Recommendation for a COUNCIL RECOMMENDATION with a view to bringing an end to the situation of an excessive deficit in Bulgaria
Date: 2026-06-25
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Bulgaria, budget deficit, budgetary control, economic policy, economic reform, gross domestic product, public debt, public finance, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 25.6.2026  COM(2026) 331 final  Recommendation for a COUNCIL RECOMMENDATION with a view to bringing an end to the situation of an excessive deficit in Bulgaria  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

with a view to bringing an end to the situation of an excessive deficit in Bulgaria 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union  (TFEU),  and  in 
particular Article 126(7) thereof, 

Having regard to the recommendation from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

According  to  Article  126  of  the  TFEU,  Member  States  shall  avoid  excessive 
government deficits. 

The  Stability  and  Growth  Pact  is  based  on  the  objective  of  sound  and  sustainable 
government finances as a means of strengthening the conditions for price stability and 
for strong, sustainable and inclusive growth underpinned by financial stability, thereby 
supporting  the  achievement  of  the  Union’s  objectives  for  sustainable  growth  and 
employment. 

On  [date],  the  Council  decided,  in  accordance  with  Article  126(6)  TFEU,  that  an 
excessive deficit existed in  Bulgaria due to  non-compliance with  the deficit criterion 
(1). 
Article  126(7)  TFEU  and  Article  3(4)  of  Council  Regulation  (EC)  No  1467/97  (2) 
require  the  Council  to  adopt  a  recommendation  addressed  to  the  Member  State 
concerned with a view to bringing the situation of excessive deficit to an end within a 
given  period.  In  line  with  Article  3(4)  of  Council  Regulation  (EC)  1467/97,  that 
recommendation is also  to establish a maximum deadline of six months for effective 
action  to  be  taken  by  the  Member  State  concerned  to  correct  the  excessive  deficit, 
which  can  be  reduced  to  three  months  when  warranted  by  the  seriousness  of  the 
situation. Furthermore, the Council is to recommend that the Member State implement 
a corrective net expenditure (3) path, which ensures that the general government deficit 
is brought, and maintained, below the reference value of 3% of gross domestic product 
(GDP)  within  the  deadline  set  in  that  recommendation.  Where  the  excessive  deficit 
procedure  was  opened  on  the  basis  of  the  deficit  criterion,  the  corrective  net 
expenditure path is, according to Article 3(4) of Council Regulation (EC) No 1467/97, 

(1) 

(2) 

(3) 

Council  Decision  of  [DATE]  on  the  existence  of  an  excessive  deficit  in  Bulgaria  (OJ  L,  [OJ:  please 
insert in this footnote the reference]).  
Council Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive 
deficit procedure (OJ L 209, 2.8.1997, ELI: http://data.europa.eu/eli/reg/1997/1467/2024-04-30) as last 
amended by Council Regulation (EU) 2024/1264 of 29 April 2024 (OJ L, 2024/1264, 30.4.2024). 
According  to  Article  2(2)  of  Regulation  (EU)  2024/1263,  'net  expenditure'  means  government 
expenditure net of interest expenditure, discretionary revenue measures, expenditure on programmes of 
the  Union  fully  matched  by  revenue  from  Union  funds,  national  expenditure  on  co-financing  of 
programmes funded by the Union, cyclical elements of unemployment benefit expenditure, and one-offs 
and other temporary measures. 

EN 

1 

  EN 

 
 
(5) 

(6) 

(7) 

(8) 

to be consistent with a minimum annual structural adjustment of at least 0.5% GDP as 
a benchmark for the years when the general government deficit is expected to exceed 
the  reference  value.  The  Commission  may,  during  a  transition  period  in  2025,  2026 
and  2027,  adjust  the  benchmark  to  take  into  account  the  increase  in  interest 
expenditure when setting the proposed corrective net expenditure path for those years, 
taking into account Recital 23 of Council Regulation (EU) 2024/1264. Where needed, 
the corrective path is to be based on updated projections produced by the Commission 
using the methodology for Debt Sustainability Analysis. The concerned Member State 
may  signal  to  the  Commission  country-specific  issues  that  it  considers  relevant  for 
setting the corrective path. 

