site.btaUPDATED Government Approves Draft Legislation on 2026 State Budget

The government approved the draft legislation on the 2026 State Budget, as well as the Updated Medium-Term Budget Forecast for the 2026-2028 period, which represents the grounds for the draft law, the governmental press service reported on Thursday.

The 2026 budget was drafted in accordance with the adopted first National Medium-Term Fiscal-Structural Plan of the Republic of Bulgaria for the 2025-2028 period, which contains policies, priorities, reforms, and investment plans for the medium term. These were also reflected in the national budget documents. In regard to fiscal policy, ensuring the long-term sustainability of public finances in order to increase confidence in the country and to create a predictable investment and business environment remains a priority, the Council of Ministers noted.

In the context of the national adoption of the euro that will take place on January 1, 2026, the information and documents relating to the budgetary procedure for 2026 have been prepared in euro at the official exchange rate under the Introduction of the Euro in the Republic of Bulgaria Act, which is set at BGN 1.95583 for EUR 1. The estimates for the 2026-2028 period reflect the trends in the autumn macroeconomic forecast for the development of the national economy, the main assumptions and estimates of the effect of discretionary revenue and expenditure measures.

The macroeconomic forecast, prepared by the Ministry of Finance, predicts economic growth of up to 2.7% in 2026, and ranging between 2.4 and 2.5% in 2027 and 2028. Average annual inflation for 2026 is expected to be close to that in 2025. i.e. 3.5%, with average annual inflation slowing to 2.9% in 2027 and 2.5% in 2028.

The budget balance under the consolidated fiscal programme (based on the national cash-based methodology), expressed as a share of GDP, for 2026 is a deficit of 3% of GDP. Keeping the deficit within the limits ensures that a number of expenditure policies are backed by corresponding revenue measures. The general government deficit is also 3% of GDP for 2026.

Public debt is forecast at EUR 37.6 billion (31.3% of GDP) in 2026, EUR 43.5 billion (34.2% of GDP) in 2027, rising to EUR 49 billion (36.6%) in 2028. In 2026, the maximum amount of new government debt that can be incurred is up to EUR 10.44 billion, including up to EUR 3.2 billion under the Security Action for Europe (SAFE) mechanism to strengthen the European defence industry.

The fiscal reserve will total EUR 2.4 billion. Key social measures include a minimum wage of EUR 620.20, childcare and parental allowances of EUR 460.17, and increases in social security ceilings to EUR 2,352–2,659. Pension contributions rise by 2 points in 2026 and 1 point in 2028, while public sector salaries, including teachers', will increase.

Tax changes include raising the withholding tax on dividends to 10%, expanding electronic reporting and tracking, and incentives for electric vehicles. The budget aligns with EU fiscal rules and Bulgaria’s euro adoption plans.