Bulgaria’s 5.7% deficit triggers EU discipline

Bulgaria joined the euro area in January. Six months in, Sofia has published a 2026 draft budget with a consolidated deficit of 5.7% of GDP (BNR, Forbes Bulgaria). The EU ceiling is 3%. The European Commission has already moved to open an excessive deficit procedure (EDP), the formal process Brussels triggers when a country's finances stay too far out of line (European Commission). For a country that leaned on one-off accounting tricks to clear its euro-entry tests, the first budget under the new currency exposes what those tricks were papering over.

The money that was already spent

Bulgaria qualified for the euro partly through legal but temporary moves: collecting bank taxes early and pulling state-enterprise dividends forward into the entry year. Those techniques shifted hundreds of millions of euros of future revenue into the present. The money arrived once. Now it's gone, and the deficit reflects a lasting gap between what Bulgaria collects and what it spends.

The draft, released 24 June, projects spending at 45.3% of GDP against revenues of 39.9%. Finance Minister Galab Donev promises staged cuts: a 3.8% deficit in 2027 and 3.0% in 2028 (BTA). By the EU's own general-government measure, though, the deficit stays above 3% through 2028 (European Commission).

Commissioner Valdis Dombrovskis confirmed the EDP would advance to EU finance ministers for a formal vote (Fakti). Binding recommendations and regular monitoring start immediately. If Bulgaria fails to show progress, the EU's fiscal rules allow escalation up to financial sanctions (Regulation (EU) 2024/1263).

Brussels now watches spending, not just the final number

Under the reformed fiscal framework active since 2024, a government can't just promise a lower deficit. Brussels sets a ceiling on how fast nationally financed spending can grow, stripping out interest costs and cyclical swings (Regulation (EU) 2024/1263). The point is to track the spending that governments actually control, not the final deficit after growth and accounting effects move it around.

Sofia's budget mixes revenue grabs and spending restraint: a 10% tax on gambling winnings, 30% pricier road vignettes, higher social-security ceilings, and new personal contributions for civil servants (Forbes Bulgaria). Restrictions on automatic public-pay increases are expected to save over €560 million (Sega). Trade unions are already pushing back. But these measures amount to hundreds of millions against a deficit gap exceeding €7.2 billion (Investor.bg). Revenue alone does not close this budget.

Who carries the cost

The burden lands on identifiable groups. Civil servants shoulder new contributions. Higher earners face a raised social-security ceiling. Drivers pay steeper road charges. Gambling winners face a new tax. Bulgaria's largest trade union, CITUB, argued that wages and pensions did not cause the deficit and should not bear the correction (BTA). The budget numbers back them up: the gap between 45.3% spending and 39.9% revenue did not open because of recent pay rises.

Sofia has one genuine advantage: public debt at roughly 30.1% of GDP, well below the EU's 60% reference (Fakti, Investor.bg). This is a spending-driven deficit, not a debt crisis. Romania shows where slippage leads: a 9.3% deficit in 2024, far higher debt, and a correction path now stretching to 2030 (Eurostat).

The Council's formal decision comes within weeks. Sofia has written a correction path. Now it has to collect the money, hold spending, and show the 2028 return to 3% rests on something more durable than the one-off fixes that got it into the euro.