site.btaInstitute for Market Economics Calls for Shift in Fiscal Course Ahead of Eurozone Entry

Senior Research Fellow Petar Ganev of the Institute for Market Economics (IME) underlined the need to reverse the budget trajectory in order for Bulgaria to be successful as a model within the euro area. He spoke at a roundtable on the fiscal policy and economic vision of Bulgaria as a future eurozone member, held here Friday and organized by the Bulgarian Employers Association Innovative Technologies (BRAIT) and IME.

Ganev noted that the discussion concerns not only the 2026 budget but its overall trajectory and the direction in which the country is moving, which he described as the key question facing society. He recalled that after nearly ten years of unsuccessful transition policies prior to the introduction of the currency board arrangement (IMF-backed fixed exchange rate system introduced in 1997), followed by 28 years of relative success marked by stable public finances, declining debt and low taxes, Bulgaria is now entering a new period with the adoption of the euro on January 1. This, he said, opens a fundamental debate about the future course of medium-term policy, making the budget trajectory decisive. Ganev noted that what raises concern in the new budget framework is that a trajectory pointing towards higher taxes appears merely postponed to 2027-2028.

He added that this trend is already visible, citing the active campaign for increasing health insurance contributions and discussions on raising other taxes, including the dividend tax.

Ganev further noted that Bulgaria is facing not only political instability resulting in a record number of elections, but also other records, such as the number of unadopted budgets and the number of years begun without an approved budget. He pointed out that the dividing lines in society that fuel political instability and clashes between various groups and parties manifest themselves most clearly in the budget. He said this is also sobering, as after years of disputes on numerous issues, Bulgaria is once again confronted with the fundamental question of the past three decades: the direction of the country’s economic and fiscal policy, and the need for a shared understanding of integrity and anti-corruption efforts.

The country is returning to this fundamental debate on its economic course and budget policy, Ganev said, adding that this is what prompts so many people to voice their views.