Bulgaria’s 2026 Budget: Key Changes and Controversies

• Administrative Reform Begins: Cuts to defense and transport funding are part of a broader administrative overhaul starting in 2026.
• Tripartite Talks Scheduled: An extraordinary meeting with unions and business representatives is planned for tomorrow.
• Budget Plan Deadline: Delyan Dobrev, head of the budget commission, aims to finalize a state finance plan by December 29th.

The revised 2026 budget addresses at least six contentious issues. The Finance Ministry published the draft late Saturday night, following discussions with employers and unions.

Key changes include the removal of a proposed increase in dividend tax from 5% to 10%, the maintenance of current social security contribution rates, and the abandonment of plans to introduce sales management software in retail stores.

These revisions will be discussed at an extraordinary tripartite council meeting on Monday morning.

A maximum insurance income of 2,300 euros has been agreed upon by both business and trade unions.

The budget includes a 10% increase in salaries for all public sector employees. However, remuneration in the defense and security sectors will no longer be tied to the average wage.

The capital program faces reductions totaling 750 million euros – 450 million euros from national funding and 300 million euros from European funds and programs.This impacts funding for defense, roads, and transport projects.

Government expenditure is set at 40.1% of gross domestic product, complying with the Public Finance Act. A roadmap for social policy is also planned, aiming to establish long-term agreements and define future policies.

Key Takeaways

• Tax Changes Reversed: The proposed dividend tax increase has been scrapped.
• Social security Stable: Social security contributions remain unchanged.
• Capital Investment Reduced: Significant cuts to the capital program will affect infrastructure projects.
• Public Sector Pay Rise: A 10% salary increase is planned for public sector workers.
• Defense Sector Decoupled: Defense and security sector pay will no longer be linked to the average wage.