Real  GDP  in  Bulgaria  grew  by  3.1%  in  2025.  According  to  the  Commission  Spring 
2026  Forecast,  the  economy  is  expected  to  grow  by  2.5%  in  2026,  on  the  back  of 
continued  growth  in  domestic  demand  components.  In  2027,  the  same  drivers  are 
expected to support real GDP growth of 2.2%. The unemployment rate is expected to 
reach 3.7% in 2026 and 3.9% in 2027. The inflation rate is set to increase from 3.5% 
in 2025 to 4.2% in 2026 and reach 2.6% in 2027. 
According  to  the  data  provided  by  Eurostat  on  22  April  2026  (4),  the  general 
government  deficit  in  Bulgaria  stood  at  3.5%  of  GDP  in  2025.  The  Commission 
Spring 2026 Forecast projects a general government deficit of 4.1% of GDP in 2026 
and 4.3% of GDP in 2027, thus remaining above the reference value of 3% of GDP. 
According  to  the  Commission’s  calculations  (5),  these  developments  correspond  to  a 
net expenditure growth rate of 12.3% in 2025 and 5.5% in 2026. The structural deficit 
is projected at 4.1% in 2026 and is expected to remain at the same level in 2027. 

General  government  debt  stood  at  29.9%  of  GDP  at  end-2025.  According  to  the 
Commission Spring 2026 Forecast, it is projected to increase to 32.3% of GDP at end-
2026  and  35.5%  of  GDP  at  end-2027,  thus  remaining  below  the  60%  of  GDP 
reference value. 

The  corrective  net  expenditure  path  in  this  recommendation,  which  establishes 
maximum  growth  rates  of  net  expenditure,  is  consistent  with  minimum  annual 
structural adjustments, or structural primary adjustments, of at least 0.5% GDP in line 
with  Article 3(4) of Council Regulation  (EC)  No 1467/97  and Recital  23 of Council 
Regulation  (EU)  2024/1264.  Based  on  the  macroeconomic  assumptions  from  the 
Commission  Spring  2026  Forecast,  the  corrective  net  expenditure  path  in  this 
recommendation corresponds to an adjustment in the structural primary balance of 0.3 
percentage points in  2026 and  of 0.6 percentage  points in  2027. For 2028 and  2029, 
which is beyond the period during which the Commission may take into account the 
increase  in  interest  expenditure,  the  corrective  path  corresponds  to  an  annual 
adjustment  in  the  structural  balance  of  0.5  and  0.6  percentage  points,  respectively. 
While  the  corrective  net  expenditure  path  in  2026  implies  a  structural  adjustment  of 
less  than  0.5  percentage  points  of  GDP,  considering  that  the  late  formation  of  the 
government  delayed  the  adoption  of  a  budget,  this  is  compensated  by  the  higher 
adjustment in the remaining years. 

(4) 

(5) 

EN 

Euro 

Eurostat 
April 
https://ec.europa.eu/eurostat/en/web/products-euro-indicators/w/2-22042026-ap]   
Fiscal Statistical Tables providing background data relevant for the assessment of the budgetary policies 
of the Member States, SWD(2026)200 final, Brussels 3.6.2026. 

Indicators 

published 

2026. 

22 

on 

See:  

2 

  EN 

 
(9) 

The corrective net expenditure path in this recommendation supersedes the maximum 
growth rates for net expenditure set out in point 1 of Council Recommendation of 20 
June 2025 endorsing the medium-term fiscal-structural plan of Bulgaria (6).  

(10)  Based on the corrective net expenditure path in this recommendation, and based on the 
the 
Commission  medium-term  government  debt  projection 
Commission  Spring  2026  Forecast,  the  general  government  deficit  is  projected  to 
decrease from 3.5% of GDP in 2025 to 2.9% by 2029.  

framework  and 

(11)  Based on the corrective net expenditure path in this recommendation, the Commission 
medium-term  government  debt  projection  framework,  and  the  Commission  Spring 
2026  Forecast,  the  general  government  debt-to-GDP  ratio  would  continue  increasing 
from 29.9% at end-2025 to 38.3% at end-2029, while remaining well below the 60% 
of GDP reference value. 

