European Commission Launches Deficit Procedure Against Bulgaria

The European Commission is preparing to launch an excessive deficit procedure against Bulgaria after the country's fiscal deficit is projected to rise from 3% of GDP in 2024 to 4.3% in coming years. As part of its recommendations for 2026 and 2027, the Commission is urging Bulgaria to replace its 10% flat tax with a progressive structure and to increase spending on defense and the energy transition.

President Rumen Radev attributed the fiscal crisis to budget gymnastics by previous governments, alleging they used delayed accounting to mask a hidden deficit. Radev stated that outstanding obligations, including delayed VAT reimbursements and public procurement costs, total approximately 2.2 billion euros. He called for joint parliamentary action to stabilize the national finances.

Separately, Deputy Prime Minister Atanas Pekanov informed parliament that a lack of political will to establish an independent anti-corruption body led to the suspension of 400 million euros in EU funds. Following legislative updates and discussions with European Commission President Ursula von der Leyen, approximately 370 million euros of those funds may now be released.