Krastev says 2026 budget lacks strategy and burdens business

Bulgaria’s proposed spending plan fails to provide sustainable economic growth and instead relies on increased social security burdens to address immediate deficits, according to business representative Krastev. The framework lacks strategic investment incentives while industrial output and exports decline, leaving domestic consumption and government expenditure as primary drivers that cannot sustain long-term expansion.

Authorities risk squandering eurozone membership benefits by maintaining policies focused on administrative cost increases rather than productivity reforms, Krastev warned. Higher contribution requirements particularly burden technology firms paying premium wages, making Bulgarian labor costs less competitive regionally. Revenue projections appear overly optimistic given slowing production, potentially forcing capital spending cuts or additional borrowing if collections fall short.

The mechanical burden increases signal weak policy predictability to potential investors while failing to improve tax compliance in shadow economy sectors employing approximately 200,000 workers, Krastev noted.