(12)  Abiding by the corrective net expenditure path in this recommendation should secure a 
lasting correction of the excessive deficit; concrete measures should be geared towards 
enhancing  the  quality  and  composition  of  the  public  finances,  preserving  investment 
and reinforcing the growth potential of the economy. Reforms of a fiscal and broader 
economic nature should improve the growth and resilience potential of the economy in 
a sustainable manner, and support fiscal sustainability. 

(13)  On  8  July  2025,  the  Council  adopted  a  recommendation  (7)  allowing  Bulgaria  to 
deviate  from  the  maximum  growth  rates  of  net  expenditure  recommended  by  the 
Council Recommendation C/2025/3700, for the period 2025-2028.  

(14)  The flexibility provided by the national escape clause should also be considered in the 
implementation of the excessive deficit procedure, and when assessing if Bulgaria has 
taken  effective  action.  Therefore,  until  2028,  the  corrective  net  expenditure  path  set 
out in this recommendation is complemented by the flexibility that is allowed by  the 
increase  in  defence  expenditure  (8)  under  the  national  escape  clause.  To  ensure  that 
fiscal  sustainability  is  not  endangered,  this  recommendation  should  set  out  the 
maximum flexibility, in line with the Commission Communication of 19 March 2025 
and  the  Council  Recommendation  of 8  July  2025.  For  that  purpose,  the  overall 
maximum  flexibility  under  the  excessive  deficit  procedure  should  be  limited  to  the 
flexibility that has not been used during the period preceding the net expenditure path 
in this recommendation. 

(15)  Based  on  the  Commission's  calculations  (9),  Bulgaria  exceeded  the  cumulative 
maximum  net  expenditure  growth  rate  for  2025  recommended  by  the  Council  on  20 
June  2025,  by  2.1%  of  GDP.  This  deviation  is  reduced  to  1.4%  of  GDP  when 
accounting for the flexibility allowed by the Council Recommendation of 8 July 2025, 
corresponding to a use of  the flexibility under the national  escape clause  of 0.6% of 
GDP.  Therefore,  only  the  part  of  the  increase  in  defence  expenditure  as  percent  of 
GDP since the reference year 2024 that is above 0.6 percentage points is eligible for 

(6) 

(7) 

(8) 

(9) 

Council Recommendation of 20 June 2025 endorsing the national medium-term fiscal-structural plan of 
Bulgaria  (OJ C, C/2025/3700, 20.8.2025, ELI: https://eur-lex.europa.eu/eli/C/2025/3700/oj). 
Council Recommendation of 8 July 2025 allowing Bulgaria to deviate from the maximum growth rate 
of net expenditure as  set by the Council under Regulation (EU) 2024/1263 (Activation of the national 
escape clause), (OJ C, C/2025/3961, 20.8.2025, ELI: https://eur-lex.europa.eu/eli/C/2025/3961/oj) 
Nationally financed defence expenditure as defined in the Classification of the functions of government 
(COFOG02) 
Commission  Staff  Working Document  SWD(2026)200,  'Fiscal  statistical  tables  providing background 
data relevant for the assessment of the budgetary policies of the Member States', 3.6.2026. 

EN 

3 

  EN 

 
granting  flexibility  in  2026  to  2028.  Moreover,  the  available  maximum  flexibility  in 
that period should be reduced from 1.5% of GDP to 0.9% of GDP. 

(16) 

In  line  with  Article  8(3)  of  Regulation  (EC)  No  1467/97,  a  Council  decision  to 
abrogate  the  excessive  deficit  procedure  shall  only  be  taken  pursuant  to  Article 
126(12)  TFEU  where  the  deficit  has  been  brought  below  the  3%  of  GDP  reference 
value and is  projected by the Commission  to  remain so in  the current  and following 
year. 

