“It Could Be a Debt Spiral”: Lawmakers Approved a Debt Increase of Nearly €4 Billion

With some reservations and criticism directed at the ruling majority, the National Assembly decided that Bulgaria would take on an additional €3.8 billion in debt this year. MPs adopted the amendments to the budget extension law on first reading with 135 votes in favor, 29 against, and 29 abstentions.

As has become clear in recent weeks, the funds will be used to pre-finance projects under the Recovery and Resilience Plan (RRP), which is set to take place in the coming months. But also to cover the current budget deficit, due to the growth of which the European Commission (EC) launched an excessive deficit procedure against Bulgaria. Both in committee and on the floor, MPs had their reservations about the proposal.

Martin Dimitrov of “We Continue the Change – Democratic Bulgaria” expressed concerns that this might not be the only debt for 2026, given that a draft budget for 2026 has not yet been presented.

You’re asking for 3.8 billion in debt without telling us if there will be another one and how much it will be, and that’s a problem for us. It could turn into a debt spiral – 3.8 billion euros now, and we have no data or guarantee as to what deficit you’ll end up with in 2026,” he added.

According to him, the state needs no more than 2 billion euros in debt by September, but the government is taking on “twice as much.” Vladislav Goranov of GERB-SDS also expressed similar concerns.

We have no confidence that this will be the last discussion this year regarding the debt limit for 2026. I hope this limit is not exceeded, but we have not received a definitive assurance from the finance minister that he will succeed in the task of consolidating the budget with a 3% deficit,” he said.

His party colleague and former finance minister Temenuzhka Petkova, meanwhile, emphasized that the ruling party must submit a regular budget bill as soon as possible.

The debt limit belongs in the annual budget law. Right now, we don’t know exactly what you’ll be financing with this debt. They say they’ll finance the deficit and the Public Investment Program, but do we even know what deficit we’ll be financing?" she asked from the podium.

Petkova also recalled Finance Minister Galab Donev’s grim projections of a “real” deficit of 7.4% of GDP, which she described as a “very far-fetched scenario.”

In the end, the texts were approved, and at the suggestion of Budget Committee Chair Konstantin Prodanov, lawmakers will have five days to submit their written proposals for amendments between the two readings.

Translated with DeepL.