On 24 June 2026, the Council of the European Union adopted a recommendation outlining economic, social, employment, structural, and budgetary policies for Bulgaria, urging the country to keep net expenditure growth within maximum rates of 4.9% in 2026, 4.4% in 2027, and 4.0% in 2028, and to address its excessive deficit, tax fairness, and public administration challenges.
The recommendation follows a Council Decision establishing an excessive deficit for Bulgaria due to non-compliance with the deficit criterion in 2026, alongside a Recommendation under Article 126(7) TFEU. Bulgaria's general government deficit rose from 3% of GDP in 2024 to 3.5% in 2025, projected at 4.1% in 2026 and 4.3% in 2027 according to the Commission Spring 2026 Forecast. General government debt increased from 23.8% of GDP at end-2024 to 29.9% at end-2025, projected at 32.3% at end-2026 and 35.5% at end-2027. Net expenditure grew 12.3% in 2025, well above the recommended 6.2% maximum, with a cumulative deviation of 1.4% of GDP after accounting for defence flexibility under the national escape clause.
The Council calls on Bulgaria to improve tax fairness, noting that the flat 10% rate with no tax-free allowance creates a regressive burden. It also recommends tackling high tax arrears and the shadow economy, and addressing structural spending pressures from population ageing and defence. Public administration faces capacity constraints, especially at sub-national level, and Bulgaria has the lowest share of civil servants in adult learning. Strengthening corruption prosecution remains key; a 2023 anti-corruption commission law was repealed in 2026 before new management could be appointed, and a revised law is pending parliamentary adoption. Cohesion policy implementation is progressing well, but Just Transition Fund resources must be disbursed by end-2026.
The recommendation impacts several stakeholders. Bulgarian taxpayers may face higher taxes or reduced services as the government tightens fiscal policy. The Bulgarian government must implement structural reforms in tax administration, public administration, and anti-corruption, requiring political will and administrative capacity. EU institutions, particularly the Commission and Council, will monitor compliance with the fiscal rules and excessive deficit procedure. Businesses and investors may benefit from improved fiscal stability and a more predictable tax environment, but could face higher tax burdens if the flat tax is reformed.
Institutional follow-up includes Bulgaria reporting on measures taken in response to the recommendation, with the Council expected to review progress in subsequent semesters. The Commission will continue to monitor Bulgaria's fiscal and structural performance under the European Semester and the excessive deficit procedure.