Bulgarian Cabinet approves revised 2026 draft Budget package
Bulgaria’s Government approved the re-drafted 2026 draft Budget package at a special sitting on December 8, dropping several contentious provisions that drew criticism from employer groups.
Following large protests, the Cabinet formally asked Parliament’s consent to withdraw the package, which was granted on December 3, and has moved swiftly to revise the draft Budget, in the hope that the National Assembly can pass the bills at both readings before the end of the year.
The National Assembly’s budget committee is scheduled to debate the Budget at its sitting on December 9 and the first reading of the package is likely to be on Parliament’s order paper later this week.
Unlike the first version of the package, which has been criticised by both trade unions and employer groups and the latter refused to participate in consultative tripartite meetings that are part of the budgetary process, the revised package has been endorsed by both trade unions and employer associations.
The Cabinet agreed to drop the provisions that the employer groups objected to, namely the planned increase in the dividend tax from five per cent to 10 per cent, the two percentage points increase in social security contributions and the introduction of government-approved software for retail sales management.
The Finance Ministry has not given up on the increase in social security contributions, but those raises are now postponed. In its three-year macroeconomic framework, the ministry envisions an increase in those contributions by one percentage point in 2027 and two percentage points in 2028.
On the spending side, the Finance Ministry suspended the mechanism linking wages in the security and defence sectors to the average salary, replaced by a uniform 10 per cent increase of wages in the public sector.
Additionally, the Cabinet decided to cut its capital spending programme to keep the Budget deficit within three per cent of gross domestic product (GDP).
The revised Budget package envisions a consolidated fiscal programme with revenues of 50.4 billion euro and 54.05 billion euro in spending. The earlier version featured 52.44 billion euro and 55.09 billion euro, respectively. The projected Budget deficit remains unchanged at 3.65 billion euro in real terms, or three per cent of GDP.
Owing to the Bulgaria’s imminent adoption of the common European currency on January 1, all the financial parameters of next year’s Budget are denominated in euro.
Although the Finance Ministry adjusted revenue and spending in the consolidated fiscal programme, the 2026 Budget’s macroeconomic framework remains largely unchanged.
The economic growth target for next year remains 2.7 per cent and the debt ceiling is also unchanged at 37.6 billion euro, although the figure for new debt has been reduced to 9.94 billion euro from 10.44 billion euro in the earlier version.
(Photo: government.bg)
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