October Sees Bulgaria’s Budget Deficit Spike to New High

Bulgaria's budget deficit is expected to reach 4 billion leva (2 billion euros) by the end of October, according to preliminary data and projections from the Ministry of Finance, showing a rise of 1.17 billion leva compared to September. This anticipated shortfall, reflecting the balance of the consolidated fiscal program (CFP), represents about 2% of Bulgaria’s estimated gross domestic product.

As of September’s end, the budget deficit on a cash basis had climbed to 2.829 billion leva, or 1.4% of the projected GDP, an increase of 1.1 billion leva compared to August, when the deficit stood at 1.681 billion leva. In the state budget draft for the current year, a targeted deficit amount of 6.2 billion leva (or 3% of projected GDP) has been established as an upper limit by the Finance Ministry.

October expenditures included state support programs like the “Aid to support liquidity of farmers to overcome the negative economic impact of the Russian aggression against Ukraine,” which disbursed around 200 million leva. Additionally, 200 million leva was allocated for the acquisition of new railway equipment under the Recovery and Sustainability Plan, while routine monthly expenditures for staff, social services, and health insurance continued.

The CFP’s revenue, grants, and donations by October 2024 amounted to 58.1 billion leva, or 77.2% of annual forecasts, marking an 8.8% year-over-year nominal growth. By October, tax and social security contributions were projected at 81.6% of the annual target, rising from 79% in the same period of 2023. Compared to October 2023, CFP revenue saw an increase of 4.7 billion leva, largely driven by tax and social security gains of 5.3 billion leva (12.6%). Conversely, non-tax revenue dropped by 1.2 billion leva (13%), due mainly to a decrease in income from dividends and greenhouse gas emission sales.

CFP expenditures, including Bulgaria’s EU budget contribution, reached 62.1 billion leva by October, accounting for 76.2% of annual estimates. This increase was driven by social spending, as higher pension costs followed increases implemented in July 2023 and July 2024, alongside personnel costs due to salary adjustments for teaching and administrative staff. Bulgaria’s EU budget contribution, paid from the central budget, amounted to 1.3 billion leva as of the end of October, meeting EU’s resource-sharing requirements.