site.btaUPDATED Finance Minister Presents Parameters of 2026 Draft Budget with 5.7% Deficit

Finance Minister Galab Donev presented the main parameters of the draft budget for 2026 at a briefing here on Wednesday. It envisages a deficit of 5.7% of GDP, or just over EUR 7.2 billion.

The budget projects revenues of EUR 49.561 billion and expenditures of EUR 56.8 billion. Inflation in 2026 is expected to reach 3.6%. The Finance Minister stated that the Government's objective is to reduce the deficit to 3% of GDP by 2028.

As regards the level of public debt, it is expected to increase by EUR 2.2 billion in 2026, in addition to the already approved ceiling of EUR 3.8 billion, reaching EUR 37.7 billion, or 31.1% of GDP, by the end of the year. In 2027, public debt will rise to EUR 44.7 billion, or 33.2% of GDP, while in 2028 it is projected to reach EUR 50.5 billion, or 35.2% of GDP.

The fiscal reserve is expected to stand at EUR 2.6 billion at the end of 2026.

Donev stated that a proposal has been made for civil servants to begin paying their own social security contributions from August 1 this year, with contributions split 80% for the employer and 20% for the employee, and from 2027 onwards at a ratio of 60% to 40%. A mechanism is also envisaged under which the personal social security contributions of other public-sector employees, including those in the Ministry of the Interior and the armed forces, will be covered from 2027.

"It should be clear that these changes provide for compensation of remuneration so that the achieved net income is maintained," Donev explained.

He further stated that easing wage expenditure in state-owned enterprises and for elected positions will save the 2026 budget more than EUR 560 million.

Donev also noted that the Government is not planning to freeze the minimum wage, but rather aims to create a new mechanism for determining the minimum wage from 2027 onwards. 

With regard to investment policy, capital expenditure is expected to reach EUR 9.360 billion in 2026, including EUR 4 billion financed from national sources and EUR 5.3 billion financed by the European Union, including funding under the Recovery and Resilience Plan.

Donev added that the Government plans to increase the maximum social security income threshold to EUR 2,300 from August 1, 2026, which is expected to generate just over EUR 90 million in additional revenue.

An increase of 5% in the minimum social security thresholds for certain economic activities is also envisaged, with the expected positive budgetary effect estimated at around EUR 40 million.

The Government also plans to increase vignette fees by 30% from August 1 and expand the toll system, with the expected effect estimated at EUR 53 million.

The draft budget will also introduce a 10% tax on profits from gambling activities, which is expected to generate an additional EUR 100 million.

Later on Wednesday, the draft budget is due to be published on the website of the Finance Ministry.

Donev stressed that the State budget is the most important policy instrument of the government: "First and foremost, because it affects virtually all members of society. It is now clear to everyone that the State treasury is in a difficult position," he said. Donev argued that this is the result of "ill-considered and haphazard financial decisions that have led to serious consequences."

"The expected reasons for the significant deficit are the accumulated imbalances of recent years resulting from the unchecked growth of expenditure, particularly spending on the public sector, personnel, social payments, and compensation for businesses and households, while at the same time the revenue side of the budget has remained unchanged, or one-off measures have been applied to partially cover deficits, which may have been intended to conceal those deficits," the Finance Minister said, arguing that "this has also been confirmed by the European Commission."

According to him, some are blaming the current Government for this, "but the deficit is entirely real, and moreover excessive."

Earlier on Wednesday, Prime Minister Rumen Radev announced that the projected deficit in the draft State budget for 2026 would exceed 3%. He criticized the economic policies of previous governments, arguing that insufficient efforts had been made to improve productivity, the investment climate and investment inflows.