Fiscal Council Delivers Critical Assessment of Bulgaria's 2025 Budget Execution

Bulgaria’s Fiscal Council has delivered a highly critical preliminary assessment of the implementation of the consolidated fiscal programme for 2025, highlighting major concerns including significantly overestimated forecasts, high inflation, unrealistic tax revenue projections, excessive current spending and substantial underperformance in capital investment.

The findings are outlined in a summary of the Council’s analysis of the actual execution of the 2025 budget. The Council notes that this is a preliminary assessment based on data available at the end of the year.

According to the Fiscal Council, tax revenues fell short by around 3% of Gross Domestic Product (GDP). The largest gaps relate to VAT, excise duties and corporate income tax. The Council estimates that the forecasting error for revenues stands at around 10%.

It argues that the macroeconomic and fiscal projections underpinning the 2025 budget were unrealistic and overly optimistic. The Council also criticises the use of what it describes as “fiscal tricks”, including requiring 100% dividend payouts from state-owned companies, collecting advance tax payments from banks, and capitalising the Bulgarian Development Bank instead of recording budget expenditures. In its view, such measures circumvent fiscal rules and create longer-term risks.

The Council further warns that rising current expenditure — particularly on wages — is undermining fiscal sustainability. It argues that, given solid economic growth, the deficit should have been no more than 0.8% of GDP.

Structural reforms are needed, the Council says, including limiting current spending and undertaking administrative reform to address mounting pressures from defence, pensions, healthcare and demographic challenges. Without such measures, it cautions, the country risks facing either higher taxes or increased public debt.

Although 2025 ended with higher-than-forecast GDP, this was accompanied by high inflation, weak revenues, inflated current spending and unfulfilled investment plans. The Fiscal Council views this as a sign of declining fiscal discipline and calls for more substantial reforms, rather than “innovations” that merely postpone underlying problems, the summary of the Council's analysis says.

Source: BTA