Parliament approves "bankruptcy budget" for 2026 with over BGN 20 billion in new debt

The National Assembly (NA) adopted Bulgaria's state budget for 2026 at first reading. The debate among MPs was dominated by criticism and disputes over the proposed parameters, which include an increase in social security contributions, the maximum social security income, new BGN 20 billion in debt, and revenue measures to combat the gray economy that are contested by experts. The texts were adopted by a vote of 218 MPs – with 131 votes in favor, 87 against, and no abstentions.

The fiscal policy aims to ensure the long-term sustainability of public finances," said Finance Minister Temenuzhka Petkova during the presentation of the budget.

She also listed the main parameters:

• 3% budget deficit;
• €620.20 minimum wage;
• €2,352 maximum insured income;
• 2 percentage points on social security contributions for the Pension Fund;
• Doubling of the dividend tax from 5% to 10%;
• 7-8% increase in pensions, effective July 1, 2026;
• Childcare allowance for children up to 2 years of age – €460.17;
• The allowance for mothers returning to work early jumps from 50% in the second year to 75%;
• Maintaining the minimum and maximum unemployment benefits at €9.21 and €54.78, respectively;
• A ceiling on new debt for 2026 of €10.5 billion, etc.

Among the main parameters that were criticized was the planned debt.

This budget is a bankruptcy budget. It provides for a new BGN 20 billion in debt, which means that the money that will be withdrawn in just two years will exceed BGN 40 billion. This will cause the largest debt in the history of the third Bulgarian state," said Kostadin Kostadinov, chairman of the parliamentary group of "Vazrazhdane," from the podium.

Hüseyin Adem from APS said that this is "the most unpopular budget among professional and industry organizations" and demonstrates "a lack of vision and strategic planning."

The former finance minister, now chairman of "We Continue the Change - Democratic Bulgaria," Asen Vasilev, also expressed dissatisfaction, pointing out that the debt is filling the "state coffers" in the form of the Bulgarian Development Bank (BDB), the Bulgarian Energy Holding (BEH), and other state-owned enterprises.

This year, you raised the debt-to-GDP ratio by 3 percentage points, and it's not because of the deficit. You took out an additional 9 billion levs in debt, which is not being used for the deficit, salaries, or pensions, but for the coffers of the BBR, BEH, and others," Vassilev said.

His party colleague Martin Dimitrov described the increase in social security contributions and the tax on dividends as "a blow to the middle class and business."

This is the most left-wing budget in the last 25 years, the most risky," Dimitrov said.

After voting on the budget, MPs also decided to shorten the deadline for submitting proposals for changes between the two readings to three days. This was done through a procedural proposal by GERB-SDS MP Denitsa Nikolova.

Translated with DeepL.