Fiscal Council Makes Recommendations on Preparation of Draft Budget for 2026

The Fiscal Council has issued six recommendations to the regular government regarding the preparation of the draft budget for 2026. Among them is the maintenance of the current tax policy, as low rates and the flat tax are considered an advantage for Bulgaria.

The Council notes that budget revenues are growing at a good pace, and that the main problems lie on the expenditure side of the budget.

It calls for the removal of automatic wage and pension increases across individual sectors, as set out in sector-specific legislation. This is particularly relevant for the Ministry of Interior, where significant automatic salary increases are planned for 2026. According to the Council, such automatic increases lead to higher consumer demand, and their removal would be an effective anti-inflationary measure.

It is also recommended that the distribution of social security contributions between employers and employees be made uniform for all workers. Civil servants under special employment status and police officers should pay the same social security contributions as other employees. The Council further suggests reviewing the categories of workers eligible for early retirement.

Immediate measures should be taken to optimise the public administration, including restructuring and consolidation of certain institutions where overlapping functions exist – for example, by reducing the number of ministries from 19 to 16. The document also states that a review of public expenditure should be carried out across all key sectors using the Ministry of Finance’s existing methodology, covering all aspects of policy, including individual programmes.

It further recommends that all public sector employees who have reached retirement age should be released from their positions in the short term. According to the proposal, this could quickly reduce personnel costs, free up administrative capacity, and initiate a broader reform of public sector management.

It is proposed that unfilled positions in the public administration be abolished, with the aim of permanently limiting personnel expenditure and preventing future pressure to fill these posts, which would otherwise lead to an automatic increase in costs. The measure is presented as a fast and effective tool for optimising the administrative structure without directly affecting currently employed staff.

In addition to these short-term recommendations, the regular government should also initiate structural reforms of public finances. Their objective should be to achieve lasting efficiency and optimisation across the public sector.