site.btaMedia Review: October 23

2026 DRAFT BUDGET

In a preview of the 2026 draft state budget, TrudNews.bg writes that a 40% increase in property tax is among the proposals. The tax valuations of real estate have not been updated since 2012, and preliminary consultations with municipalities on their sharp increase have already taken place. Local authorities have long reminded the government that the three local taxes they collect, on buildings, vehicles, and real estate transactions, have not been adjusted for more than 10 years.

At the moment, several scenarios for raising the property tax are being calculated, with the governing coalition partners expecting this measure to be the least painful for the public. The motivation is clear 0 rising housing prices and higher market valuations.

GERB and There Is Such a People of the ruling coalition have been firm that the BSP’s proposals to replace the flat tax with a progressive income tax system will not happen next year. The idea to raise the corporate profit tax from 10% to 12%was also rejected.

According to GERB, if social spending is not increased, the budget could be balanced through stricter tax collection, a rise in property tax, and higher social security thresholds.

BSP representatives have vowed that they will not back down from the Swiss rule for adjusting pensions. GERB, however, has proposed a revision to that rule-  to raise pensions by 5%, instead of by the percentage calculated under the Swiss rule, which is 50% of inflation and 50% of the growth in the average insurable income from the previous year.

One of the measures to be included in the efforts to increase revenues in the state budget will be the fight against the grey economy. “A quarter of Bulgaria’s economy is grey, and that is an extremely high level,” Labour Minister Borislav Gutsanov recently said.

According to him, this sector holds the greatest untapped potential for increasing revenues - both in the pension system and in budget tax receipts.

The issue of pension contribution rates also remains open. Under the medium-term budget forecast, social insurance contributions are scheduled to increase by 1% starting in 2027 and by another 2% from January 2028.

However, the International Monetary Fund has recommended that Bulgaria should move the increase to as early as January 2026, in order to secure more funds for the state budget.

The Confederation of Independent Trade Unions in Bulgaria also supports the idea of raising insurance contributions, but proposes that this is combined with larger tax reliefs for families with children.

The Labour Ministry, however, insists that now is not the right time to raise contributions. As of January 1, Bulgaria will join the eurozone, and it would not be advisable for this to coincide with higher contribution rates, which could lead to lower net wages and higher costs for businesses.

Representatives of the business community are likewise opposed to major changes in the tax and social insurance system.

EUROPEAN PARLIAMENT DEBATE ON RULE OF LAW IN BULGARIA

In the wake of a debate at the European Parliament on the rule of law in Bulgaria and the assault on democratic institutions, in an analysis Capital.bg says that Bulgarians have stopped believing that Europe will solve their problems

Five years ago, in October, mass protests in Sofia had brought the issue of corruption and the rule of law in Bulgaria to the forefront - from a national concern to a pan-European topic, debated in the European Parliament’s plenary session in Strasbourg.

This Wednesday, October 22, 2025, Bulgaria was once again on the agenda of the European Parliament, and the tone of the debate showed that concern among Europe’s political families has not only failed to diminish, but has actually deepened.

This time, however, people are not on the streets, and yet another round of speeches in the European institutions seems to mean little to them. They appear to have lost faith, both in the capacity and the will of the European Commission and the European political families, to bring about real change in Bulgaria.

Still, the sense of deja vu in Strasbourg remains strong — some of the faces on the political scene have changed, others have shifted their political colors or rhetoric, but the fundamental questions about the independence of the judiciary, political pressure, the capture of institutions, and media freedom in Bulgaria remain the same.

“No one is innocent,” countered Kristian Vigenin of the Bulgarian Socialist Party, who is also now part of Bulgaria’s ruling coalition. According to him, the Liberals have proposed a “propaganda debate” in the European Parliament, along with suspending EU funds for Bulgaria and European political interference in the work of the Bulgarian judiciary.

