Defense spending to be separate from budget deficit

The defense expenditures that the Bulgarian government, headed by Rosen Zhelyazkov, plans to make will not be included in the state budget deficit calculations.

To do this, the cabinet will request a derogation from the European Commission (EC) under the Stability and Growth Pact, which would seek to increase defense spending above the current 2% of GDP.

The news was announced by Prime Minister Zhelyazkov himself during a joint briefing with EU Council President Antonio Costa. The Prime Minister specified that a decision on the derogation will be adopted this week at the meeting of the Council of Ministers.

Through the derogation, we will have the opportunity to invest more in defense, provided that this does not threaten our fiscal sustainability in the medium term," explained Zhelyazkov.

He added that the idea is for investments to amount to up to 1.5% of GDP on an annual basis for a period of 4 years, with the reference year being 2021, the one before the start of the war in Ukraine.

Costa stressed that competitiveness and defense are the most important priorities for Europe.

Investing in defense not only guarantees our security but also creates jobs. This guarantees the development of the regions and supports our development," said the President of the European Council.

In response to a journalist's question about the power outage in Spain and Portugal, Costa replied that there were no indications of a cyberattack as the cause of the incident.

The electrical grid operators in both countries are working to determine the cause and restore the power supply," he added.

If the EC approves Bulgaria's request for a derogation, it will give the country a breath of fresh air in its otherwise busy spending program for the current year, which also includes remaining unpaid obligations from 2024.

It was the deferred payments from last year that raised concerns about whether Bulgaria would meet the Maastricht budget deficit criterion as part of its eurozone membership goal. Last week, however, Eurostat confirmed that Bulgaria had ended 2024 with exactly a 3% budget deficit.

Translated by Tzvetozar Vincent Iolov