site.btaFinance Ministry Publishes Draft 2026 State Budget, Updated Medium-Term Budget Forecast

The Bulgarian Finance Ministry has published on its official website the draft State Budget Act for 2026 and the Updated Medium-Term Budget Forecast for the 2026–2028 period.

In connection with the planned adoption of the euro as of January 1, 2026, all budget procedure documents and data are prepared in euro at the official exchange rate, Finance Minister Temenuzhka Petkova said in her report.

Under the draft, the budget balance under the Consolidated Fiscal Programme (CFP) is set at 3% of gross domestic product (GDP) for 2026, with the same level maintained for 2027 and 2028.

Revenues, grants, and donations under the CFP are projected at EUR 31.2 billion, while expenditures and transfers (net) are expected to total EUR 17.6 billion and EUR 16.2 billion respectively. The overall budget balance, including Bulgaria’s contribution to the European Union, is projected to be negative, reaching EUR 3.857 billion by end-2026.

GDP for 2026 is expected to reach EUR 120.1 billion, marking a growth rate of 2.7%.

At this level of deficit, revenues, grants, and donations under the CFP are projected to amount to 42.8% of GDP in 2026 and 40.5% in both 2027 and 2028. The increase compared to the estimated 39.6% of GDP in 2025 is mainly due to new revenue measures and the full-year effect of policies adopted in 2025, which did not fully materialize because of the later adoption of the 2025 Budget.

Public Debt and Fiscal Reserve

Over the 2026–2028 period, general government debt is projected to reach EUR 37.6 billion (31.3% of GDP) in 2026, EUR 43.5 billion (34.2% of GDP) in 2027, and EUR 49 billion (36.6% of GDP) in 2028. The minimum level of the fiscal reserve as of December 31, 2026, is set at EUR 2.4 billion.

Social and Insurance Policy

As of January 1, 2026, the pension contribution rate to the Public Social Insurance (PSI) Pension Fund will increase by 2 percentage points, with a further 1-point rise scheduled for January 1, 2028.

The minimum social security income for self-insured persons will be EUR 620.20, while the maximum social security income will rise to EUR 2,352 in 2026, EUR 2,505 in 2027, and EUR 2,659 in 2028.

Key social policy measures for the period include:

• Increasing the minimum monthly wage (MMW) to EUR 620.20 as of January 1, 2026;
• Raising the monthly childcare allowance for children up to 2 years of age to EUR 460.17, to remain unchanged through 2028;
• Raising the monthly allowance for fathers (or adoptive fathers) caring for a child up to 8 years old to EUR 460.17 through 2028;
• Increasing compensation for unused maternity, parental, and adoption leave from 50% to 75% of the due amount under the Social Insurance Code;
• Adjusting labour pensions granted before December 31 of the previous year as of July 1 each year in line with the so-called Swiss Rule (Article 100 of the Social Insurance Code);
• Increasing personnel expenditures in the public sector by 5% in 2026, with additional increases in specific sectors under the applicable regulations and policies;
• Continuing the policy of increasing teachers’ salaries so that their average remuneration reaches at least 125% of the national average wage, with the aim of attracting young and qualified educators to the pre-school and school system;
• Increasing municipal budget allocations to reflect updated indicators in delegated state activities in the areas of culture, social services, healthcare, and others.

Tax Policy Measures

The following amendments to tax legislation and ongoing measures were taken into account when projecting tax revenues:

• Increasing the withholding tax rate on dividends and liquidation proceeds from 5% to 10% under both the Corporate Income Tax Act and the Personal Income Tax Act;
• Expanding the list of goods classified as high fiscal risk;
• Expanding the electronic tracking system for the movement of vehicles transporting high fiscal risk goods;
• Introducing mandatory electronic reporting of sales revenue through National Revenue Agency (NRA)-approved sales management software in commercial outlets;
• Continuing the excise duty calendar for tobacco and tobacco products introduced on May 1, 2025, to ensure a balanced, gradual increase in excise rates;
• Retaining enhanced tax relief for children and children with disabilities in 2026;
• Introducing a more favourable depreciation regime for electric vehicles.

Fiscal Objectives and EU Requirements

The parameters of the budget framework are aligned with the reformed European economic governance framework, including fiscal rules, limits, and derogations that are to be transposed into national legislation.

Budgetary policies are consistent with the priorities set out in Bulgaria’s 2025–2029 Governance Programme, focusing on balanced fiscal policy, financial stability, and the introduction of the euro as the official currency as of January 1, 2026, Finance Minister Temenuzhka Petkova also said in her report.