Debate Over Bulgaria’s Budget: Billions in New Debt and Uncertain EU Funds

At a press conference in Parliament on "The Truth About the Recovery and Resilience Plan," Asen Vassilev, co-chair of "We Continue the Change" (WCC), criticized the proposed state budget, highlighting the planned debt of BGN 7 billion. He described this as the most scandalous aspect of the draft, claiming that GERB had failed to defend it. According to him, Finance Minister Temenuzhka Petkova justified the borrowing by stating that the funds would be allocated through state-owned enterprises and the Bulgarian Development Bank (BDB) to cover the deficit. However, Vasilev argued that this approach signified a return to old corruption schemes.

Vasilev also pointed out that, in addition to the BGN 7 billion, the budget foresees an increase in government spending by BGN 18 billion, meaning that GERB plans to spend a total of BGN 25 billion this year. He noted that in the three-year period from 2021 to 2024, Bulgaria’s state debt had grown by BGN 14.5 billion, while the gross domestic product had increased by BGN 62 billion. He further warned that the new budget proposes borrowing more in a single year than in the past three years combined, exceeding BGN 15 billion. According to him, this is a direct admission that part of the borrowed funds will not actually enter the Bulgarian economy.

On the topic of the Recovery and Resilience Plan, Vasilev stated that the government has committed to receiving the full amount of funds this year and next year, even though it claims that some reforms have not been implemented. He argued that the reforms are feasible, particularly in the energy sector, and insisted that electricity market liberalization would not lead to higher prices for consumers.

WCC co-chair Kiril Petkov added that they would closely monitor how the borrowed money is spent. He suggested that GERB intends to channel the BGN 7 billion to state-owned enterprises and the BDB because spending through these entities is easier to control. He also raised concerns about the appointment of Rosen Karadimov as the only candidate for chair of the Commission for Protection of Competition (CPC), stating that this institution manages public procurement worth nearly BGN 30 billion and that Karadimov is part of previous corruption schemes.

In response to the criticisms, Deputy Prime Minister and Minister of Innovation and Growth Tomislav Donchev held an extraordinary briefing alongside Finance Minister Temenuzhka Petkova and Energy Minister Zhecho Stankov. Donchev dismissed the claims made earlier in Parliament as "scandalously false" and announced that the government would disclose which projects under the Recovery and Resilience Plan would be removed. He stated that the final decisions from ministries would be gathered by March 7, with an official announcement expected early next week.

Donchev also highlighted that Bulgaria has faced serious delays in implementing investments under the Recovery and Resilience Plan over the past four years. He criticized previous ministers for failing to prepare project documentation and initiate public procurement procedures, describing the lack of action as unacceptable. He also addressed the ongoing reforms, stating that the government is working on two major legislative packages related to justice and anti-corruption measures. The administration plans to submit these proposals to Parliament in March to avoid further delays.

Regarding the energy sector, Donchev admitted that some reforms would be particularly challenging. He clarified that Bulgaria’s initial version of the Recovery and Resilience Plan did not include commitments to shut down energy capacities, and most of the completed reforms had already been covered in the first tranche of payments.

Finance Minister Temenuzhka Petkova responded directly to Vasilev’s accusations, questioning his criticisms of the budget given that he had been in charge of public finances for the past four years. She argued that the budget follows all existing legal provisions and does not exceed the established expenditure framework. She also emphasized that the proposed budget reduces expenditures by BGN 2.2 billion compared to the draft prepared by the previous caretaker government.

Petkova accused Vasilev of lacking transparency in his past financial decisions, particularly referencing the purchase of grain with over BGN 1.2 billion, which she claimed had not been completed, leaving uncertainty about the fate of those funds. She also dismissed claims that the budget would collapse due to delays in receiving EU funds, arguing that such funds do not directly impact Bulgaria’s fiscal stability.

Regarding concerns about the Bulgarian Development Bank, Petkova rejected allegations that it would be misused for large-scale state expenditures, pointing out that under its statute, BDB can only provide funding to private companies up to BGN 5 million per project.