Bulgaria's 2026 Budget Approved with 5.7% Deficit, New Taxes & EU Pressure
Key Details of Bulgaria's 2026 Budget Approval
Parliamentary Approval and Economic Projections
SOFIA, July 24 (Reuters) - Bulgaria's parliament approved a long-awaited 2026 budget on Friday, which foresees a fiscal deficit of 5.7% of economic output this year from 3.5% in 2025, as the economy grows by 2.6%.
Background and Political Context
Bulgaria has been operating under a temporary budget since a proposed 2026 plan with higher social security contributions and dividend taxes triggered protests late last year which eventually led to snap elections and a new government led by Rumen Radev taking office in May.
EU Pressure and Fiscal Discipline
Parliament's approval of the budget is key for the EU and NATO member to improve finances and secure funds from the European Union, which opened a disciplinary action in July over what it said was an excessive deficit estimate of 4.1% of GDP for 2026, giving Sofia until October 15 to present measures to cut it.
Budget Measures and Revenue Sources
The budget, which was approved by 125 lawmakers in the 240-seat national assembly, forecasts a 10% decrease in administration spending and higher revenue from taxing tobacco and gambling profits. It also foresees fresh borrowing of up to €10.1 billion ($11.5 billion), including as much as €3.3 billion through the EU's multi‑billion‑euro SAFE defence fund.
Public Debt and Future Targets
Public debt is projected to rise to €37.7 billion or 30.1% of gross domestic product.
Bulgaria aims to trim its deficit to 3% by 2028. However, analysts said that spending rigidities and opposition to tax hikes would challenge the efforts.
Additional Information
($1 = 0.8764 euros)
(Reporting by Alex Lefkowitz; Writing by Angeliki Koutantou; Editing by Kirsten Donovan)
