Fiscal Council Urges Caution as Bulgaria’s 2026 Budget Shows Persistent Deficit

The Fiscal Council has urged a more cautious approach to planning Bulgaria's state finances in its analysis of the revised 2026 Budget, which was rejected by parliament on Wednesday. According to the advisory body, even after cutting both revenues and expenditures by roughly €1 billion (about 2 billion BGN), the projected deficit remains at a high €3.65 billion.

The council emphasizes the importance of a balanced budgeting strategy. In its assessment, the deficit persists despite reductions: the first budget version, which faced opposition from employers, projected revenues exceeding €50 billion (around 98 billion BGN) against expenses over €54 billion (about 106 billion BGN), while the revised plan forecast revenues slightly over €49 billion (approximately 96 billion BGN) and expenses of €53 billion (around 104 billion BGN).

The Fiscal Council highlights that the deficit’s share of GDP is crucial. While the official forecast assumes a GDP of €123 billion (roughly 242 billion BGN), making the deficit 3%, a weaker economic scenario with GDP falling to €118 billion (about 232 billion BGN) would push the deficit to 3.1%, exceeding the Maastricht limit.

The National Assembly’s rejection of the second 2026 Budget version effectively triggered the resignation of the Zhelyazkov cabinet. Until a new budget is adopted, Bulgaria will operate under a temporary law for revenue collection and expenditure execution, commonly referred to as the “extension law,” ensuring state finances remain functional in the first months of the year.