The Bulgarian government has approved the draft State Budget Act for 2026, along with the updated Medium-Term Budget Forecast for 2026–2028. According to the official announcement, the document outlines priorities for sustainable fiscal policy, economic stability, and preparation for the adoption of the euro on January 1, 2026, at the fixed exchange rate of 1.95583 leva for 1 euro.

Economic growth in 2026 is projected to reach 2.7 percent, while average annual inflation is expected to stand at 3.5 percent. The government forecasts GDP growth of 2.5 percent in 2027 and 2.4 percent in 2028, with inflation gradually declining to 2.9 and 2.5 percent, respectively.

The budget foresees a deficit of 3 percent of GDP under both the consolidated fiscal program and the general government balance, maintaining compliance with fiscal discipline requirements. Government debt is expected to total 37.6 billion euros (31.3 percent of GDP) in 2026, increasing to 43.5 billion euros (34.2 percent) in 2027 and 49 billion euros (36.6 percent) in 2028. The ceiling for new government debt issuance in 2026 is set at up to 10.44 billion euros, including 3.2 billion euros under the SAFE instrument to strengthen Europe’s defense sector. The fiscal reserve at the end of 2026 will be no less than 2.4 billion euros.

Revenues, grants, and donations under the consolidated fiscal program are projected to reach 42.8 percent of GDP in 2026, falling to 40.5 percent in 2027–2028. The rise compared to the expected 39.6 percent of GDP in 2025 is attributed to new tax measures and the impact of already adopted policies.

Among the major fiscal policy changes, the dividend tax will be doubled - from 5 to 10 percent. Other proposed amendments include expanding the list of goods under fiscal control, extending the electronic tracking of vehicles transporting high-risk goods, and introducing mandatory electronic reporting of sales via National Revenue Agency–approved software. The gradual increase in excise duties on tobacco products will continue, as well as existing tax reliefs for families with children and children with disabilities.

Additional measures include tax incentives for electric vehicles, a 25 percent tax deduction for research and development costs, and higher taxation on gambling - raising the variable part of the levy from 20 to 25 percent.

Social security reforms are also planned. From January 1, 2026, the pension fund contribution will increase by 2 percentage points, followed by an additional 1-point rise in 2028. The minimum social security income for self-employed persons will grow to 620.20 euros (1,213 leva), while the maximum insurable income for all employees will rise to 2,352 euros (4,598 leva).

Personnel costs across the public sector will rise by 5 percent, with specific adjustments depending on legislation. The salaries of teachers will continue to increase to reach at least 125 percent of the national average wage, while remuneration for academic staff will also be updated. In healthcare, 260 million euros will be allocated to raise pay for resident doctors, nurses, and midwives, alongside higher funding for defense and security sector personnel.

The minimum monthly wage will increase to 1,213 leva (620.20 euros) from January 1, 2026. The average pension will reach 541.20 euros (1,058 leva), representing an 8.5 percent rise. From July 1, 2026, all pensions granted before the end of 2025 will be indexed by 7 to 8 percent following the “Swiss rule,” equivalent to 491 million euros in additional spending.

The government will also raise child-related benefits. The allowance for raising a child up to two years of age will increase from 398.81 to 460.17 euros, while the same rise will apply to the benefit for fathers caring for children up to eight years old. Cash benefits for unused parental leave will grow from 50 to 75 percent of the standard payment rate.

Municipal budgets will rise by 544 million euros to a total of 5.107 billion euros in 2026, reflecting higher allocations for culture, healthcare, and social services. Capital expenditures are set at 7.76 billion euros - 3.605 billion euros in national funding and 4.155 billion euros from European sources, including loans.

The Investment Program for Municipal Projects will continue, with up to 920.3 million euros provided for local initiatives under agreements attached to the draft law. Payments will be managed by the Bulgarian Development Bank under procedures approved by the Council of Ministers.

Overall, total public spending will represent 45.8 percent of GDP in 2026, 43.6 percent in 2027, and 43.5 percent in 2028. The government emphasizes that the 2026 budget aligns with Bulgaria’s long-term goal of maintaining fiscal stability, supporting economic growth, and ensuring a smooth transition to the eurozone.