site.btaMedia Review: November 5

OVERVIEW

The topic that dominates Wednesday’s media is the 2026 State Budget.

STATE BUDGET

Trud daily’s front page story is on Bulgaria’s first State Budget in euros, which has been sharply criticized by employers, trade unions, and economists, who called it a “disaster budget.” Employers warn that raising social security contributions will heavily burden the private sector, while unions say wage increases are insufficient. Experts note that the pension system remains unreformed, and economists argue that the revenue projections are unrealistic. Fiscal Council Chair Simeon Djankov described the higher social security payments as the worst possible tax increase, predicting a major fiscal crisis by 2027 and an EU excessive deficit procedure against Bulgaria. Key budget measures include: minimum wage to rise to EUR 620.20 and childcare benefits to EUR 460.17; public sector wages to increase by 5% or more in some sectors; pensions to continue rising under the “Swiss rule,” but widow’s pensions will not increase as promised; pension fund contributions to rise by 2 percentage points in 2026 and another 1 point in 2028; dividend tax to double from 5% to 10%. Economic forecasts foresee a GDP growth of 2.7% in 2026, to EUR 120.1 billion; new public debt of up to EUR 10.4 billion for 2026, rising to EUR 49 billion by 2028, 36.6% of GDP; the fiscal reserve set at EUR 2.4 billion by the end of 2026.

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Speaking on bTV’s morning programme former deputy finance minister and Fiscal Council member Lyubomir Datsov warned that Bulgaria’s recent budgets are leading to growing public debt and that deficits and inflation cannot be reduced without radical policy changes. He criticized the government for repeating the same budget structure and spending model for the past five or six years, saying that real reform requires “unpopular decisions”. He argued that the current financial policy creates income imbalances and noted that Bulgaria’s economy is expected to grow by only about 2.9% in 2026, slightly below the 3% forecast for 2025, signalling a slowdown. According to Datsov, if the 2026 budget parameters are implemented as planned, citizens will end up paying more, especially those who are law-abiding and transparent, as the system provides no incentives for responsible taxpayers.

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Former deputy prime minister and minister of economy Nikolay Vassilev on Nova TV’s morning programme called on MPs from all parties not to vote for the proposed budget. Throughout the transition period until 2020, spending averaged 30%, with a maximum of 40%, he said. Even left-wing governments spent less. Currently, spending is 46-47%. The nature of the state is changing, “we are starting to resemble communist countries, whereas we used to be one of the most disciplined in Europe.” Regarding dividend tax, he said that this was the first time he heard that increasing taxes would improve the economy. "We can pay this tax, or we can choose not to pay it. We can pay salaries, for example. That is legal. It will be more profitable for companies to pay salaries rather than dividends," the economist explained. Vassilev said that MPs will vote for this budget because of party discipline. "There is a misconception that by handing out money in the public sector, they are buying the next election. Things don't work that way," he added. The former deputy prime minister said that it is necessary to make both a large reduction in the state administration of about 30,000 people and structural reform in the public sector.

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Economist Vladimir Sirkarov told Bulgarian National Radio (BNR) that the 2026 State Budget seems to be driven by political motives, essentially sending the message “If there are elections, vote for me.” He criticized the draft budget for lacking real policies and focusing instead on artificially achieving a 3% deficit by adjusting figures and hiding the true deficit. Sirkarov expressed surprise at the continued excessive spending, saying he had expected a more cautious and responsible approach, especially since 2026 will be a challenging year due to Bulgaria’s planned entry into the euro area. He described the budget as “more of the same,” noting unrealistic expectations such as “a 35% increase in VAT revenues, which are based on this year’s unattainable targets”. According to him, politicians are avoiding telling the truth because they fear losing electoral support amid the constant threat of new elections. Sirkarov also criticized recent tax and social security changes, pointing out that pension contributions and the dividend tax have been increased, despite earlier promises not to raise the tax burden. He called this “illogical”, as higher dividend taxes could encourage the shadow economy and discourage new investors, the opposite of what Bulgaria needs before joining the euro area.

