site.btaCentral Bank Governor Urges Return to Prudent Fiscal Policy, Warns of Higher Taxes and Debt

Bulgaria central bank Governor Dimitar Radev Tuesday urged a return to prudent fiscal policy and discipline and warned that the alternative to that is higher taxes and debt. Radev was answering a BTA question during a news conference held after a high-level conference on Bulgaria's accession to the eurozone. 

The draft 2026 state budget was made public by the Finance Ministry Monday evening.

"We've earned a reputation over the years for a fiscally responsible country. And this is demonstrated by one of the lowest debt-to-GDP ratios in Europe, and not only. However, since 2020, we have been gradually losing this disciplined fiscal stance," stated Radev.

He said that it has been his consistent position that Bulgaria needs to reverse this trend. "And we now face the same dilemma in the context of the 2026 budget. From a macroeconomic standpoint, the best approach would be to exercise tighter control over current expenditure and to prioritize public investment projects that support long-term growth. If there is no capacity to do so, the remaining options are higher taxes and higher debt. These are not good alternatives. They carry adverse macroeconomic but also political consequences, as recent experience in other European countries clearly shows."

"The upcoming discussions for the 2026 budget will be indicative if there is political capacity to do it," the central bank Governor concluded.