Bulgaria's state budget deficit escalated to an estimated €3 billion by late August, marking a significant widening from July's figures. This increase was primarily attributed to rising expenditures on state salaries, pensions, and municipal infrastructure projects, which have outpaced tax revenues. A brief improvement in July, when the deficit temporarily narrowed due to an €896.1 million grant from the European Union, was quickly reversed in August as preliminary data showed an €800 million increase in the deficit within that single month.
The Ministry of Finance attributed the August surge in the deficit, which reached 2.4% of projected GDP, to accelerated investment payments under the Recovery and Resilience Plan (RRP). These substantial payments were concentrated to meet an August 31, 2026, eligibility deadline for activities, with the expectation that R&S Program expenditures will continue to pressure the budget until the fifth payment from the European Commission is received. Revenues, grants, and donations under the Consolidated Fiscal Program (CFP) as of August 2026 are expected to total €30.1 billion, a €3.2 billion (11.9%) increase from the previous year, driven by a €2.2 billion (10.1%) rise in tax revenues and €1.5 billion in grants and donations. Expenditures under the Fiscal Framework, however, reached €33.1 billion, or 58.3% of annual estimates, up from €29.6 billion in August 2025.
Several factors contributed to the expenditure increase, including higher social and health insurance payments, particularly pension costs due to indexation under the "Swiss rule" as of July 1, 2025, and July 1, 2026. Additionally, the increase in the minimum wage as of January 2026 and an additional wage increase based on accumulated inflation for 2025, effective January 2026, added to personnel costs. Significant capital expenditures for the Public Investment Program and the Municipal Investment Program also played a role. Bulgaria's contribution to the EU budget as of August 31, 2026, was €0.8 billion. The government faces an October 15 deadline to present European authorities with a plan to curb overspending.
