Simeon Dyankov, chairman of Bulgaria’s Fiscal Council, has warned that price increases implemented by traders are likely to remain in place despite new laws and fines, highlighting structural issues in the country’s economic regulation. Speaking on BNT, Dyankov explained that last-minute legislative changes often leave gaps that unscrupulous traders can exploit. Many businesses had already raised prices even before Bulgaria’s entry into the eurozone, contributing to inflationary pressures observed since July 2025. While December marked a temporary stabilization, Dyankov expects average inflation in 2026 to fall to around 4%, down from 5–5.5% in 2025.

According to Dyankov, some sectors with strong competition can self-regulate, but essential goods such as milk have seen sustained price increases. “Whether you like it or not, the milk price in the store next to you has risen, and you will buy it because your children need milk this morning,” he said, adding that coordinated pricing among traders makes alternatives difficult.

Dyankov also discussed Bulgaria’s budgetary outlook. He expects a regular budget will only be in place by mid-2026, noting that caretaker cabinets are unlikely to undertake this task given the challenges of previous interim budgets. For now, the government is operating under the old budget framework with a 5% increase for civil servants, reflecting December’s inflation of 5%. This adjustment is estimated to cost roughly 430 million euros annually, or about 35 million euros per month. Beyond the financial impact, Dyankov highlighted the precedent this sets, warning that once additional allowances are introduced, political parties may continue to propose further increases before elections, potentially straining public finances.

The fiscal council chairman emphasized that Bulgaria’s real budget deficit is already above 3%, pointing to prior “creative accounting” methods used to comply with EU fiscal requirements. He stressed the need for a public debate and a regular government to reconsider the country’s tax and social security systems.

On the euro transition, Dyankov stated that the process is proceeding smoothly, largely due to banks having prepared for the change over several years. He noted that political delays have not hindered the technical readiness of the financial sector, which remains the key driver of the successful adoption of the euro in Bulgaria.

In conclusion, Dyankov stressed that inflation trends reflect pre-euro price adjustments by traders rather than immediate benefits from euro adoption. While some stabilization is expected in 2026, he cautioned that regulatory and budgetary challenges remain, and that meaningful reforms will require coordinated action by a permanent government rather than interim administrations.