Economic.bg 
Public Finances
The budget deficit remains within 3%, but revenues are lagging behind the plan
The Ministry of Finance had projected a more than 33% increase in VAT revenues, but as of November the increase is 15%
~ 2 min read
Bulgaria ends November with an economy that generates significant tax revenues, but also with a budget that’s under strong pressure from social commitments and investment needs. The deficit at the end of the 11th month is 2.8%, which is on the verge of the Maastricht criteria, according to data on the implementation of the consolidated fiscal program published by the Ministry of Finance.
Revenues in the state treasury are increasing at a rate not seen in many years, but it’s insufficient to meet the unrealistic targets set by the Ministry of Finance. Total budget revenues reached BGN75.4 billion, which represents 83.5% of the amount planned for the whole year. Compared to the same period last year revenues have increased by BGN10.2 billion, or 15.6%. When drafting the 2025 Budget Finance Minister Temenuzhka Petkova predicted a 25% increase.
The bulk of the increase in revenue comes from taxes and social security contributions, which grew by 15%, or BGN 8 billion. The figures do look impressive, but tax revenues are expected to grow by 21% for the whole year. VAT revenues alone – the largest revenue item in the budget – grew by 15.4% to BGN19.22 billion. Petkova’s target was over 33% more revenue from this indirect tax on an annual basis.
Non-tax revenues also saw solid growth of 21.7%, adding nearly BGN2 billion to the treasury. Aid and donations, mainly from the European Union, further increased revenues by BGN247 million.
Tax revenues, including social security contributions, account for over 80% of all revenues and amount to BGN 61.4 billion – 86.7% of the annual plan.
Expenditures are also growing significantly
In parallel with revenues budget expenditures are also growing. At the end of November they reached BGN81.6 billion, which is 84.4% of the annual estimates and represents an increase of 16.4% compared to last year.
The largest increase is observed in social payments, including pensions, as well as in capital expenditures and salaries. There’s also significant growth in investments financed by EU funds, especially under the Recovery and Resilience Facility.
Interest payments on public debt rose by BGN 434 million to a total of BGN 1.4 billion at the end of November, which is in line with the debt servicing schedule.
The deficit is widening
As a result of faster growth in expenditure the budget balance in November was negative, with a deficit of BGN 6.2 billion, or 2.8% of the forecast GDP. It consists of a national budget deficit of BGN 4.2 billion and a European funds deficit of BGN 2 billion.
The fiscal reserve at the end of November amounted to BGN 20.6 billion, of which BGN 16.4 billion were deposits with the BNB and banks and the remaining amount represented receivables from European funds.
Translated with DeepL.
