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Draft 2027 budget sets a 3.5% deficit, €8.6 billion of new borrowing and spending cuts to 39.6% of GDP

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Empty university lecture hall with a lectern, a projection screen and rows of wooden seats Economy
Empty university lecture hall with a lectern, a projection screen and rows of wooden seats

Finance Minister Galab Donev presented the draft State Budget Act at UNWE, with growth forecast at 2.5%, inflation at 4% and a deficit path down to 2.4% of GDP by 2029.

Deputy Prime Minister and Finance Minister Galab Donev presented the draft 2027 State Budget Act on 6 November at the University of National and World Economy (UNWE) in Sofia, BTA reported. The draft sets the budget deficit at 3.5% of gross domestic product and the minimum monthly wage at €660. Donev called it a "budget of coming to one's senses", one that deals with "real figures, real policies and real trends".

The government plans to narrow the cash deficit under the consolidated fiscal programme to 3.1% of GDP in 2028 and 2.4% in 2029. Spending is projected to fall from 43.5% of GDP in 2026 to 39.6% in 2027, and then to 38.9% in 2028 and 38% in 2029. New borrowing is planned at €8.6 billion in 2027, taking government debt to 31.4% of GDP, followed by €8.5 billion in 2028 and €7.9 billion in 2029.

The macroeconomic assumptions for 2027 are real GDP growth of 2.5%, inflation of 4%, unemployment of 3.4% and nominal GDP of €141.3 billion.

On the income side, public-sector pay is to rise by 5% and teachers' pay by 7.5%. Pensions will be indexed from 1 July, with the maximum pension raised to €1,874. The poverty line is set at €443, and the maximum monthly income subject to social security contributions rises to €2,400. Mechanisms that link spending to the minimum and average wage will be abolished, and personnel spending is to be cut by 10% across the year, with exceptions for delegated budgets and municipalities.

For business, the draft includes a one-off 33% tax on excess profits in certain sectors, a higher tax on expenses in kind of 7%, a VAT registration threshold of €60,000 and higher alternative taxation for luxury cars. The maximum monthly food voucher allowance rises from €102.26 to €200, with the annual quota increased to €1.5 billion from €818 million.

Donev said that spending commitments made over the years without secured funding, identified in three National Audit Office audits, would have to be carried by this year's and next year's budgets. The National Council for Tripartite Cooperation is due to discuss the draft this week, and the document then goes to Parliament.

Sources