The European Commission has formally opened an excessive deficit procedure against Bulgaria, finding the country in violation of the European Union’s fiscal rule on budget balances just six months after it adopted the euro.
According to the Commission's assessment, Bulgaria’s budget deficit is forecast to reach 4.1% of gross domestic product in 2026 and climb to 4.3% in 2027, surpassing the EU 3% ceiling. Until recently, Bulgaria had maintained low public debt and balanced budgets, conditions that supported its entry into the euro area.
Brussels pointed to a drawn-out political crisis as the central cause of the fiscal deterioration. Bulgaria has held eight national elections since 2021. In that context, politicians increased public sector wages and expanded social benefits substantially, measures aimed at securing voter support. The Commission specifically cited "continued structural increases in public sector wages and social benefits in the absence of compensatory measures" as the reason for the deficit breach.
Compounding the problem, Bulgaria currently lacks an approved budget for 2026. A draft budget tabled in December provoked mass protests and precipitated the collapse of the government, leaving the country without a standing budget law for the coming year.
Finance Minister Galab Donev said the government would move to curb spending before the EU imposes tougher measures. "We won’t wait for the recommendations and the tough measures that the EU could impose on us," Donev stated. "We’ll take on responsible policy to limit government expenses within reasonable margins." He framed the response as pre-emptive action to avoid more severe enforcement.
The Commission’s initiation of the excessive deficit procedure begins a formal review process under EU fiscal rules. The Commission will produce recommendations and, if needed, propose corrective steps. Bulgaria’s fiscal trajectory, the absence of a 2026 budget law and the political instability that produced recent policy decisions are central elements that Brussels will evaluate as the procedure unfolds.
Summary: The European Commission has launched an excessive deficit procedure against Bulgaria after forecasting deficits of 4.1% of GDP in 2026 and 4.3% in 2027, linked to increases in public-sector wages and social benefits amid ongoing political instability. Bulgaria does not yet have a 2026 budget following protests that toppled the government; the finance minister said the country will implement spending limits before the EU escalates measures.