Bulgaria is facing growing fiscal pressures only months after joining the eurozone, with the government proposing a 2026 budget that includes a deficit of 5.7% of gross domestic product (GDP), or approximately 7.2 billion euros, the highest level recorded in the past three decades.
Under the draft budget, public spending is set to increase by nearly 20% compared with this year, while public debt is projected to climb to around 50.5 billion euros by 2028.
Finance Minister Galab Donev said the current administration had inherited a significantly weaker fiscal position than previously disclosed, arguing that earlier governments had understated the country’s financial problems in order to meet the criteria for eurozone membership.
However, Bulgaria’s Fiscal Council said the proposed budget relies primarily on new borrowing rather than structural reforms. It argued that planned savings from a 10% reduction in administrative spending would have little impact against an increase of more than 9 billion euros in overall public expenditure.
Economists have also expressed concern over the rapidly rising cost of servicing public debt. Annual interest payments are expected to rise from less than 350 million euros in 2022 to nearly 1.8 billion euros by 2028, reducing fiscal space for spending on education, healthcare and infrastructure.
The budget proposal has triggered strong political criticism. Opposition lawmakers warned that Bulgaria risks repeating the fiscal instability of the 1990s or following a “Romanian scenario” marked by high deficits, political instability, austerity measures and declining investor confidence.
Analysts note that the fiscal deterioration is occurring despite favourable economic conditions. Bulgaria currently has one of the European Union’s lowest unemployment rates, strong wage growth and robust domestic consumption, leading economists to argue that the widening deficit reflects expansionary fiscal policy rather than economic weakness.
The European Union has already placed Bulgaria under the Excessive Deficit Procedure, requiring Sofia to submit concrete measures by mid-October aimed at restoring fiscal sustainability.
The debate comes as neighbouring North Macedonia is also discussing a state budget rebalance, highlighting broader regional concerns over public spending, borrowing and long-term fiscal discipline.