“I Warned You”: It’s Time to Stop the Budget Deficits Fueling Record Inflation

Bulgaria is the country with the highest inflation in the eurozone for the past month and with a deficit exceeding the permitted 3% – exactly what I warned about on October 13, 2025 This is how a post by Kiril Domuschiev, chairman of the Confederation of Employers and Industrialists in Bulgaria (CEIB), begins on Facebook.

The previous coalition government was misled into joining the eurozone with an extreme-left draft budget, which even after revision remained inert, lacking reforms and allowing the country to continue its descent into a debt and inflation spiral,” the text continues.

According to Domuschiev, Bulgaria is taking out massive loans that it pours into the inefficient public sector, while simultaneously stifling production and entrepreneurship through regulation – the money supply is growing by 19%, while production is falling by 9%.

In other words, more money is being poured into civil servant salaries and bloated social systems, while fewer goods and services are being produced in return,” adds the chairman of KRIB.

And he offers a comparison: Romania, which has fallen into a stagflationary crisis, has seen a 7.5% increase in the money supply and a mere 2.5% decline in production.

Ultimately, our colleagues in Turkey and China should take note, because with this loan-fueled consumption, we continue to stimulate their factories,” says Domuschiev.

According to him, the next government faces a huge challenge—to stop the budget deficits fueling this record inflation.
And since the measures won’t be popular, at least the mistakes we’ve been warning about for over a year must be clearly acknowledged.”

And he points them out:

• Automatic wage indexations in the public sector, which have long exceeded those in the private sector by double-digit percentages.
• The absurdity of stimulating consumption through loans in a small, open economy, since the money first creates inflation and then flows out.
• Continuing to inflate the public sector to 660,000 people in the midst of a demographic crisis and an AI revolution.
• To wonder why there are no new manufacturing facilities or investments, when we are the world’s worst at connecting a factory to the power grid and are operating in the 21st century with a Labor Code drafted during the Vietnam War.
• Trying to raise the tax and social security burden above 40% of GDP in a country like Bulgaria, which has not even half a century of capital accumulation in a market economy.

I am stunned that, despite such clear and catastrophic economic consequences – clearly rejected by Bulgarian society – unions and far-left politicians continue to demand more of the same: more bureaucrats with even higher salaries and perks, more automatisms, more consumer loans!”, says the chairman of KRIB.

And he makes his prediction: if the next cabinet falls for these policies, an inflationary avalanche will sweep the country in a matter of months.

And in six months, I’ll post another Facebook update that will start with “I warned you on that date.”

Translated with DeepL.