Bulgaria’s Finance Ministry submitted its 2027 draft budgetary plan to the European Commission and the Eurogroup, targeting a general government deficit of 4.3% of GDP, the Ministry said on Thursday. The plan includes revenue-raising and expenditure-limiting measures aimed at ending this country’s excessive deficit procedure by 2029.
This is Bulgaria’s first budgetary plan as a full member of the euro area, which the country joined on January 1, 2026. The document was submitted by the October 15 deadline and is based on the Finance Ministry’s autumn macroeconomic forecast, approved by the Fiscal Council.
For 2026, the Ministry expects an accrual-based deficit of about 5% of GDP, compared with 5.4% envisaged in the State Budget. The 0.4 percentage-point improvement mainly reflects revised Defence Ministry estimates, including changes to military equipment delivery schedules.
The projected 2027 deficit of 4.3% represents a 0.7 percentage-point reduction from the updated forecast for this year. Revenue and expenditure are expected to decline as shares of GDP to 36.1% and 40.4%, respectively.
Under the EU Council recommendation, Bulgaria should limit annual nominal growth in net expenditure to 4.2% in 2026, 3.4% in both 2027 and 2028, and 3.2% in 2029. Cumulative growth should not exceed 4.2%, 7.7%, 11.4% and 15%, respectively.
The aim is to correct the excessive deficit by 2029, taking into account the national escape clause for defence spending activated in 2025. The EU Council opened an excessive deficit procedure for Bulgaria on July 10, 2026.
Revenue measures
Among the revenue measures is a one-off contribution on windfall profits in selected sectors in 2027, expected to generate an indicative EUR 800 million. The plan also provides for mandatory VAT registration for taxable supplies involving land and buildings and changes to the electronic food voucher regime.
Other measures include an excise duty on motor vehicles, changes to the tax on personal use, and updated fines and financial penalties.
For the gambling sector, the plan envisages a higher alternative tax on gaming halls and casinos, increased contributions for socially responsible conduct, a state fee on the manufacture and import of gaming equipment, and higher one-off fees for issuing and maintaining gambling licences. It also provides for gradual increases in the variable component of the two-part state fee and a minimum monthly threshold of EUR 100,000 for online gambling operators.
Tax and social measures
The package also includes tax relief for families with children and businesses, including a higher threshold for mandatory VAT registration, increased tax allowances for children and children with disabilities, and a new child development allowance covering healthcare, education and sports expenses.
From January 1, 2027, the maximum contributory income is planned to rise to EUR 2,400, with an estimated revenue effect of EUR 265.1 million. Higher minimum contributory income and minimum insurance thresholds by economic activity and occupational qualification group are expected to bring in another EUR 196.7 million.
The plan also provides for dividends from state-owned enterprises and companies with state participation for the 2026 financial year, as well as an interim dividend equal to 50% of reported profit based on six-month financial statements as of June 30, 2027.
Expenditure priorities
On the expenditure side, pensions are planned to rise by about 8%, public-sector wages by 5% and teachers’ salaries by 7.5%. Child allowances are also set to increase.
Additional funding is planned for education, healthcare, culture, sport and security, as well as investment in defence capabilities, including counter-drone and air-defence systems.
Structural spending cuts and public-sector administrative optimization launched this year are expected to continue and be completed in 2027. According to the plan, the measures should curb growth in personnel and operating costs while improving the quality of public services.
The document also includes reform of the medical disability assessment system to improve expenditure control and measures to encourage public-private partnerships in infrastructure projects.
Debt outlook
General government debt is projected to reach EUR 40.6 billion at the end of 2026 and EUR 47.1 billion at the end of 2027. The debt-to-GDP ratio is expected to rise from about 31.1% to around 33.3%.
The increase is attributed mainly to the need to finance budget deficits, refinance existing debt, raise defence spending and capitalize state-owned companies.
Bulgaria Submits 2027 Draft Budgetary Plan to European Commission, Eurogroup with 4.3% Deficit Target THE NEWS FROM BULGARIA – NEWS AGENCY 2009-2025 2026-10-15 16:02:48
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