Public sector pay bills in Bulgaria have more than doubled between 2020 and 2025. They are growing faster than tax revenue and the economy, according to an audit by the National Audit Office. As a result, the deficit and debt are rising.
At the end of 2025 the state owed €31.43bn, up from €14.06bn in 2020. The figure is expected to reach €37.7bn in 2026.
Parliament ordered the audit earlier this year. It assessed how changes in laws and regulations affected the state budget and the indicators of the consolidated fiscal programme. The audit covered the Finance Ministry. It looked at the period from 1 January 2020, with data analysed up to 30 June 2026. The report went to parliament on time, before the 30 October 2026 deadline. It is one of three audits of public finances ordered in early July. The other two cover social policy and the Road Infrastructure Agency.
Pay costs were €5.78bn (11.3bn leva) in 2020 and €12.42bn (24.3bn leva) in 2025. That is a rise of 114%. Over the same period tax revenue grew by almost 89%, so wages outpaced it by 25.3 percentage points. Staff costs rose from 9.40% to 10.73% of GDP.
Staff costs grew by 14.50% in 2024, when inflation was 2.6%, and by 16.22% in 2025, when inflation was 3.5%.
Eleven institutions account for more than 90.7% of the increase. More than 60% of it is in defence and security, meaning the Interior Ministry and the Defence Ministry. Pay for judges and prosecutors rose by 79.66%, or €282m (551.6m leva). The audit says their pay is tied by law to the highest salaries in the state.
The population is 7.13% smaller, yet there are 28.32 posts for every 1,000 people, not 24.70. Among major budget holders, 129,819 posts are filled, which is 11,835 (10%) more. In municipalities there are 232,367, which is 25,466 (12.3%) more.
Between 5.25% and 7.66% of posts are vacant. The audit office says this builds up savings, which are later used to raise individual salaries and pay bonuses. The auditors say pay costs stay in the budget for good.
Taxes and social security contributions bring in more than 80% of budget revenue. Over the period they grew by 88.8% in nominal terms. In 2021 and 2022 revenue grew more slowly than the economy because of anti-crisis measures: lower VAT, tax breaks and the scrapping of excise duty on electricity, gas and liquefied petroleum gas. From 2023 to 2025, higher social security ceilings, the minimum wage and index-linked rises pushed revenue up. But staff costs grew even faster.
Non-tax revenue rose from €2.97bn (5.8bn leva) to €6.08bn (11.9bn leva), an increase of more than €3.07bn (105.5%). Its share of GDP is 5.2% in 2025, against 4.8% in 2020. The audit office says this money is not stable. It depends on one-off receipts and on dividends from state-owned firms, which the Council of Ministers sets each year. Only fees, mostly road fees, grow in a predictable way.
Capital spending, meaning money for new projects and investment, rose from €2.56bn (5bn leva) to €5.88bn (11.5bn leva), by almost 130%. On average only 78.1% of the plan was carried out. Investment makes up between 7% and 12.9% of spending under the consolidated fiscal programme, excluding Bulgaria's payment to the EU. Current spending makes up between 87% and 93%. Municipalities almost tripled their capital spending, from €421m (824m leva) to €1.18bn (2.3bn leva). Their investment programmes for 2024 and 2025 had no secured funding and left unpaid bills.
The deficit, the gap between spending and revenue, is almost twice as big. At the end of 2025 it stood at €3.48bn (6.8bn leva), against €1.79bn (3.5bn leva) in 2020. That is a rise of 93.3%, or €1.69bn (3.3bn leva). In 2020 and 2021 the causes were the fall in the economy and payments for Covid-19 measures. In 2022 the deficit fell by 65.1% to €665m (1.3bn leva), because inflation lifted revenue by 23.5% and spending by 17.5%. In 2023 it grew more than fourfold, to €2.86bn (5.6bn leva).
Debt was 29.9% of GDP in 2025, up from 22.5% in 2022, and is expected to hit 31.3% in 2026. Servicing it costs more than 2.5 times as much: €1bn in 2020 and more than €2.53bn in 2025. The audit office says debt no longer pays for investment but covers day-to-day needs.
Over the next 10 years the state must refinance old bond issues worth more than €12bn, on which it now pays 1–2% interest. The auditors say new bonds will carry higher interest, so servicing the debt will cost more.
The audit office says the legal changes do not make revenue stable. Staff costs, the biggest part of spending under the consolidated fiscal programme, keep rising. That upsets the balance of public finances, leaves less money for investment and forces the state to borrow regularly. The auditors say Bulgaria needs timely fiscal consolidation, meaning cuts in state spending and/or more tax revenue, together with steps to boost the economy.
The auditors made one recommendation to the finance minister. He should set up a single legal framework to plan, assess, rank, select and track public investment projects paid for from the state budget, so that public investment is run on a lasting model. Under the National Audit Office Act, the minister has six months from receiving the report to act on the recommendation and tell the head of the institution in writing.