Bulgarian Cabinet approves draft 2026 Budget bill
Bulgaria’s Government approved the 2026 draft Budget package at a sitting on November 13 and was set to table it in Parliament, opting against further delays to the budgetary procedure as employer groups continued to oppose some of the Cabinet’s revenue-raising measures.
The Government has dubbed the 2026 Budget package as “Bulgaria’s first euro Budget”, owing to the country’s imminent adoption of the common European currency on January 1. As such, all the financial parameters of next year’s Budget are denominated in euro.
The package has been criticised by both trade unions and employer groups – the former for not going far enough with reforms and “social spending,” while the latter claimed that it would create an inordinate burden on businesses.
Employer groups repeatedly refused to participate in meetings with trade unions and the government, a tripartite format that is part of the budgetary process, but only in a consultative role, with the Cabinet not required to secure the consent of the other two parties to move forward with the bills.
The employer organisations’ main objections in the 2026 Budget package were the two percentage points increase in mandatory pension contributions and the social security ceiling (the maximum income on which social security contributions are owed), as well as the increase in dividend tax (which will double to 10 per cent).
Prime Minister Rossen Zhelyazkov acknowledged the criticism about a lack of reforms in his opening remarks at the start of the Cabinet sitting on November 13, saying that the main goal of the 2026 Budget was to “stabilise public finances and create the conditions for the much-delayed discussion about long-term reforms.”
The Budget package envisions a consolidated fiscal programme with revenues of 51.44 billion euro and 55.09 billion euro in spending, with the Budget deficit estimated at 3.65 billion euro in real terms, or three per cent of gross domestic product (GDP).
On the spending side, the bulk of the increase – from 49.44 billion euro planned for 2025, although current projections put the actual spending at 48.1 billion euro – was due to a rise in social transfers, mainly hikes in amounts earmarked for pensions and salaries, including an increase in the minimum salary (from 550 euro in 2025 to 620 euro in 2026), and household assistance programmes.
The commensurate increase in revenue (in 2025, the Budget envisioned 46.15 billion euro to be collected, but current projections put the figure at 44.71 billion euro) was forecast to come from beneficial macroeconomic conditions, increased tax collection and reducing tax fraud, as well as the increased mandatory pension contributions.
The 2026 Budget macroeconomic framework sets an economic growth target of 2.7 per cent, higher than the European Commission’s 2.1 per cent projection made in this year’s spring forecast. (The Commission is expected to release its autumn forecast with updated projections next week.)
The draft budget sets the debt ceiling at 37.6 billion euro, with the government allowed to take on up to 10.44 billion euro in new debt in 2026. This figure includes borrowing up to 3.26 billion euro under EU’s Security Action for Europe (SAFE) mechanism for investment in defence capabilities.
The ministry said that at an estimated 32.1 per cent of GDP, that was still one of the lowest figures for government debt in the European Union.
(Photo: government.bg)
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