The Ministry of Finance plans and expects to accelerate the reduction of Bulgaria’s government deficit towards the Maastricht criterion of 3% of GDP as part of the country’s state budget procedure for 2027, which has already begun, Deputy Prime Minister and Minister of Finance Galab Donev said on Friday. He was speaking at the high-level conference “Building Resilience Together: Bulgaria’s Membership of the ESM”, being held at the Grand Hotel Millennium Sofia. The event has been organized by the Finance Ministry and the European Stability Mechanism (ESM).
Donev also highlighted measures being taken to achieve this goal, including keeping tax rates at their current levels and maintaining the growth in social spending, while pensions will again increase in line with the provisions set out in the Social Security Code. He outlined the planned income policy, aimed at ensuring that public-sector employees are protected from inflationary shocks, while avoiding measures that could fuel inflation.
“We are also introducing further strengthening of fiscal controls and stepping up the fight against the grey economy and VAT fraud, so as to ensure that the 2027 budget remains within the 3% deficit limit,” Donev said.
With regard to the future fiscal trajectory, he was adamant that the Finance Ministry will seek to preserve the country’s competitive advantage in terms of its debt-to-GDP ratio as well.
“This will be our major challenge, both for the government and for the National Assembly: to restore the confidence of citizens, businesses and investors in financial stability and fiscal discipline in Bulgaria, and to move towards reducing the deficit below 3% in the coming years,” he said, summarizing the goals of the Finance Ministry and the government.
The special guest at the conference is ESM Managing Director Pierre Gramegna, with whom Finance Minister Donev held a discussion.
The conference marks Bulgaria’s accession to the ESM on June 29, making it the 21st member of the stability mechanism.
A new stage for Bulgaria
According to Finance Minister Donev, Bulgaria’s membership of the euro area and the ESM is not merely the final step towards integration into the European Union’s financial architecture, but the beginning of a new stage that brings greater responsibility for the country as a full member.
He noted that since January 1, when the country joined the euro area, individuals and businesses have felt greater stability in the markets. He said confidence has increased among households and businesses in the institutions, as well as among foreign investors in the Bulgarian economy and vis-a-vis fiscal stability.
Foreign investment in Bulgaria almost doubled in the first half of the year compared with the same period last year, Donev said. He attributed the increase to membership of the euro area, greater investor confidence and sustained economic growth.
According to him, half of the increase was due to reinvested profits by companies already operating in the country, while the other half came from new foreign investment in Bulgaria precisely because the country had become a member of the euro area, was showing better results and had stable economic growth.
Donev compared the European Central Bank’s forecast of 0.9% growth in the euro area with Bulgaria’s growth of around 2.8-2.9%. He said the higher growth rate in this country also poses challenges for economic policy. He highlighted the rise in inflation, which, according to the figures he cited, has reached 5.1% year-on-year, the third-highest rate in the euro area after Lithuania and Cyprus.
The finance minister cited the country’s improved credit rating as another benefit of euro area membership.
According to Donev, markets and investors are taking into account the presence of a regular government with a stable parliamentary majority after years of political instability. He noted that his Progressive Bulgaria party holds more than half of the seats in the National Assembly, which, he said, is a signal of the sustainability and predictability of government policy.
Following the political challenges of the past four to five years, Bulgaria is now embarking on a stable and predictable course, with the prospect of a four-year term and a clear government programme, Donev said.
Bulgaria Set on Bringing 2027 Government Deficit Within 3% 2026 THE NEWS FROM BULGARIA – NEWS AGENCY 2009-2025 2026-09-25 09:33:00
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