The cabinet will spend funds from the Fiscal Reserve on civil servant salaries

This week Prime Minister Andrey Gyurov’s caretaker government submitted its version of a draft law to extend the 2 025 state budget to the National Assembly. However it is striking that the cabinet has included a clause that allows the state, ministries and municipalities to spend more than last year, according to a review of the bill by Economic.bg.

It creates a new paragraph that states:

Additional expenditures and transfers under the state budget, resulting from acts of the National Assembly and the Council of Ministers that have entered into force to increase salaries and social payments, may be financed from the previous year’s balances, with the exception of the State Fund for Guaranteeing the Sustainability of the State Pension System.”

Money for civil servants from the Fiscal Reserve

In other words this sentence allows transfers to be made from the Fiscal Reserve (but not from the so-called Silver Fund) to pay the salaries of civil servants. We would like to remind you that just a few days ago the acting finance minister, Georgi Klisurski, announced that some ministries and state structures have not yet increased the salaries of their employees by the 5% provided for in the law – a controversial provision that was introduced in contravention of the Public Finance Act when the 2025 Budget was extended for the first three months of the current year. It was included at the request of “We Continue the Change – Democratic Bulgaria” but was supported by all parliamentary groups. Business reacted by declaring the planned increase in civil servant salaries unconstitutional.

The bill provides for the possibility of the planned increase in remuneration, including the one-off indexation and the increase in the minimum wage and social payments resulting from legislative acts that have entered into force, including transfers to municipalities, can be financed from the previous year’s funds,” the sponsors state in their explanatory memorandum.

Financing of municipal projects

Municipalities will also be able to incur more expenses. The explanatory memorandum states that: “The mayor of the municipality may finance expenses for local activities in amounts greater than the expenses for the same period of the previous year, up to the amount of the municipality’s own revenues for the relevant period.” In other words municipalities will be able to cover their increased expenses with the local taxes and fees they collect.

The bill allows the caretaker cabinet to negotiate and conclude an agreement with the European Commission for a loan of €3.2 billion to receive financial support in the form of the “Measures for the Security of Europe (SAFE) by strengthening the European defense industry,” subject to subsequent ratification.

The use of financial assistance from SAFE provides an opportunity for accelerated modernisation of the Bulgarian armed forces, easing the pressure on the country’s budget liquidity position by using new European Union initiatives to support significant investments in defence,” the Council of Ministers said.

Until the adoption of a regular budget for 2026 the Council of Ministers will also be able to issue state guarantees for student loans of up to €4 million.

As Klisurski announced at a briefing earlier this week the current extension of the budget law will remain in effect until the adoption of a new regular budget for the country.

We would like to remind you that just a day earlier the Fiscal Council issued a statement on the proposed bill supporting its early adoption.

According to them if the National Assembly adopts it this will prevent uncertainty about public finances from now on, give peace of mind to municipalities and the public sector and protect large payments and EU funds to businesses and citizens.

The Council also pointed out that the decision demonstrates responsibility towards European partners and international markets.

Translated with DeepL.