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Trud’s article continues saying that the 2026 draft budget reintroduces a measure requiring all businesses to use state-approved sales management software aiming to curb the shadow economy. Starting March 1, 2026, companies will be obliged to report sales electronically only through software approved by the National Revenue Agency. The government claims this will eliminate undeclared “grey” revenues and boost tax collection by an estimated EUR 320 million. Financial experts warn that the measure will significantly increase administrative and financial burdens, particularly for small and medium-sized enterprises. Businesses will have just a few weeks to install the new systems, right after they already spent money adjusting their fiscal devices to work in both levs and euros. The proposal revives elements of a controversial Ordinance, first introduced in 2020, which foresaw similar software integration. That regulation was later struck down by the Supreme Administrative Court, which ruled it invalid because the government had failed to assess its economic impact and the costs for businesses. Critics argue that instead of helping curb tax evasion, the measure could disrupt small businesses, increase compliance costs, and add bureaucracy, while supporters insist it will improve transparency and enhance tax discipline.

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24 Chasa’s front page article is also about the state’s attempt to bring to light the revenues of over 50,000 shops and restaurants in order to secure another EUR 500 million, by reporting sales electronically only through approved software. The problem that the state is trying to solve stems from the fact that traders declare their turnover using software that is unknown to tax authorities. Tax inspectors found that these various software products allow data to be entered manually or selectively. This enables traders to not report part of their sales, thereby avoiding paying taxes. Currently, only 5,934 merchants use one of the 500 software programs registered with the National Revenue Agency. This is an extremely small proportion of the total 250,000 to 300,000 registered fiscal devices in the country.

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The front page of Telegraf daily is also on the same subject, with the sensational headline: “Next Year's Budget Introduces Tax Big Brother”. In addition to the introduction of the software, the Ministry of Finance plans to expand the list of goods that are considered to have high fiscal risk under tax and customs controls. Alongside the list expansion, the draft budget also includes the extension of electronic tracking systems for vehicles transporting these high-risk goods. The tracking will be done in real time by the National Revenue Agency either via on-board devices in transport vehicles or a mobile app. The rationale behind this being to fight tax evasion, undeclared sales or transport of goods, and to boost tax collection by targeting goods that tend to have higher levels of “grey” or unreported activity.

LUKOIL

Energy expert Hristo Kazandzhiev told BNR that appointing a special administrator on behalf of the state for Lukoil Bulgaria remains the most effective solution to the company’s current crisis. He explained that such a move would allow Bulgaria to lift existing sanctions, while placing Lukoil Neftochim’s operations under state control, similar to how Germany handled its own energy assets under sanctions. Kazandzhiev said that the special administrator’s powers are clearly defined by law, they “cannot negotiate or sell company assets” but must ensure that the refinery continues operating normally. The revenues from this activity would be held in a special account, to be returned to Lukoil once sanctions are lifted. He added that the position could be held by one person or a small collective of up to three people, “to ensure greater oversight and trust”. Kazandzhiev urged the Bulgarian government “to act promptly to implement this solution”.

ECONOMY/BANKING

Capital.bg has an article saying that the banking system's profit reached BGN 2.8 billion in September, but its growth slowed to just 3.9%. Lending continues to boom and competition remains fierce, especially in the area of housing loans. On the threshold of the eurozone, UBB maintains its leading position with nearly BGN 42 billion in assets. For the first nine months of 2025, the sector's profit reached nearly BGN 2.83 billion, which is BGN 106.6 million more than in the same period of the previous year. However, growth has already slowed to just 3.9%, compared to around 9% in the previous quarters. Net income from fees and commissions stands out as the atypical main driver of profit growth. It increased by BGN 113.5 million (9.5%) year-on-year to BGN 1.3 billion. The battle for customers continues to be most pronounced in the area of housing loans, where annual growth is chasing the unprecedented 30% seen before the global financial crisis, reaching almost BGN 33.6 billion. This equals BGN 7.7 billion increase in portfolios, with a jump of BGN 2.18 billion in the third quarter of 2025 alone. The picture is more complex for corporate loans, as despite the overall growth of 8.4% or BGN 4.2 billion on an annual basis to BGN 55.3 billion, many banks are also reporting a contraction in portfolios. UBB continues to be the most aggressively growing player, dominating with an increase of BGN 451 million for the quarter and BGN 1.37 billion for the last 12 months.

