site.btaEU Council Confirms Excessive Deficit Procedure for Bulgaria, Sets 2029 Deadline for Fiscal Correction

The Council of the European Union has formally confirmed the European Commission's early June recommendation to open an Excessive Deficit Procedure (EDP) against Bulgaria, calling on the Bulgarian government to take measures to curb public spending. The decision was published in the Official Journal of the European Union.

Under the Council's recommendation, Bulgaria should ensure that the nominal growth rate of net government expenditure does not exceed 4.2% in 2026, 3.4% in 2027, 3.4% in 2028, and 3.2% in 2029. Compliance with these expenditure ceilings is expected to bring the country's budget deficit below the 3% of GDP threshold by 2029, thereby ending the excessive deficit procedure.

The Council set October 15, 2026, as the deadline for Bulgaria to take effective action and submit the necessary corrective measures together with its draft 2027 Fiscal-Structural Plan, which is to be presented to the European Commission and the Eurogroup.

Bulgaria will also be required to report on progress in implementing the recommendation at least twice a year – by April 30 through its annual progress report and by October 15 through its draft budgetary plan – until the excessive deficit has been corrected.

The recommendation allows Bulgaria to temporarily exceed the prescribed expenditure growth ceilings through 2028 if the additional spending is related to defence and does not exceed the limits by more than 0.6 to 0.9 percentage points.

After 2028, Bulgaria may also be permitted to exceed the expenditure ceilings if the additional spending is linked to deliveries of military equipment contracted before the end of 2028.

To ensure proper accounting of these additional costs, the Bulgarian authorities are required to provide actual and projected data on total defence expenditure, including defence investments and any spending financed through loans under the SAFE programme.

On Wednesday, Bulgaria’s Finance Ministry published the draft 2026 State Budget, projecting a general government deficit of 5.7% of GDP. According to the draft, the consolidated fiscal programme envisages deficits of 5.7% of GDP in 2026, 3.8% in 2027, and 3.0% in 2028.

The budget framework for the 2026-2028 period has been designed, to the extent that adjustments can already be made in 2026, in line with the European Commission's proposal to launch an excessive deficit procedure and with the need to stabilize Bulgaria's public finances over the medium term, the draft says.