogation clause under the Stability and Growth Pact as part of the ReArm Europe Plan/Readiness 2030 package, which allows European Union member states to set aside 1.5% of GDP compared to the approved net spending plan, provided that this deviation is the result of increased defense spending.
"The forecasts indicate that nationally financed capital expenditures for 2025 will increase to 3.5% of the country's gross domestic product, which reflects pressure on public finances. It is necessary to pay attention to the significant projected growth in defense spending for 2025, which amounts to 102.5% on an annual basis and is mainly driven by capital spending. Current defense spending planned for 2025 will increase by 42.9% compared to 2024, the position reads.
And they add: "It should be noted the potential risk that increased defense funding could cause a crowding-out effect, in which limited public resources are diverted from sectors with higher economic returns, such as education or road infrastructure. Fiscal policy has suffered from a chronic deficit over the past three years. The GDN lacks sufficient commitments to countercyclical policy, including in the foreseeable future. The increase in defense spending should be at least partially offset by limiting the growth of current spending".