site.btaUPDATED PM Zhelyazkov Says Extended Budget Is Also an Option If Consensus Is Reached

If the consensus is to work with an extended budget, that is also an option, Prime Minister Rosen Zhelyazkov said in an interview for the Bulgarian National Radio on Sunday.

He recalled that the draft state budget was submitted by the government as a complex project and adopted at first reading. Withdrawal after first reading can only occur by decision of the National Assembly. Restarting the procedure would require a new Council of Ministers decision, a new draft, and consultations within the National Council for Tripartite Cooperation. If the current bill is withdrawn, about two months would be lost solely to procedural steps.

This would require drafting an extended budget to apply for 2026 - essentially the 2025 budget already converted into euro. "That poses a systemic risk, which is why, in our view, proceeding in this way is only possible if the government, trade unions and employers reach an agreement on the overall parameters," the Prime Minister said.

He added that the focus now is on identifying the substance around which consensus can be built. The current draft budget provides for a 12% increase in social spending, and, according to him, the protests against it are the first in history to oppose a budget with such a significant rise in social expenditure.

"If more spending is requested while revenues are reduced, it must be stated clearly what will be done with the deficit," Zhelyazkov said. He stressed that the protests are not social protests like those in 1996 or 2013, when expectations centred on more social protection.

"When preparing this draft, we were mindful of the need to increase spending for groups requiring higher protection. It contains measures that anger many active social groups," he continued. The protests have brought together very different groups - those opposing the euro, those advocating more liberal or more conservative policies, supporters of systemic and anti-systemic approaches, as well as generational divides, with young people expressing a typical generational outburst against the status quo and conservatism, Zhelyazkov added.

Zhelyazkov said he had assured Deputy Prime Minister Atanas Zafirov that the core social commitments laid out in the draft budget would be preserved. He spoke in response to a question about whether Zafirov’s recent warning poses a risk to the stability of the government.

Deputy Prime Minister and Bulgarian Socialist Party leader Atanas Zafirov said here Thursday that there can be no compromises on incomes, families, pensions, healthcare or the condition of municipalities. "If there is no possibility to continue the planned social policies, BSP - United Left will reconsider its participation in the government", he said as quoted by the party press office.

"I do not think the role, place or authority of BSP are under threat," Zhelyazkov said.

He noted that BSP had made a difficult decision in joining the government from the outset, given its position on the left of the political spectrum. The party had to support centre-right fiscal measures, Bulgaria’s stance on the war in Ukraine, and the introduction of the euro. "As a socialist party, BSP has insisted on defending these positions and has been doing so in a pragmatic way," the Prime Minister said.

Employers and trade unions have their own views – some more radical, others more realistic, but combining all demands would mean lower revenues and higher spending, Zhelyazkov noted. He said that a budget expressing the position of the governing majority cannot be expected to secure full parliamentary consensus or opposition support.

"This will be a budget that must convey a sense of solidarity ahead of a challenging year – on the one hand due to the presidential election and political tension, and on the other because such tension may place additional political pressure on the smooth transition to the euro. This must be taken carefully into account when adjusting the budget parameters, which cannot differ significantly, because the fiscal framework cannot exceed the country’s real capacity," Zhelyazkov said.

If social spending is to retain its planned 12% increase, and if some discretionary measures are removed, the financial effects must be assessed together with possible alternative measures, he added.

The Prime Minister noted that income growth outpaces inflation, which makes the draft a "budget for higher incomes". He said that this is not universally accepted, as a significant share of society expects income growth to come through the State’s direct role in securing higher pay, rather than through gradual economic stimulus.

Asked how far the government can compromise on the draft, Zhelyazkov said: "We are not the universal accountant of the State. Society must indicate its boundaries." He pointed out that the EUR10 billion in debt planned for next year includes EUR 3.2 billion under the SAFE mechanism for defence commitments, the principal of which will start being repaid after ten years. This period will provide opportunities for military modernization. A further EUR 3.7 billion is allocated to finance the deficit set at 3% of GDP, and EUR 1.7 billion will refinance existing debt.

"We have no funds that raise concerns regarding debt being used for improper purposes. The professional discussion concerns the sustainable level of debt, and Bulgaria remains among the countries with the lowest debt-to-GDP ratio," the Prime Minister said.

Zhelyazkov stressed that the government "cannot allow" a VAT increase in 2026, as it would fuel inflationary pressures. He reaffirmed that the tax burden will remain unchanged.

Speaking to journalists later, Zhelyazkov said there is "every possibility" for the 2026 State budget to be adopted within December.