site.btaMedia Review: June 24

CIVIL SERVANTS WILL BEGIN TO PAY SOCIAL SECURITY CONTRIBUTIONS

24 Chasa writes that the salaries in the public administration and judicial system will be increased so that employees can begin to pay their own social security contributions. This will happen in two stages. The first stage will take effect on August 1, when the social security burden will be set at 20%. In the next stage, contributions will be gradually increased until they reach 40%, which is the level applied to all other working Bulgarians. For now, Finance Minister Galab Donev has planned to compensate civil servants for the reduction in their disposable income. The measure will also apply to judges and prosecutors, although further details are not yet known.

In total, there are 61,200 state employees under the Civil Servants Act and the Judiciary Act, with an average gross salary of EUR 1,965, according to data of the National Social Security Institute. The average net salary is EUR 1,768. This is intended to remain unchanged so that there is no reduction in income. However, under the new rules, their contributory income will increase, which means they will receive higher pensions, maternity benefits, sick leave compensation, and unemployment benefits.

Police officers, employees of the State Agency for National Security, and the military will continue to be exempted from paying their own social security contributions. In the civil service sector, they number 70,200, with an average gross salary of EUR 2,033 and a net salary of EUR 1,830.

The reasons why their social security contributions will remain fully covered by the state are several. The first is that compensating their income would lead to a 30% increase in personnel expenses, which would have the opposite effect on the budget. The amount of their social security contributions is set at 74% of the contributory income, whereas for other employees it is 33%.

In addition, this sector includes workers classified under first and second labor categories, as well as overtime work. All of this would result in significantly higher pensions and benefits, which already substantially exceed those of other public sector employees.

In addition, a 10% reduction in salary and social security expenditures is planned from September 1. According to the Podkrepa trade union, this is an unprecedented attempt at “fiscal genocide” against civil servants and employees under labor contracts in the public administration. The union described it as a “brutal blow that will affect individual wages” and expressed fears of mass layoffs. Instead, it proposes the elimination of redundant structures, where political appointments are made, and where people receive shamefully high salaries.

However, none of these proposals were discussed at a tripartite meeting on Tuesday, although a bill by Democratic Bulgaria on social security contributions for civil servants was reviewed there. It foresees that civil servants will start paying a 2% contribution this year, increasing to 5% next year, 14% in 2028, and gradually reaching 40% by 2032. However, their salaries would not be adjusted, meaning this would lead to a decrease in net income.

As expected, the proposals received principled support from employers, while trade unions opposed them. The proposal provides a “piecemeal solution” and does not guarantee that people will maintain their income, said Social Minister Natalia Efremova in rejecting it. However, she did not announce what the government’s budget draft will include.

REVENUES INTO SILVER FUND DRY UP

Sega.bg writes that the Silver Fund has once again become a topic of public discussion amid concerns about the significant depletion of the Fiscal Reserve, which the government uses to cover a large portion of its current expenditures. 

The State Fund for Guaranteeing the Sustainability of the State Pension System, as is the official name of the Silver Fund, is part of the Fiscal Reserve, but the money in it can only be used for its designated purpose. It was established in 2007 with the idea that, after 10–15 years of accumulation, a substantial amount would be built up and could be used in situations where the state faces difficulties in paying pensions.

After nearly 20 years, the funds accumulated in the Silver Fund remain worryingly small. As of May 31, the fund held EUR 2.393 billion, according to data from the Ministry of Finance.

The amount is insignificant compared to the rapid increase in pension expenditures in recent years, driven by high inflation, rising contributory income, and a number of political decisions. The money currently held in the fund is not enough to cover pension payments even for two months. According to data from the National Statistical Institute, the expenditures of the Public Social Insurance for pensions in January and February amounted to EUR 2.4 billion.

Under the law, the Silver Fund is financed through proceeds from the privatization of state assets, revenues from concessions, and, in years when there is a budget surplus, 25% of the surplus reported in the state budget for the respective year.

Over the years, however, privatization revenues have virtually dried up, budget surpluses have long disappeared, and concession fees have remained the fund’s only source of income. When this is combined with the highly conservative policy of depositing all funds with the Bulgarian National Bank, where returns were zero for many years, it becomes clear why the fund’s assets have grown so modestly. Over the span of a year, the assets of the Silver Fund increased by only EUR 85.6 million as of May 31.

CONCERNS GROW FOR FIRST TOURIST SUMMER SEASON AFTER EURO ADOPTION DUE TO HIGH PRICES

Against a grim outlook for the first tourist summer season since Bulgaria adopted the euro, Telegraf interviews Rumen Draganov, who heads the Institute for Analyses and Evaluations in Tourism. In the interview he allays fears that there are no tourists on Bulgarian beaches because of the high prices.

