Bulgaria has reached the new debt ceiling under the stopgap law

The Ministry of Finance (MF) has officially exhausted the legal capacity to issue new government debt for the current year under the terms of the current provisional budget. The limit was reached with the holding of the ninth auction of the year, at which 10-year government securities (GS) worth €210 million were sold.

With today’s issuance, the total amount of new domestic borrowing since January has reached €1.41 billion. This amount exactly matches the amount of government debt maturing in 2026. In other words, the government has borrowed exactly what it needs to repay. In this way, the country’s net debt will remain unchanged, which is the very purpose of the restriction in the absence of a newly approved budget.

Under the Public Finance Act, when the state operates under an extended old budget, the Council of Ministers may issue new debt solely for the purpose of refinancing old obligations, and only up to the amount of repayments planned for the year. New borrowing may only take place after the adoption of a regular budget for 2026.

Today’s auction, conducted by the Bulgarian National Bank (BNB), reopened for the third time issue No. BG 20 400 26 218 maturing on February 11, 2036.

The results of the sale demonstrate sustained interest from market participants, with the total value of bids submitted reaching €275.5 million. This corresponds to a bid-to-cover ratio of 1.31 relative to the amount offered, according to the Ministry of Finance.

The ruling party “Progressive Bulgaria” is expected to raise the debt ceiling for 2026 after adopting a regular budget. Currently, the 2025 limit of 18.9 billion levs (9.7 billion euros) is in effect, but according to Galab Donev, this amount will not be sufficient to cover all government payments this year.

Translated with DeepL.