FAC: Bulgaria is richer than it looks

As of this January 1, Bulgaria is part of the eurozone. After joining NATO in 2004, the European Union in 2007 and the Schengen area in 2025, the Balkan country with 6.5 million inhabitants is closing the last major chapter of its integration with the West.

Economically, the country is in better shape than its reputation abroad often suggests. Bulgaria's public debt is extremely low. According to data from the European Commission in 2025, it amounted to only 28.5% of gross domestic product - among the lowest levels in the eurozone. For comparison, Germany's public debt is over 63%, and in the rest of the eurozone, indebtedness significantly exceeds 80%. This is stated in an analysis by Michael Martens – correspondent for Southeast Europe of "Frankfurter Allgemeine Zeitung“, BGNES reported.

Bulgaria's budget deficit is also low – 1.9% in the last reporting period, while in Germany it reached 4.8%. Only inflation in recent years has often been relatively high, which, however, is largely due to the country's stable economic growth.

Bulgaria is gradually catching up economically

Although Bulgaria remains the country with the lowest GDP per capita and the lowest wages in the EU, since joining the Union 18 years ago it has consistently caught up. The economy grew steadily for many years and continues to expand. Last year, Bulgarian GDP grew by about 3%, according to European Commission estimates, and a similar pace is forecast for the first year in the eurozone.

While economic indicators appear stable, the political situation is far more problematic. In mid-December, Bulgaria’s coalition government resigned after mass protests. Although Prime Minister Rosen Zhelyazkov and his ministers are still in office, the cabinet’s days are numbered.

It is theoretically possible for the current parliament to form a new governing majority, but this is unlikely. If three attempts to form a government fail, this would mean a vote in the first half of 2026 – the eighth parliamentary election in just five years. The votes in April, July and November 2021, October 2022, April 2023, as well as in June and October 2024 did not lead to stable governance.

With full mandates, the eighth elections after 2021 were to be held only after 2050, but such calculations have nothing to do with the reality of the highly fragmented political system of the Black Sea state.

The government in Sofia, which failed after less than a year, was an unstable structure from the very beginning: a three-party coalition of very different partners, which nevertheless did not have its own majority and in parliament relied on the tolerance of the parliamentary group of the dubious oligarch and media magnate Delyan Peevski.

The protests against the coalition, whose largest party was the GERB of long-time Prime Minister Boyko Borisov, were provoked from the draft budget for 2026, which provided for a serious increase in taxes and fees. In itself, this probably would not have caused such outrage, but the draft also made it clear that the salaries of civil servants were also to increase sharply.

Many recognized in this the handwriting of the oligarch Peevski, who was operating behind the scenes. It was believed that in this way he wanted to buy loyalty in the state apparatus at the expense of society. However, Peevski failed in front of the country's politically awake public. The fact that the coalition relied on none other than the most unpopular politician in the country was perceived by many people in Bulgaria as something harmful.

Although the coalition tried to stop the momentum of the protests by withdrawing the draft budget, the demonstrations had already developed their own dynamics. Prime Minister Zhelyazkov, a Borisov man, was forced to step down.

However, it is far from certain whether the now probably inevitable seventh snap elections, which will be the eighth since 2021, can lead to fundamental changes. In the current situation, they can rather be expected to produce an unclear distribution of power again - unless the entry of the popular President Rumen Radev into active politics brings a stir to the situation. Radev, a former general in the Bulgarian Air Force, has been head of state since 2017. He was re-elected in 2021 and, according to sociological surveys, is the most popular politician in the country. It has long been rumored that he is considering the idea of founding his own party after the approaching end of his second and, according to the constitution, last term as head of state. Whether this would bring him success, however, is anything but certain.

Former Bulgarian President Georgi Parvanov was also relatively popular, but his attempt after ten years as head of state to establish himself in active politics with a party called "ABB" failed completely. If Radev does indeed found a party and is more successful than his predecessor, this could at least temporarily break the country's borderline ungovernable majorities.

What this would mean for the Western orientation of the former communist state remains uncertain. Radev also owes his popularity to populism, which sometimes takes on a demagogic tone. This is evident, for example, in his attempt to stop the introduction of the euro in Bulgaria through a referendum.

The president consciously exploited the population's fears of an appreciation due to the introduction of the single currency and consciously ignored a decision by the Bulgarian Constitutional Court. The court had declared a similar request by the Russian-backed "Vazrazhdane" party unconstitutional, the reason being that Bulgaria had committed to introducing the euro upon joining the European Union and that a referendum could not call into question the state's international obligations.

Even in his New Year's address, Radev expressed dissatisfaction that a referendum should have been held for the introduction of the euro. "The rulers did not want to listen to the citizens," he said. In other cases, Radev's statements often vary between populism and nationalism. The fact that he deliberately stoked the population’s fears related to Russia, while denying the democratically elected Bulgarian parliament the right to represent the people, bordered on disregard for democracy.

However, Bulgaria has been developing steadily for now, regardless of its head of state and the many elections in recent years. Although the country has been in a practically permanent pre-election regime since 2021, the political elite – including in view of the goal of joining the eurozone – has in most cases resisted the temptation to loosen budgetary discipline. The 2026 draft budget, which collapsed under the pressure of public discontent, was an exception to this rule.

Bulgarian National Bank Governor Dimitar Radev (no relation to the president) reassured the public after the failure of the last government in an interview, emphasizing that the state cannot be reduced to the duration of individual cabinets. As long as institutions reliably perform their functions, even deep political crises can be overcome without serious economic consequences. Political turmoil does not necessarily lead to economic difficulties, the banker also pointed out.

This has indeed been confirmed in recent years. The coming months will show whether the 21st member of the eurozone will be able to stay on this course in the future.