 “If this Parliament does not want to aggravate anti-European sentiments, it must ensure that European institutions can protect citizens where their own states fail,” commented Radan Kanev (Democratic Bulgaria and the European People’s Party - EPP). However, the EPP stood behind the ruling authorities in Sofia and declared the debate political and unnecessary.

Despite calls for Brussels to conduct an on-site investigation into the state of the rule of law in Bulgaria, no such official commitment was made by representatives of the institution during the debate.

“The situation in Bulgaria will be discussed at the General Affairs Council meeting on November 17 (along with three other EU member states),” said Marie Bjerre, Denmark’s Minister for European Affairs, whose country currently holds the rotating presidency of the Council of the EU and who also took part in the plenary discussion.

Meanwhile, the Renew Europe group announced they plan to visit Varna and Sofia by the end of the year for an investigative mission regarding the situation.

RULING COALITION PLANS TO SERVE OUT FULL TERM

GERB-UDF and MRF-New Beginning have promised a full term of governance in a joint statement published on the Facebook pages of both parties. The statement also notes that MRF–New Beginning will continue to support the mandate holder and its governing partners for the full term of the government.”

There will be no reformatting of the government. GERB, BSP, and There Is Such a People (TISP) will continue to govern, while MRF–New Beginning will keep supporting the cabinet without participating in the executive, and therefore without sharing responsibility for its actions.

“When something is to be reformatted, all parties should be willing. The other two parties had no such desire, so we postponed it,” said GERB leader Boyko Borissov, speaking to journalists.

Borissov explained that GERB, BSP, TISP, and MRF-New Beginning are now expected to reach an agreement on the state budget for next year.

When asked whether there would be a decision on the rotation of the National Assembly’s chairperson, Borissov replied that for his party, the rotation is mandatory. “I hope our colleagues respect that - the three parties should rotate every year.” GERB plans to nominate Raya Nazaryan, former speaker of the National Assembly, for the position.

A day ago, it became clear that both GERB and TISP want a rotation of the National Assembly’s chairperson. So far, however, no agreement has been reached with the BSP, from whose quota the current speaker, Nataliya Kiselova, was elected.

The GERB leader announced that he does not wish to become prime minister. “I’m not a candidate for prime minister, because I’ve heard all kinds of nonsense — that I’m negotiating with Delyan for him to provide support while I become prime minister. Three times were enough for me.”

ROTATION OF PARLIAMENT CHAIR

If there is general consensus, there will be a rotation of the chairperson of the National Assembly, since some of the parties and coalitions are yet to hold their assemblies and this would not be a precedent in Bulgarian politics.

“That coalition was originally constructed with the argument that there would be a rotating prime minister and a rotating speaker of parliament, but that never happened,” said Rumen Petkov, leader of ABV, part of the BSP–United Left coalition, on Bulgarian National Television, quoted by 24 Chasa.

On Sunday, the BSP has scheduled a national forum, where this issue is expected to be discussed.

“The election of Nataliya Kiselova as chair of the National Assembly was a difficult but very successful move from the perspective of national and institutional interests. Any encroachment on positions of power and influence is always perceived sensitively. I believe there is no need to dramatize the process, given that the BSP has a very solid presence in both the executive and legislative branches,” Petkov added.

He stressed that the ministers from BSP–United Left are performing very successfully in a challenging situation. According to him, the current construction that produced the cabinet is difficult to sustain, and every participant must make compromises, but not at any cost.

***

The BSP continues to remain silent on the matter, but expectations are that it will eventually agree. Within socialist circles, however, there is discussion about Kiselova not leaving immediately, but rather remaining in her post until December 6, when one year will have passed since her election.

The official decision will be made by the BSP National Council on Sunday.

From the BSP headquarters it transpired that there have been no specific talks with their partners on the topic. Last week, BSP leader Atanas Zafirov indicated that they would accept Kiselova’s replacement, but added that he had not heard any concrete criticisms of her work.

