European Union finance ministers have formally opened an excessive deficit procedure against Bulgaria, confirming a move that had been widely expected after the European Commission recommended the step last month over the country's deteriorating public finances.

The Council of the EU approved the Commission's recommendation on July 10 after forecasts showed Bulgaria's general government deficit would reach 4.1% of gross domestic product in 2026, above the EU's 3% ceiling, and remain above that threshold in 2027.

The excessive deficit procedure, which places member states under enhanced fiscal oversight, requires Bulgaria to take corrective measures to bring its deficit below 3% of GDP by 2029.

The Council said Bulgaria must present the necessary measures by October 15 and ensure that nominal cumulative net expenditure growth does not exceed 4.2% in 2026, 7.7% in 2027, 11.4% in 2028 and 15% in 2029.

The formal decision comes a year after EU finance ministers approved Bulgaria's euro zone accession after the country met the bloc's convergence criteria, including on public finances.

The European Commission last month warned that Bulgaria was no longer complying with the EU's fiscal rules and recommended launching the excessive deficit procedure after projecting a budget deficit of 4.1% of GDP in 2026. It said the excess could not be fully explained by Bulgaria's use of the national escape clause allowing additional defence spending under the Stability and Growth Pact.

Bulgaria has been operating without an approved 2026 budget after the previous government collapsed late last year following mass protests over its spending plans. The current administration has continued to use the framework of the 2025 budget with some spending restrictions.

Prime Minister Rumen Radev's government last month proposed a delayed 2026 budget targeting a deficit of 5.7% of GDP, significantly above both the Commission's forecast and the EU's fiscal limit.

The government has argued that previous government spending, combined with automatic public-sector wage increases under existing legislation, has widened the fiscal shortfall. Opposition parties have accused it of abandoning earlier commitments to fiscal discipline and reform.