site.btaGovernment Approves 2026 Budget Bill

The government has approved the 2026 Budget Bill and the Updated Medium-Term Budget Forecast 2026–2028, the government information service said on Monday. Later in the day, the budget bill was submitted to Parliament along with the draft budgets of the National Health Insurance Fund and the Public Social Insurance.

The 2026 budget has been aligned with Bulgaria’s first National Medium-Term Fiscal and Structural Plan for the period 2025–2028, which sets out policies, priorities, reforms, and investment plans over the medium term. These have been reflected in the national budget documents. Regarding fiscal policy, the priority remains ensuring the long-term sustainability of public finances in order to strengthen confidence in the country and create a predictable investment and business environment.

In connection with the introduction of the euro from January 1 2026, the information and documents for the budget procedure have been prepared in euro at the official exchange rate established by the Introduction of the Euro in the Republic of Bulgaria Act -BGN 1.95583 per EUR 1.

The initial budget bills for 2026, which were approved by the Council of Ministers and submitted to the National Assembly in November this year, were withdrawn by Decision No. 839 of 2 December 2025 of the Council of Ministers.

The estimates for the 2026–2028 period reflect the trends in the autumn macroeconomic forecast for the development of the national economy.

The autumn macroeconomic forecast, prepared by the Finance Ministry, projects that economic growth will reach 2.7% in 2026. Average annual inflation for 2026 is expected to be close to that of 2025, at 3.5%, and to slow to 2.9% in 2027 and 2.5% in 2028. The forecast has been confirmed by the Fiscal Council, the press service says. It is also close to the expectations of international institutions such as the European Commission, the Organisation for Economic Co-operation and Development, and others.

The budget balance under the Consolidated Fiscal Programme, expressed as a share of GDP for the forecast period 2026–2028, is projected to be negative, at 3% of GDP in 2026, 2.8% in 2027, and 2.4% in 2028 respectively. Maintaining the deficit within these limits ensures the continuation of various expenditure policies supported by the corresponding revenue measures.

The state debt is expected 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. In 2026, the maximum amount of new government debt that may be issued is up to EUR 10 billion, including up to EUR 3.2 billion under the SAFE instrument for strengthening the European defence industry.

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

Under the national rule in Article 28, paragraph 1 of the Public Finance Act, expenditures amount to 40.1% of GDP for 2026, 39.9% for 2027, and 40.0% for 2028. The government press service says that a derogation clause related to increased defence expenditures brings these expenditures below 40%.

The main expenditure policies leading to an increase in the spending side of the budget for the period 2026–2028 are as follows: an increase in the minimum wage as of 1 January 2026 from EUR 550.67 to EUR 620.20; indexation of retirement pensions granted up to 31 December of the previous year, effective from 1 July of the respective year under the so-called Swiss rule; an increase in the childcare allowance for children up to 2 years of age from EUR 398.81 to EUR 460.17 for the entire period until 2028; implementation of a general income policy by increasing personnel expenditures in the budget sector by 10% in 2026 and eliminating automatic mechanisms for determining remuneration in certain sectors linked to the average wage; maintaining the income policy for educators in the preschool and school education system; launching a Support Programme for junior doctors with an allocation of EUR 30 million in 2026; increasing municipal budget allocations due to changes in state-delegated activities in culture, social services, healthcare, and others.

The budget allocation for the municipalities amounts to EUR 5,077.8 million for 2026 compared with EUR 4,563.7 million in 2025, representing an increase of 11.3%.

Four measures have been planned to optimize expenditures. For the period 2026–2028, the Council of Ministers and municipal mayors, following review and assessment, will aim to reduce the total number of full-time staff by no less than 5,500 positions that have remained vacant for more than six months, distributed proportionately over the period.

Funds for capital expenditures next year amount to EUR 7.020 billion, including EUR 3.165 billion from national funding and EUR 3.855 billion from European funding, including the National Recovery and Resilience Plan.

The Investment Programme for municipal projects will continue, with a total maximum amount of EUR 920.3 million. Payments will be made by the Bulgarian Development Bank under conditions and procedures determined by the Council of Ministers.