Eurostat: Bulgaria’s deficit in the first quarter was nearly 8%

Bulgaria has the highest budget deficit in the European Union for the first quarter of 2026. This is shown by preliminary data from the European statistical office Eurostat, covering the period during which the regular “Zhelyazkov” government and the caretaker “Gyurov” cabinet were in office. According to the figures, the country’s budget deficit on an accrual basis for the period January – March 2026 already stands at 7.6% of GDP, compared to an average of 3.1% for the eurozone and the European Union (EU) as a whole.

The country outperforms nations with traditionally high deficits such as Poland (5.9%), France (5.1%), Belgium (4.8%), and Romania (-3.6%). Conversely, Cyprus (+4.4% surplus), Ireland (+2.4%), and Denmark (+2%) have the best budget balances when considering all European countries, not just eurozone members.

If we look only at the countries in the monetary union, the top three remain the same, but Greece takes Denmark’s place with a surplus of 1.2% of GDP.

An analysis by Economic.bg also showed that the deterioration in Bulgaria’s budget balance is among the sharpest – compared to the previous quarter, the deficit widened by 5.1 percentage points, after the country reported a deficit of 2.5% of GDP at the end of 2025.

The data comes against the backdrop of the excessive deficit procedure for Bulgaria launched by the European Commission (EC) in early June. In early July, the finance ministers of the European Union (EU) also approved a decision to launch the procedure in question. As justification, ECOFIN cited the EC’s forecasts that by 2027, our country will continue to exceed the permissible deficit limits.

We would like to point out, however, that these estimates are based on outdated projections from the Ministry of Finance, as it turned out that Andrey Gyurov’s caretaker government failed to submit updated forecasts this spring. Separately, Finance Minister Galab Donev’s draft budget for 2026 actually projects an even larger deficit – 5.7 percent. Prior to its presentation, Donev had also spoken of a 7.4 percent shortfall – a figure that was not mentioned to representatives of European institutions, as Economic.bg reported following a conversation with its European sources.

Just last week, the international rating agency Fitch warned that adhering to the corrective rules of the excessive deficit procedure could help improve Bulgaria’s fiscal position in the medium term, but might not be enough to stabilize the debt-to-GDP ratio.

In fact, Finance Minister Galab Donev himself acknowledged that the projected deficit of 5.7% could turn out to be lower by the end of the year. The reason is that the budget is expected to take effect on August 1, which does not leave enough time to complete all the projects included in the capital program.

Translated with DeepL.