site.btaFinance Ministry Publishes New 2026 State Budget Bill

The Ministry of Finance published the new draft state budget for 2026 and the Updated Medium-Term Budget Forecast for 2026-2028 on its official website late on Friday, hours after trade unions, businesses, and the government reached agreement on the main parametres of the draft. 

The initial draft budget bills for 2026, which were approved by the Council of Ministers and submitted to Parliament for consideration in November, were withdrawn by a decision of the Council of Ministers, following large-scale protests across the country against the draft state budget.

The fiscal policy objectives and parametres of the budgetary framework for the 2026-2028 period  are in line with the priorities for maintaining fiscal sustainability in the medium term and the need to implement revenue measures and ensure expenditure policies, with fiscal consolidation observed as a result of the changes reflected, the Ministry said.

The budget balance under the Consolidated Fiscal Programme (CFP), expressed as a share of GDP, for the 2026-2028 forecast period  is a deficit of 3.0% of GDP in 2026, 2.8% of GDP in 2027 and 2.4% of GDP in 2028.

At this level of deficit, the amount of revenue, grants and donations under the CFP is set at EUR 50.402 billion in 2026.

Total expenditure under the CFP amounts to EUR 54.051 billion.

According to the national rule under the Public Finance Act, expenditure for 2026 amounts to 40.1% of GDP, for 2027 to 39.9% of GDP and for 2028 to 40% of GDP. It should be noted that the application of the activated derogation clause for increased defence spending has the effect of reducing these expenditures to below 40% of GDP, the Finance Ministry noted. With the introduction of the revised EU economic governance framework, the new rule limiting the growth of net expenditure becomes the leading rule.

Based on the assumptions for the 2026-2028 period, the public 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 49.0 billion (36.6% of GDP) in 2028. The maximum amount of public debt at the end of 2026 may not exceed EUR 37.6 billion.

The minimum amount of the fiscal reserve as of December 31, 2026, is set at EUR 2.4 billion.

The maximum amount of new public debt that may be incurred during the year under the Public Debt Act is EUR 9.940 billion, including a loan of up to EUR 3.261 billion to receive financial support under the European Union's SAFE instrument.  

The autumn macroeconomic forecast for the period, prepared by the Ministry of Finance, predicts that economic growth will reach 2.7% in 2026. In the 2027-2028 period, GDP growth is expected to be in the range of 2.5-2.4%. The average annual inflation for 2026 is expected to be close to this year's, 3.5%, and will slow down to 2.9% in 2027 and 2.5% in 2028. The forecast has also been confirmed by the Fiscal Council, the draft reads.

The following proposed amendments to tax legislation, as well as the continued effect of certain measures, have been taken into account in forecasting tax revenues:

• Expansion of the scope of goods with high fiscal risk;
• Expansion of the electronic tracking system for vehicles transporting goods with high fiscal risk;
• Continued effect of the new excise duty calendar for tobacco and tobacco products introduced on May 1, 2025, with a view to a balanced phased increase in excise duty rates on tobacco and tobacco products;
• Continuation of the policy of increased tax relief for children and children with disabilities in 2026;
• Provision of a more favourable depreciation regime for tax purposes for electric vehicles.
• Increase in the variable part of the fee under Article 30, paragraphs 3 and 4 of the Gambling Act for licenses to organize gambling games from 20% to 22% from January 1, 2026.

The insurance policy for the 2026-2028 period provides for:

• The social security contribution to the state social security pension fund will increase by 1 percentage point from January 1, 2027 and by 2 percentage points and from January 1, 2028;
• The minimum insurance income for self-insured persons will increase to EUR 620.20 from January 1, 2026;
• The maximum insurance income for all insured persons will increase from EUR 2,300 on January 1, 2026, to EUR 2,505 in 2027 and EUR 2,659 in 2028.

The main expenditure policies leading to an increase in the expenditure side of the budget for the 2026-2028 period are as follows:

• Increase in the minimum wage from January 1, 2026, to EUR 620.20;
• Increase in the child-rearing allowance for children up to 2 years of age to EUR 460.17 for the entire period up to and including 2028;
• Increase in the amount of cash benefit for raising a child up to 8 years of age by the father (adoptive parent) to EUR 460.17 for the entire period up to and including 2028;
• The amount of cash benefit for not using maternity leave under Article 50a of the Social Security Code is increased from 50% to 75% for not using the leave for raising a child up to 2 years of age under Article 54 of the Social Security Code and for not using the leave for adoption of a child up to 5 years of age under Article 53d of the Social Insurance Code;
• Pensions for employment granted by December 31 of the previous year shall be updated as of July 1 of the respective year under Article 100 of the Social Insurance Code or the so-called "Swiss rule";
• Implementation of a common income policy by increasing personnel costs in the budgetary sphere for 2026 by 10% and abolishing the automatic mechanisms for determining the amount of remuneration in certain sectors linked to the average wage;
• Maintaining the income policy for teaching professionals in the pre-school and school education system;
• Launching a support programme for medical specialists with secured funds of EUR 30.0 million for 2026;
• Funds in municipal budgets have been increased as a result of changes in the natural indicators in the area of activities delegated by the State in the fields of culture, social services, healthcare, etc.

On Friday afternoon, Finance Minister Temenuzhka Petkova told a news briefing following a meeting with the social partners that the National Council for Tripartite Cooperation will convene on Monday, after which the Council of Ministers is expected to approve the draft and submit it to the National Assembly that same afternoon. Petkova outlined the key points on which consensus was reached with the trade union and employer organizations: keeping the dividend tax rate at 5%; rejecting the proposed 2-percentage-point increase in pension insurance contributions; removing the requirement for businesses to use National Revenue Agency–approved sales management software in commercial outlets; and abolishing the automatic mechanism for setting pay levels in sectors such as defence and security.