There are many voices in Parliament calling for Kiselova’s removal. Vazrazhdane and MECh have already initiated petitions for her dismissal and reiterated their demand on Wednesday. However, they along with Velichie oppose the rotation, arguing that it would set Parliament back to the beginning, when for almost a month the parties stalled and failed to elect a chairperson.

Kiselova was elected on the 11th attempt, and only then did the National Assembly begin to function properly.

Under the rotation plan, Raya Nazaryan is expected to serve as chairperson for one year, after which the position will pass to a representative of TISP.                                                        

ILLEGAL CONSTRUCTION IN WAKE OF RECENT FLASH FLOODS

The Green Movement has created a map of 48 riverbeds where construction is taking place. The map has been sent to the Ministry of Regional Development and the Ministry of Environment.

 “We have surveyed less than 1% of the country’s territory, but what we found is somewhat alarming,” said Toma Belev, co-chairman of the movement, in an interview on Bulgarian National Radio.

“When the floods occurred in Elenite, no one paid attention to the floods in Sveti Vlas. There, we are talking about five riverbeds that have been built over, exactly as in Elenite - with hotels, complexes, and even the city stadium is built in such a riverbed. The water entered it and swept away the surface.”

The same situation is observed in the Sunny Beach resort. “In many resort complexes where there is a high demand for properties, we are observing ongoing construction,: he said.

The Burgas water utility built the wastewater treatment plant of Tsarevo on a floodplain terrace. It was flooded and did not function both in 2023 and 2025. In Elenite, some of these areas have even become private property. Similar practices can also be found inland in some of the regional centers. The situation in Sofia is severe as well. He also commented on a case in Asparuhovo, near Varna, where permission has been granted for the construction of a residential complex with 810 apartments, located in a ravine.
“It’s an interesting case. We received a report from a member of the public about it. No one can say when a massive rainfall might occur in Asparuhovo, but one already has and there were quite a few victims,” said Belev.

Belev also expressed doubts about the quality of the expertise provided by the National Construction Control Directorate in Elenite. He noted that so far, 214 existing illegal structures have been counted - including hotels, bases, markets, and parking lots.

LOCAL GOVERNMENT AND DISTORTION OF LABOUR MARKET

24 Chasa runs an interview with Adrian Nikolov, a researcher from the Institute for Market Economics (IME), who has published a report on the growth of real wages over the past 10 years, which have doubled during this period, even after adjusting for inflation?

Nikolov says that if many find this estimate of improving living standards unrealistic, it’s because the improvement has been gradual over a long period. Large income inequality also adds to this effect. The differences in nominal wages between industries are multiple times, and between regions up to twice as much. This leads to a sense of poverty among workers in lower-paid sectors when comparing themselves to standards in higher-paid ones, even though improvements have taken place across the board.

Nikolov says that the state is the largest employer in 46 out of 265 municipalities, but more generous in as many as 226. Most often, this is attributed to small, remote, and economically weaker municipalities. The reasons are clear - on one hand, purely demographic, since small and poor regions are depopulating and aging the fastest. At the same time, these are also areas that find it more difficult to attract investments, which makes the expansion of private employment very challenging. The distortions are obvious, when the public sector in a small municipality offers much higher wages, the small remaining private business there finds it very difficult to attract good and educated workers, and potential new investors are discouraged by this lack of skilled labor. An open question remains whether these workers in state jobs achieve the productivity potential they would have in the private sector.

IME proposes a sharp reduction in the number of municipalities based on demographic criteria, but also taking into account the limits of administrative capacity, geographic features, and the real needs of the population for public services. This would lead roughly to the merging of at least a hundred municipalities with neighboring larger and economically viable ones. 

A desirable side effect of optimizing local government would be the freeing up of labor resources. This could provide relief to businesses, which are increasingly struggling to find workers.

The "minimum plan" would be sharing administrative functions among several municipalities where the workload is low. This would reduce the number of employees in those municipalities to some extent, but for me, this would only postpone and even replace a genuine administrative reform.