Draft Budget 2026: Discussion in the Budget and Finance Committee

The Budget and Finance Committee is meeting today, where it will consider on first reading a key document - the draft budget for 2026. Also included in the agenda are the draft budgets of the State Social Security and the National Health Insurance Fund. Expectations are high, as the budget for next year is of crucial importance for the country's financial health.

Along with the Budget and Finance Committee, the draft budget will also be considered by other parliamentary committees this week, which reflects the tense schedule of the legislative process. This is clear from information on the website of the National Assembly. We remind that last Friday the Defense Committee already approved on first reading the draft law on the state budget for 2026.

The draft law on the state budget for 2026 represents a significant step, as it is the country's first budget expressed in euros. It was published by the Ministry of Finance on November 3. At the same time, the updated medium-term budget forecast for the period 2026-2028 was presented. It is important to note that the draft budget did not go through consideration in the National Council for Tripartite Cooperation, after the employers" organizations refused to participate due to disagreement with certain parameters. On November 13, the government approved the draft law on the state budget for 2026, along with the draft budgets of the Health Insurance Fund and the NSSI, and submitted it to Parliament.

In view of the upcoming introduction of the euro from January 1, all documents and information related to the budgetary procedure for 2026 are prepared in euros. The official exchange rate, according to the law, is 1.95583 leva per 1 euro. The analysis of the budget balance under the Consolidated Fiscal Program (CFP), expressed as a percentage of GDP, shows a deficit of 3 percent of GDP for 2026.

The forecasts for the period 2026-2028 predict a significant increase in the state debt. It is expected to reach 37.6 billion euros (31.3 percent of GDP) in 2026, 43.5 billion euros (34.2 percent of GDP) in 2027, and 49 billion euros (36.6 percent of GDP) in 2028. In 2026, the maximum amount of new state debt that can be taken is up to 10.44 billion euros, including up to 3.2 billion euros on the line of the SAFE instrument for strengthening the European defense industry.

Revenues, grants and donations under the Consolidated Fiscal Program (CFP) are expected to reach 42.8 percent of GDP in 2026. Total CFP expenditures for the following year are projected to be 45.8 percent of GDP.

The budget includes a number of measures aimed at increasing revenues. Among them are the increase of the dividend tax from 5 percent to 10 percent. It is planned to expand the scope of goods with high fiscal risk, as well as to expand the system for electronic tracking of the movement of vehicles carrying such goods. Mandatory is the electronic reporting of sales revenues, through the use in commercial establishments of software approved by the NAP for sales management. The measures in the tax legislation remain in force, including the new excise calendar for excise rates on tobacco and tobacco products introduced on May 1, 2025, which aims at a balanced phased increase in excise rates.

From January 1, 2026, an increase in taxation for gambling games is planned. An increase in the insurance contribution to the "Pensions" fund of the state social security by 2 percentage points is expected and from January 1, 2028 - by 1 percentage point. The minimum insurance income for self-insured persons will be increased to 620.20 euros, and the maximum insurance income for all insured persons - to 2352 euros.

From next year, the minimum wage is expected to be 620 euros (1213 BGN). Pensions for work activity, granted until December 31 of the previous year, as of July 1 of the respective year, will be updated according to the so-called "Swiss rule" by 7.6 percent.

Within the framework of the government discussion, Prime Minister Rosen Zhelyazkov shared his view on the budget. "This budget is neither liberal, nor conservative, nor left, nor right. This is the budget that should enable all macroeconomic indicators to be reflected, so that Bulgaria can smoothly transition to the euro, without strong inflationary shocks and without reducing incomes, which should outpace the growth of inflation_q_, he said.