ECONOMY/ROSE OIL

Mediapool.bg has an extensive report headlined: From the Rose Valley to the Asian Market. A company from the village of Skobelevo conquered China with rose oil capsules for drinking, the subtitle reads. Alba Grups Ltd., a Bulgarian family-owned company founded in 2009 near Kazanlak, Central Bulgaria, produces natural cosmetics and essential oils with a fully closed production cycle, from growing roses and herbs to creating finished products. Its rose oil capsules for drinking, developed with French partners, have become the company’s best-selling product and a major success in China. Using traditional steam-water distillation without chemicals, Alba produces high-quality rose and lavender oils, floral waters, and natural cosmetics. The firm employs about 50 people year-round and expands seasonally during harvest, Marketing and Sales Manager Ivaylo Petkov said. In 2023, Alba reported over BGN 4 million in revenue, a 33% annual increase. Challenges include rising labour and fuel costs and competition from cheaper producers in Turkiye and Azerbaijan. A major concern for the industry is the EU’s proposal to classify essential oils as chemical products, which producers fear could devastate the sector. Alba continues to innovate with new products, such as cosmetics made from white rose oil and a dental set using white rose water.

LOCAL POLITICS

Duma daily’s front page story quotes Ivan Takov, leader of BSP–Sofia and head of the BSP for Bulgaria coalition in the City Council, saying that amid Sofia’s ongoing garbage crisis, Mayor Vassil Terziev and his deputy for ecology, Nadezhda Bobcheva, have come under fire after reportedly traveling to Rio de Janeiro while the city struggles with uncollected waste. Takov criticized the mayor not only for leaving during the crisis but also for launching a PR campaign thanking residents of affected boroughs Lyulin and Krasno Selo, through billboards in the colours of the Ukrainian flag, for cleaning their own garbage. Takov called this “cynical”, saying citizens shouldn’t have to do the municipality’s job and then see their tax money spent on self-congratulatory ads. The BSP group will demand that next year’s waste management budget include compensation for residents in boroughs where waste collection was suspended. Takov accused Terziev’s administration of relying on slogans and PR instead of real solutions, urging a shift of public resources from private contractors to municipal companies. He argued that Sofia must strengthen its municipal economy, rather than continue to privatize services, a policy he blamed for the city’s repeated crises and inefficiency over the past 35 years.

ANTARCTIC

Prof. Hristo Pimpirev, head of the Bulgarian Antarctic Institute, interviewed by Bulgarian National Television (BNT) said that the first group of 11 people, nine logistics specialists and two scientists, will depart for the St Kliment Ohridski Base in the Antarctic to study marine biology in cooperation with researchers from the US and Portugal. This year’s expedition focuses on scientific research rather than construction, following the recent completion of a new laboratory on the base, which Pimpirev described as “a space station on the Moon”. The main projects involve oceanography and climate change, including studies of currents in the Bransfield Strait with German scientists and research on global warming’s effect on sea levels. The expedition will conduct 25 scientific projects, 15 of which are entirely Bulgarian, covering topics such as mineral resources, cosmic radiation, and the impact of solar activity on climate.

RELIGION/MOBILE APP

BNR reported that the Bulgarian Orthodox Church launched a mobile application designed to help people interested in faith and spiritual life easily access reliable and verified church information. According to Angel Karadakov, administrator of the official website of the Bulgarian Orthodox Church, the goal is to bring the Church closer to people and protect users from misleading online content. “The app has already been downloaded several thousand times, receiving positive feedback and suggestions for new features, such as sections explaining church rituals and sacraments, guidance on how to behave in church,” Karadakov said. The administrators plan to introduce reminders for holidays and fasting periods.