Asked whether there is a significant increase in restaurant and beach prices, he says this is a natural process, as is the case with everything else in Europe and the world. Draganov cites a ranking of destinations by price, according to which Bulgaria has always been among the 4th or 5th cheapest destinations out of 50 possible. The calculation includes a three-course dinner, which is around 75 euros, whereas in the most expensive destination it reaches 200 euros. A weekend stay for two in a three-star hotel in Bulgaria costs about 75 euros, while in more expensive destinations it exceeds 215–2200 euros. This shows that Bulgaria remains a cheap tourist destination, even cheaper than Greece.

Citing data from the National Statistical Institute, Draganov says that since the beginning of the year, accommodation establishments have decreased by 2% compared to last year, but their revenues have increased by 12%. The cheapest country is Bosnia and Herzegovina. Then comes Bucharest, followed by Sofia, Tirana, and others. For example, in Sarajevo a weekend for two with a three-course dinner and wine in a three-star hotel costs 248 euros. In Bulgaria it is 300 euros, while in the most expensive city, Oslo, it is 850 euros. 

Draganov says: “Every year we hear the same complaints from the business. What Bulgarian businessmen and tourism operators are doing is speaking against tourism and demanding accountability from the ministry, which is supposedly obliged to bring tourists to them. This is an unregulated form of state aid, and the ministry cannot arrange charter flights, this is the responsibility of the business sector. What the state can do is encourage low-cost airline routes and improve connectivity. That means having flights to Podgorica, Tirana, and other destinations. First, we need to develop connections within the Balkans and then expand usage of our airports, which are currently underutilized. We should restore the airports we once had, because then low-cost airlines will start landing and establishing bases there. It is the state’s job to allow these inland airports to operate flights, and then tourism across the whole country will start to develop.”

ILLEGAL ENGINEERING CONSTRUCTION WILL BE EXEMPT FROM DEMOLITION

Speaking on Bulgarian National Television, Regional Development Minister Ivan Shishkov said that the state cannot afford to demolish illegal construction on a large scale.

“Illegal construction that was once permitted by the state cannot be demolished by the state on such a large scale. We proposed that these provisions be amended. A provision for tolerance should apply only to engineering infrastructure, so that as a society we can preserve what has been built, after verifying whether it meets the required standards,” Shishkov said.

Regarding the indexation of contracts with construction companies, the regional minister said that “protecting the state’s interest does not mean opening a front against anyone.”

“On December 12, 2025, the previous government approved a methodology attempting to index all advance payments. Those advances from 2018 and 2019, politicians decided to index them and allow them to be paid once again. We stopped this methodology,” Shishkov said.

Shishkov also commented on the construction of the Hemus motorway. “Within our mandate, the Hemus motorway will be completed up to Lot 9 at Veliko Tarnovo. Lot 9 will be built. I have always said that Lots 7 and 8 need new design work. We will prepare the project, we will start the design, and then we will begin construction. I am not convinced that the contractors will be able to complete it within four years. We will ensure that any ongoing construction will be completed,” Shishkov noted.

EX-FINANCE MINISTER GORANOV SKEPTICAL OF 3% BUDGET DEFICIT

Mediapool.bg runs the second part of an extensive interview with GERB MP and former finance minister Vladislav Goranov in which he focuses on measures to tackle the growing budget deficit, after previously discussing the political processes in GERB, “the Borissov-Peevski model”, Progressive Bulgaria, the technology of political power, and relations between politicians and oligarchy.

Of unpopular measures to curb the budget deficit, Goranov says that what absolutely needs to happen is the abolition of all automatic mechanisms for increasing salaries, which would create conditions for limiting the exponential growth of personnel expenses in the future.

“Looking at the broader picture, since 2019, spending on social insurance, social assistance, and care has increased by nearly 5 percentage points of GDP. If we also include the growth in wages in the public sector, we see roughly a 7% increase in budget redistribution, without any changes to tax rates. That is a substantial increase and means that one of two things must be adjusted. Either taxes must be raised, which nobody wants to do, and rightly so, or these increased expenditures must be gradually reduced.”

Of the mechanism for determining the minimum wage Goranov says that it should include objective criteria related to labour productivity, economic development, and similar factors. “Otherwise, although we are not yet in such a situation, sooner or later there may come a point where the current minimum-wage formula will distort the labour market,” he adds.

Of government plans to cut ministries’ budgets by 10% this year, the former finance minister says that any measures that do not result in the shutdown of a state system are feasible and acceptable, and there is parliamentary support for such measures in Bulgaria.

Unfortunately, a commitment made during the election campaign by Progressive Bulgaria for a 3% budget deficit and preservation of the current tax system is gradually disappearing from the government's rhetoric, as recently, President Radev said that achieving a 3% deficit is impossible. Goranov advises the cabinet to take that budget framework, prepared by the cabinet of Rosen Zhelyazkov and adapt it as needed.

Goranov says that GERB are against financing current expenditures through debt. For more than a decade, from 2009 to 2020, with only brief interruptions - the budget functioned under the current tax system and operated with a deficit close to zero. Goranov blamed Assen Vassilev for financing recurring expenditures, such as pensions, through deficits and debt.