On 25 June 2026, the Council of the European Union issued a recommendation under the excessive deficit procedure (EDP) for Bulgaria, setting a deadline of 15 October 2026 for the country to take effective action and requiring it to correct its excessive deficit by 2029. The recommendation prescribes a detailed net expenditure growth path, with annual limits of 4.2% in 2026, 3.4% in 2027 and 2028, and 3.2% in 2029, based on a 2025 baseline.
The recommendation follows the Commission's report of 19 June 2026, which identified Bulgaria's general government deficit at 3.5% of GDP in 2025, projected to rise to 4.1% in 2026 and 4.3% in 2027, exceeding the EU's 3% reference value. Bulgaria's debt stood at 29.9% of GDP at end-2025, well below the 60% threshold, but is projected to increase to 35.5% by end-2027. The Council's recommendation aims to bring the deficit below 3% by 2029 through a combination of fiscal consolidation and limited flexibility.
Under the recommendation, Bulgaria may exceed the net expenditure growth limits until 2028 only for defence spending increases above 0.6% of GDP since 2024, capped at 0.9% of GDP total flexibility. After 2028, excess is allowed solely for military equipment deliveries contracted before end-2028, within the same 0.9% GDP cap. Bulgaria must report progress every six months: by 30 April (annual progress report) and by 15 October (draft budgetary plan), including detailed defence expenditure data.
The recommendation impacts several stakeholders. For the Bulgarian government, it imposes strict fiscal discipline, requiring spending cuts or revenue increases to meet the net expenditure path, with limited flexibility for defence. Bulgarian taxpayers may face higher taxes or reduced public services as the government consolidates. EU institutions, particularly the Commission and Council, gain enhanced monitoring powers through regular reporting. Defence contractors could benefit from the allowed flexibility for military spending, though capped at 0.9% of GDP. The recommendation is binding in its corrective path; failure to comply could lead to further EDP steps, including potential fines.
The Council's recommendation now requires Bulgaria to submit a corrective plan by 15 October 2026, detailing how it will achieve the targets. The Commission will monitor progress through the six-monthly reports and may propose additional measures if Bulgaria deviates from the path.