“The Bubble Bursts”: Bulgaria Faces Excessive Deficit Procedure

The European Commission (EC) is initiating an excessive deficit procedure against Bulgaria. Our country ended 2025 with a budget deficit that Brussels deems unacceptable. Moreover and more importantly this trajectory is expected to continue this year and next prompting the EC to initiate the corrective procedure involving regular monitoring and sanctions. Prime Minister Rumen Radev stated this at a government meeting on Friday.

He explained that on June 3, 2024 the Commission will issue a report announcing the procedure in question.

This means that our deficit is well over 3% and we will be subject to regular monitoring and related sanctions. According to actual EC data last year’s deficit was well over 3%, contrary to the lies told by the previous government to achieve its goal of joining the eurozone. And this year the deficit will be even larger. “The bubble has burst,” commented Radev.

In his words this is the “heavy legacy” the country is inheriting, while “others were learning to be financiers at our expense.”

We remind you that according to Eurostat data the country ended 2025 with a 3.5% deficit on an accrual basis of GDP while the permissible limit is 3%. Then-Finance Minister Temenuzhka Petkova (GERB) failed to bring public finances within the permissible limit even on a cash basis, reaching 3.1%.

Analysts and economists expected the bad news and the Fiscal Council has been warning for months that this constant rise in public spending in recent years is creating strain in a system that is inertial.

Others engaged in all sorts of manipulations, decapitalized state-owned companies, drained liquidity from the business sector, collected taxes a year in advance to adjust their Excel spreadsheets as they saw fit, while others inflated spending with inappropriate public procurement contracts at inflated prices and plundered and drained the budget,” he added.

The Prime Minister took responsibility for doing “everything possible” in the coming years to bring the budget back to normal.

We remind you that the European Commission’s recently published spring macroeconomic forecast states that Bulgaria’s budget deficit will continue to grow this year and next, stabilizing at over 4% of GDP. Brussels forecasts that the deficit will rise to 4.1% in 2026 and to 4.3% in 2027 due to residual automatic mechanisms in social spending and persistently high defense spending through 2027.

Another factor driving this trend is public investment, supported by the accelerated implementation of the Recovery and Resilience Plan in 2026, more active use of other European funds and certain planned deliveries of defense equipment in 2027.

Translated with DeepL.