Bulgaria’s Fiscal Council calls for tighter spending in 2026 budget

Bulgaria’s Fiscal Council has urged the country’s next regular government to retain its flat tax regime and curb public spending in the 2026 budget, according to a document cited by the Bulgarian News Agency BTA.

While acknowledging that low tax rates remain a competitive advantage and that revenues are growing steadily, the council warned of mounting pressures on public spending. It recommended scrapping automatic increases in wages and pensions, particularly within the Interior Ministry, as such policies contribute to inflationary pressures. The council also called for social security contributions to be aligned for all workers, including those in the public sector, and for government institutions with overlapping functions to be restructured, potentially by reducing the number of ministries.

Other proposed measures include phasing out employees who have reached retirement age as part of broader efforts to contain spending.

The fiscal watchdog estimates the 2025 budget deficit at 3.5% of gross domestic product (GDP), which exceeds the 3% ceiling set by the EU’s Stability and Growth Pact. Rising social spending and wage growth are cited as the main drivers of this deficit.

Editor: Miglena Ivanova