Bulgarian MPs adopt Budget 2026 in the middle of the year

Five months before the end of the year, the Bulgarian parliament adopted the state budget with only the votes of the ruling "Progressive Bulgaria" party. It should come into force on August 1. The budget plan foresees an unprecedented deficit of 7.2 billion euros.

"In recent years, the deficit of 3% has begun to be considered normal. Now the ruling party is proposing 5.7%, which is an extremely harmful policy at a time when the economy is still growing. This means higher inflation, depreciation of savings, higher interest rates and an increase in state debt. According to economic logic, larger budget deficits are justified in periods of economic crisis, not during economic growth,” MP Vladislav Panev told BNR - Radio Plovdiv.

Despite the opposition's numerous proposals on revenues and expenditures, not a single proposal was accepted by the ruling party.

This is Bulgaria's first budget in euros and with it the country immediately entered an excessive deficit procedure. Earlier this month, the Council of the EU also adopted a recommendation to this country, which outlines the net spending plan and the schedule that must be followed in order to end the excessive deficit procedure by 2029. On the "Horizont" program of the BNR, the Chairman of the Committee on Economic Policy, Investment and Industry in the National Assembly, Stefan Belchev, said:

"We have the ambitious goal for 2028 our deficit to fall to and below 3 percent in order to comply with the Maastricht criteria, but here I have to draw attention to the fact that we are currently in an excessive deficit procedure and we need to comply with the instructions of the European Commission."

In the medium-term framework, the government is targeting a deficit of 5.7% of GDP in 2026, 3.8% in 2027, and 3% in 2028. However, its reduction does not explain why the same framework is targeting a further increase in state debt in 2028 - up to 35% of the gross domestic product.

What are the budget parameters that directly affect citizens?

Personnel  costs remain almost at last year's level - 12.4 billion euros. This year, the automatic mechanisms for increasing the salaries of military personnel, police officers, teachers, and university professors will not be applied, but they have not been completely cancelled. However, the share of education spending is decreasing from 4.8% to 4.5% of GDP, and by 2028 the plan is to reduce it to 3.8% of GDP. MP salaries are currently frozen, along with the remuneration of the heads of various committees and agencies.

The budget repeals the formula for calculating the minimum wage in 2026, which is frozen at 620.20 euros until a new formula is adopted. Until now, it was defined as 50% of the average gross wage, as many social benefits depend on it.

With changes to the Labour Code, the calculation of the length of service of employees with employment contract is also changing: it will be calculated based on the actual working hours.

The proposal of "We Continue the Change" to increase the tax relief for children in the amount of 306.78 euros to 600 euros was not accepted. The proposals of GERB and "We Continue the Change" to increase student scholarship money, the minimum amount of which was set at 10 euros at the end of the 20th century, were rejected.

Vignette fees are increasing by 30% from August 1. The excise tax on cigarettes is also being raised, but the government rejected a 50% increase in the gambling tax proposed by Democratic Bulgaria.

The budget does not provide funds for the construction of National Children's Hospital, which was among the government's stated priorities.

The formation of former Minister of Finance Asen Vassilev - "We Continue the Change" called on the head of state to veto and return for a new discussion in the National Assembly the State Budget Act, the State Social Security Budget and the National Health Insurance Fund Budget. So far, the petition has been supported by nearly 30,000 people.

Text: Yoan Kolev based on interviews by Yavor Stamatov and Antonia Popova