Government, Unions and Employers Finalize Compromise Framework for Bulgaria’s 2026 Budget

The government, unions and employer organizations confirmed that they have reached a shared position on the key elements of the revised Budget 2026, following several days of intensive talks. Finance Minister Temenuzhka Petkova described the discussions as productive, noting that all sides managed to align their positions on the most contentious issues, allowing the draft to move forward again.

A central part of the compromise is the decision not to change the tax and social security framework next year. The proposal to raise the dividend tax has been withdrawn, the plan to increase social security contributions by 2 percentage points has been abandoned, and the mandatory introduction of SUPTO software will not go ahead. The maximum income subject to social security will remain at 2,300 euros, which is roughly 4,500 leva.

The government will maintain the planned general income policy, which envisages a 10 percent pay rise across the entire public sector. According to the unions, this amounts to a little over 1.4 billion euros, or roughly 2.7 billion leva, with the exact distribution among ministries and spending units still to be finalized. In the security and defense sectors, the automatic link between remuneration and the average national salary will be removed as part of the changes.

To offset the removal of several revenue measures, the capital investment program will be reduced. Petkova confirmed that national co-financing will be cut by 450 million euros (around 880 million leva), while a further 30 million euros (about 59 million leva) from European funds will also be trimmed. Earlier estimates placed the total adjustment needed at approximately 1.5 billion leva, making the capital reduction a major element of the compensation plan.

The Ministry of Finance intends to provide the updated draft budget and the medium-term forecast to social partners by the end of the day. Over the weekend, work will continue on the budgets of the National Health Insurance Fund and the State Social Security system. On Monday morning, the National Council for Tripartite Cooperation is scheduled to meet, after which the cabinet will vote on the final draft, with parliamentary submission planned for early afternoon.

Employer representatives expressed satisfaction with the outcome. Kiril Domuschiev highlighted that avoiding tax increases was a priority for business, noting that this helps maintain investor confidence. He said reforms and workforce optimization within the administration will remain necessary, reflecting commitments for a three-year program to eliminate vacant positions and modernize the public sector.

Union leaders also underlined that the compromises reached were substantial. Dimitar Manolov recalled similar negotiations from 2019 and said that the common ground found this time provides a workable starting point for future reforms. Lyuboslav Kostov emphasized that while transport companies in major cities and Bulgarian Post will receive support enabling wage increases, the situation at Bulgarian State Railways (BDZ) remains unresolved. He warned that railway workers are close to striking, describing BDZ as a red line for the Confederation of Independent Trade Unions in Bulgaria and calling for a legal mechanism to raise the subsidy for Passenger Transport.

Representatives of employer organizations stressed that discussions on broader structural reforms must continue into 2026. Rumen Radev of the Association of Bulgarian Employers’ Organizations said that separating social and pension payments should become a priority and welcomed the consensus reached so far as a foundation for more substantial changes ahead.

All sides expressed hope that, with the agreement now in place, Bulgaria will succeed in adopting the 2026 budget at the beginning of the year, allowing the planned pay increases and other measures to be implemented without delay.