site.btaUPDATED State Budget Scheme Jeopardizes Financial Stability – Bulgarian Industrial Association

Bulgarian Industrial Association (BIA) Management Board Chair Dobri Mitrev warned on Monday that the government-sponsored 2025 State Budget Bill seriously jeopardizes Bulgaria's financial stability and can generate inflationary pressure. Mitrev sees in the bill "drastic expenditures" and "missing revenues." He spoke at a news conference unveiling an annual survey on the business climate in Bulgaria in 2024 and 2025.

"If the budget revenues are approved by Parliament the way they are laid down in the Budget Bill, this will trigger another inflation episode," he cautioned.

Mitrev likened the draft state budget scheme to a restaurant overbilling a customer and leaving them no choice but to pay the money. "This is terrible, because Bulgarian citizens and Bulgarian businesses have paid enough to the Exchequer. Public revenues from taxes and social and health insurance are growing considerably, by 10-15%, which means that neither Bulgarian citizens nor Bulgarian companies owe a debt to the government. They should not be made to bear the burden of irrelevant and harmful political decisions made in the last few Bulgarian National Assemblies."

At present, businesses have no idea whether the compensatory mechanism for high electricity prices for non-household consumers will still function in 2025, according to Mitrev. He insisted that such a mechanism should be provided for in the future state budget law or in an extension to it. This will enable economic operators to keep prices from rising as they will not be faced with the prospect of growing costs. "It is crucial to keep inflation as low as possible, not just in order for Bulgaria to become a full eurozone member. This is important for us, so we stop getting poorer. This is important, so we can rest assured that our country is stable."

Discussing the BIA survey, conducted among member companies of the association, Mitrev said that local firms expect global growth to slow. They fear that new environmental regulations will impact the economy adversely, and they continue to expect high energy prices and mounting inflationary pressure. About 41% of respondents forecast an economic slump in 2025, and 21% expect no change. Optimism is very limited, compared with last year, Mitrev said.

The survey was conducted between November 5 and December 6 among 738 micro-, small, medium and large enterprises across the country and across the economic sectors. It was carried out for the 20th year in a row.

"The period when we did the survey was before the 2025 state budget bill was submitted and the little optimism there is would have been gone had the respondents known what budget would be proposed," commented Mitrev. 

The polls show that the leader in the approval ratings is the presidential institution with 40% approval, followed by the municipal administrations with 37% and the tax administration with 36%. The caretaker Cabinet of Dimitar Glavchev has 21% approval.

The judiciary has 1% approval and Parliament zero.

Maria Mincheva of the BIA Managing Board said that political instability is a major hurdle for businesses and that the zero confidence in the legislature is a big cause of concern. Other hurdles are poor infrastructure; shortage of workers; red tape; frequent changes in the regulations and corruption.

She also said that the new formula for calculating the minimum pay has forced employers to give up investment plans. For 31% of the respondents the forced increase of pay is unaffordable and they may have to cut jobs (13%), drop investment plans (16%) or leave Bulgaria (2%). 33% of the respondents say that they will add the extra pay costs to the price of goods or services.

Stanislav Popdonchev, Chief Financial Officer of BIA, said that a growing share of respondents are supporting of Bulgaria's accession to the eurozone (61% in 2024 against 47% in 2021) and much fewer don't know (27% in 2021 and 15% in 2024), showing an increasing awareness of the matter.