Overview
Finance Minister Galab Donev presented Bulgaria's 2026 budget proposal on Wednesday, outlining a plan to reduce the country's budget deficit to 5.7% in 2026 and to reach the European Union's 3% deficit threshold by 2028. The minister framed the targets as part of a multi-year consolidation effort while specifying measures intended to lower spending.
Planned measures and fiscal levers
Donev said the government will pursue a range of spending reductions. Administration spending is slated to fall by 10%, and the package includes salary caps for executives at state-owned enterprises. The government also intends to end mandatory health insurance payments for police, military personnel and civil servants on a phased basis, though Donev did not provide further detail on timing or transitional arrangements.
At a press conference, Donev reiterated the government’s commitment to fiscal consolidation but stopped short of mapping every implementation step. Parliament must debate and approve the budget proposal before it can take effect.
Political and institutional context
The budget plan comes as the European Commission has proposed opening disciplinary proceedings against Bulgaria for breaching EU deficit rules. Donev had previously warned that the deficit for the current year could reach 7.4%.
Last week, the national legislature approved a debt ceiling increase of c3.8 billion to cover social spending and administrative expenses. Bulgaria joined the euro zone in January. The current government, led by Prime Minister Rumen Radev, assumed office after winning a parliamentary election on April 19; Radev previously served as the country's president.
Background and recent developments
The prior government resigned last year after street protests over a budget plan that included proposals to raise business taxes and mandatory health insurance contributions. The new administration's budget outlines a trajectory toward meeting EU rules but relies on parliamentary approval and the successful execution of spending constraints.
Takeaway
Bulgaria's 2026 budget proposal sets a clear numerical path back to the EU deficit target while detailing several cost-cutting moves. Key elements - a 10% reduction in administration spending, salary limits at state firms and the phased removal of compulsory health insurance payments for specific public servants - are intended to reduce fiscal pressure. The plan remains subject to parliamentary debate and unfolds against the backdrop of potential EU disciplinary action and a recent expansion of the nation’s debt ceiling.