HEREBY RECOMMENDS: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(10) 

Bulgaria  should  ensure  that  the  nominal  growth  rates  of  net  expenditure  do  not 
exceed the maxima established in Annex I.  

Bulgaria should thus put an end to the excessive deficit situation by 2029. 

The  Council  establishes  the  deadline  of  15  October  2026  for  Bulgaria  to  take 
effective  action  and  present  the  necessary  measures  together  with  its  2027  Draft 
Budgetary Plan, to be submitted to the Commission and the Eurogroup in accordance 
with Article 6 of Regulation (EU) 473/2013 (10). Thereafter, Bulgaria should report 
on  progress  made  in  the  implementation  of  this  recommendation  at  least  every  six 
months,  in  spring  in  the  context  of  its  annual  progress  report  by  30  April,  and  in 
autumn in its draft budgetary plan by 15 October, until the excessive deficit has been 
corrected. 

Until  2028,  Bulgaria  is  allowed  to  exceed  the  maximum  growth  rates  of  net 
expenditure  as  set  by  point  1  of  this  recommendation,  to  the  extent  that  the  net 
expenditure in excess of these maximum growth rates is not more than the minimum 
of:  

(a) 

the  part  of  the  increase  in  defence  expenditure in  percent  of GDP  since  2024 
that is above 0.6 percentage points of GDP; and 

(b)  0.9 percent of GDP. 

In the years after 2028, Bulgaria may still be allowed to exceed the maximum growth 
rates  of  net  expenditure,  as  set  by  point  1,  to  the  extent  that  the  net  expenditure  in 
excess of these maximum growth rates is related to deliveries of military equipment 
contracted before end-2028 and remains within the overall limit mentioned in point 
4. 

In  order  to  ensure  a  correct  recording  of  the  additional  expenditure,  Bulgaria  is  to 
include actual and planned data on total defence expenditure (COFOG division 02), 
including defence investment (COFOG division 02 P.51) and any expenditure to be 
financed by SAFE loans that are not covered in COFOG-02: 

Regulation  (EU)  No  473/2013  of  the  European  Parliament  and  of  the  Council  of  21  May  2013  on 
common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of 
excessive  deficit  of 
the  euro  area  (OJ  L  140,  27.5.2013,  ELI: 
http://data.europa.eu/eli/reg/2013/473/oj). 

the  Member  States 

in 

EN 

4 

  EN 

 
 
• 

• 

• 

for  years  T-4,  T-3,  T-2  and  T-1  (with  year  T  being  the  current  year),  in  the 
reporting to the Commission (Eurostat) in accordance with Council Regulation 
(EC) No 479/2009 (11); 

for years 2021 through year T (current year), in national medium-term  fiscal-
structural  plans  and  in  annual  progress  reports  in  accordance  with  Article 
11(1), Article 15 and Article 21(1) of Regulation (EU) 2024/1263; 

for years T (current year) and T+1, in draft budgetary plans in accordance with 
Regulation (EU) No 473/2013. 

This Recommendation is addressed to the Republic of Bulgaria.  

ANNEX I 
Maximum growth rates of net expenditure 
(annual and cumulative growth rates, in nominal terms) 
Bulgaria 

Years 

2026 

2027 

2028 

2029 

Growth rates 

Yearly 

Cumulative (*) 

4.2 

4.2 

3.4 

7.7 

3.4 

11.4 

3.2 

15.0 

(*) The cumulative growth rates are calculated by reference to the base year of 2025. 

Done at Brussels, 

For the Council 
The President 

(11) 

Council  Regulation  (EC)  No  479/2009  of  25  May  2009  on  the  application  of  the  Protocol  on  the 
excessive  deficit  procedure  annexed  to  the  Treaty  establishing  the  European  Community  (OJ  L  145, 
10.6.2009, p. 1-9, ELI: http://data.europa.eu/eli/reg/2009/479/2014-09-01). 

EN 

5 

  EN