The Bulgarian government has approved the draft State Budget Act for 2026 together with the Updated Medium-Term Budget Forecast for 2026–2028, which outlines the fiscal policies, macroeconomic assumptions and investment priorities for the next three years. The documents form the foundation of next year’s fiscal framework and incorporate Bulgaria’s preparations for adopting the euro on 1 January 2026.

This year’s budget package — covering the central government budget, the State Social Security (SSS) budget, and the National Health Insurance Fund (NHIF) — received considerably broader support from the National Council for Tripartite Cooperation (NCTC). The SSS budget was approved unanimously, the NHIF budget passed with abstentions from the Confederation of Independent Trade Unions (CITUB) and the Bulgarian Industrial Capital Association (AICB), while only the AICB abstained from the central government budget vote.

The outcome meets Prime Minister Rosen Zhelyazkov’s expectation for a stronger mandate from social partners. Government, employer organizations and trade unions also signaled commitment to beginning structural reforms in 2026 — including decoupling salaries in numerous public-sector areas from the national average wage, and reducing thousands of long-vacant positions across state administrations.

The government is expected to submit the draft laws to Parliament by the end of the day.

Fiscal Framework: Stability and Eurozone Alignment

Budget 2026 is aligned with the National Medium-Term Fiscal-Structural Plan for 2025–2028 — Bulgaria’s first comprehensive multi-year fiscal strategy. The plan prioritizes long-term financial sustainability, improved business conditions, and investment predictability.

In accordance with Bulgaria’s euro adoption schedule, all budget documents for 2026 are drafted in euros at the official fixed exchange rate of 1.95583 leva per euro.

The autumn macroeconomic forecast prepared by the Ministry of Finance projects GDP growth of 2.7% in 2026, easing slightly to 2.5–2.4% in 2027–2028. Inflation is expected to stay at around 3.5% next year before gradually declining to 2.5% by 2028. The forecast has been endorsed by the Fiscal Council and is broadly in line with projections from the European Commission and the OECD.

Under the consolidated fiscal program, the budget deficit is planned at:

• 3.0% of GDP in 2026,

• 2.8% in 2027,

• 2.4% in 2028.

State debt is projected to rise gradually but remain moderate by EU standards. The government expects public debt to reach:

• €37.6 billion (31.3% of GDP) in 2026,

• €43.5 billion (34.2% of GDP) in 2027,

• €49 billion (36.6% of GDP) in 2028.

Up to €10 billion in new debt may be issued in 2026, including up to €3.2 billion under the EU’s SAFE instrument for strengthening European defense capabilities.

The minimum level of the fiscal reserve at the end of 2026 is set at €2.4 billion.

Tax Policy: Focus on Compliance and Investment Incentives

The government plans several tax changes aimed at strengthening revenue collection and supporting businesses:

• Broader classification of high-fiscal-risk goods.

• Expansion of electronic tracking systems for transport of such goods.

• A new tax incentive for research and development (R&D) allowing companies to deduct an additional 25% of R&D expenses.

• Continued phased increases under the new excise calendar for tobacco products.

• Extended tax reliefs for families with children for 2026.

• Preferential tax depreciation for electric vehicles.

• An increase in the variable component of the gambling license fee from 20% to 22%.

Revenues under the consolidated fiscal program are forecast to reach:

• €50.4 billion in 2026,

• €51.5 billion in 2027,

• €54.7 billion in 2028.

The substantial rise in 2026 is driven by new revenue measures and the full-year effect of policies adopted late in 2025.

Public Spending Priorities for 2026–2028

Expenditures under the consolidated fiscal program are planned at:

• €54.1 billion in 2026,

• €55.1 billion in 2027,

• €58 billion in 2028.

Under Bulgaria’s national fiscal rule, expenditures will remain around 40% of GDP, with temporary deviations allowed due to increased defense spending.

Key spending measures include:

Income and Labour Market Policies

• Raising the minimum wage from €550.67 to €620.20 as of 1 January 2026.

• A 10% increase in public-sector wage costs in 2026, alongside elimination of automatic mechanisms linking certain salaries to the average wage.

• Continued support for wage growth among pedagogical staff.

Social Security and Family Policies

• Increasing the childcare allowance up to the age of 2 from €398.81 to €460.17.

• Raising the same amount for fathers taking leave until the child turns 8.

• Increasing compensation for early return to work after childbirth from 50% to 75% of the benefit.

Pension System

• The average pension is expected to reach €541.20 in 2026 — an 8.5% nominal increase.

• All pensions granted before the end of 2025 will be indexed on 1 July 2026 by 7–8% under the “Swiss rule.”

• The minimum retirement pension for full service will rise from €322.37 to €346.87.

• Retirement age continues to increase gradually:

  • Women: 62 years and 6 months, with 36 years and 10 months of service.

  • Men: 64 years and 9 months, with 39 years and 10 months of service.

• Total pension expenditure in 2026 will reach €13.4 billion, or 11.3% of GDP.

Administrative Reforms

• A reduction of at least 5,500 long-vacant positions across ministries and municipal administrations over 2026–2028.

• Freezing basic salaries for top administration officials at 2025 levels through 2026.

Capital Investments

Capital expenditure in 2026 is set at €7.02 billion, including:

• €3.17 billion in nationally funded projects;

• €3.85 billion financed through EU programs, including the Recovery and Resilience Plan.

The municipal investment program will continue with up to €920 million earmarked for projects to be managed and implemented by municipalities, with payments processed through the Bulgarian Development Bank.

Health Insurance Budget for 2026

The government also approved the 2026 budget draft of the National Health Insurance Fund.

Key figures:

• €5.29 billion in total revenues and transfers.

• €5.17 billion in health insurance revenues, including €3.15 billion in contributions and €2.02 billion in transfers from the state.

• €4.92 billion allocated for health insurance payments — an 8.5% increase over 2025.

• The Ministry of Health will provide an annual transfer of €98.7 million for activities outside mandatory health insurance.

• The health insurance contribution rate remains unchanged at 8%.

The NHIF budget emphasizes legality, transparency and efficient use of public funds.