Bulgaria's government proposed a 2026 budget with a deficit of 5.7% of gross domestic product, well above the European Union's 3% limit, drawing accusations from opposition parties that it had abandoned promises of fiscal discipline and reform.

The draft budget, unveiled on June 24 by Finance Minister Galab Donev, is the first major policy initiative of Prime Minister Rumen Radev's government, which came to power after April elections pledging to break with the policies of previous administrations.

The proposal forecasts a deficit of €7.2bn, nearly double the level envisaged in a controversial budget proposal drafted by the previous government late last year, and signals that Bulgaria is unlikely to bring its budget shortfall below the EU ceiling before 2028.

The plan comes as Bulgaria remains without a fully approved 2026 budget after the collapse of the previous administration, forcing the country to continue operating under the framework of its 2025 spending plan.

Donev defended the proposal, saying it represented an improvement from a projected deficit of 7.4% of GDP this year if no corrective measures were taken.

However, the deficit target is above the European Commission's forecast of 4.1% and marks a deterioration from 2025, when Bulgaria's deficit stood at 3.5% on an accrual basis under EU accounting rules.

The government expects the deficit to narrow to 3.8% in 2027 and fall below 3% only in 2028, suggesting Sofia could remain under EU fiscal scrutiny for several years.

The budget projects revenues of €49.6bn and spending of €56.8bn. Donev said part of the increase reflected previously incurred but unpaid liabilities, including more than €1.1bn owed by the Road Infrastructure Agency.

Public debt is forecast to rise to €37.7bn, or 31% of GDP, by the end of 2026 and exceed €50bn by 2028.

Opposition attacks

The proposal immediately came under attack from opposition parties, which argued it differed little from the spending plans advanced by previous governments that triggered large-scale street protests last year.

"This budget lacks any reforms, it is pro-inflationary and will not lead to anything good," said Ivaylo Mirchev, co-chair of the opposition Democratic Bulgaria party.

Democratic Bulgaria called on the government to withdraw the draft and resubmit it with a deficit capped at 3% of GDP. The centre-right GERB party also criticised the proposal, accusing the government of hypocrisy after campaigning against similar fiscal plans while in opposition.

The budget contains relatively limited revenue-raising measures. The government expects an additional €100mn from new taxes on intermediaries that direct customers to online gambling operators, while also raising road tolls and tobacco excise duties.

Despite earlier promises to curb public spending, personnel costs are set to remain broadly unchanged at around €12.4bn.

The government says savings will come mainly from changes to public-sector pay mechanisms, tighter controls on social benefits and cuts to some state subsidies and procurement spending.

The budget must now be approved by parliament, where it is likely to face a contentious debate over whether Bulgaria can reconcile its spending commitments with EU fiscal rules.