Budget 2026 – reckless spending sets up fiscal disaster

Bulgaria’s 2026 budget proposal has drawn sharp criticism from economists who warn that unchecked spending growth will trigger a fiscal crisis within two years. Lachezar Bogdanov, chief economist at the Institute of Market Economics, said lawmakers approved a 24 percent expenditure increase despite inflation running between 3 percent and 4 percent, a combination that guarantees massive deficits.

Authorities should limit spending growth to match the economic expansion of approximately 6.4 percent in euro terms, Bogdanov explained during a television interview. He warned that delaying corrections will only intensify future economic pain. The proposed two percentage point hike in social security contributions will extract 60 leva from workers’ pockets and discourage legal employment, he added.

Bulgaria has recorded the steepest public sector wage increases in recent years. Bogdanov predicted that by fall, officials will recognize the deficit as unsustainable, forcing painful cuts in 2027. The country faces a choice between modest spending restraint today or severe austerity measures within 24 months, he concluded.