Budget 2026: Fiscal Council Calls for Spending Cuts

Spending in the next budget needs to be reduced, as recommended by the International Monetary Fund, and the budget deficit should be controlled before it increases significantly, experts from the Fiscal Council advised.

A month before the draft 2026 budget is submitted to Parliament, representatives of the Council met with MPs from the subcommittee overseeing public funds.

According to the Fiscal Council, the government is expected to achieve a 2.9% deficit by the end of this year, but measures must be taken to ensure this. If not, the budget deficit could exceed BGN 9 billion, or more than 5%, which would automatically affect the next budget.

“The trend we have observed in recent months is unfavourable for implementing the budget in the way it was adopted by Parliament,” said Simeon Dyankov, Chair of the Fiscal Council.

The Council notes conflicting data regarding the execution of the 2025 budget, at least based on the first seven months. On the one hand, revenue collection is progressing well, though still far from the budgeted targets, while expenditures are rising.

“What remains as the expected shortfall in non-tax revenues is around BGN 3 billion. The risks and uncertainties for next year are even greater than for this year,” commented Lyubomir Datsov of the Fiscal Council.

The situation with pensions and their disbursement is becoming increasingly critical, the Council reports. There is also insufficient political will for serious pension reform. They recommend not raising social security contributions, but instead considering reforms within the pillars of the system itself.

“We are in a situation where urgent measures are needed to reduce spending to improve efficiency, effectiveness, and economy, so that the budget deficit can be controlled,” stated Martin Dimitrov, Chair of the Parliamentary Subcommittee on Public Funds Oversight.

The real debate on the next budget will begin once the Ministry of Finance announces its parameters.