Bulgaria Faces Record Deficit and EU Sanctions Risk

Bulgaria is facing a record budget deficit of approximately 7.4% of GDP, totaling over 8.5 billion euros. Galab Donev, the Deputy Prime Minister and Finance Minister, informed the National Assembly that the country cannot avoid an excessive deficit procedure being prepared by the European Commission. This procedure is triggered by net spending levels in 2025 and could lead to financial sanctions or restricted access to EU funding.

Donev attributed the fiscal gap to structural issues and more than 2 billion euros in unpaid liabilities from previous administrations. While the government has proposed a 10% spending cut and targets a 3% deficit, European Commission projections suggest the deficit could reach 4.1% in 2026 and 4.3% in 2027. Donev warned the figure could hit 7.4% if current policies persist.

Critics and lawmakers have challenged the government's figures, suggesting the deficit is driven by public sector wages and pensions. Donev denied allegations of data falsification regarding eurozone entry, attributing discrepancies to accounting tricks and obligations in municipalities and the Road Infrastructure Agency. The government plans to submit the 2026 state budget by the end of June.