site.btaCabinet Approves 2025 State Budget Bill

The Council of Ministers approved the State Budget Bill for 2025, the Government Information Service said here on Monday.

The budget framework is in line with the revised EU economic governance rules, which extend the period for national fiscal planning to at least four years. As a result, Bulgaria’s medium-term budget forecast has been updated to cover the period 2025-2028, ensuring fiscal sustainability and aligning public finances with the country’s long-term economic goals.

The budget deficit under the Consolidated Fiscal Programme is expected to gradually decline from 3.0% of GDP in 2025 to 2.2% in 2028, following a downward trend. The projected deficits account for expenditure policies for 2025 and 2026, which are largely based on decisions made in 2024, accompanied by corresponding revenue measures. For 2027 and 2028, the deficit is set to decrease to 2.7% and 2.2% of GDP, respectively.

The government anticipates a steady nominal increase in revenues, including tax and social security contributions, over the medium term. Foreign aid is projected to increase in 2025, followed by a slight decline in 2026 and a more significant drop in the subsequent two years, reflecting the implementation stages of EU co-financed programmes. Public expenditures will adhere to the 40% rule under the Public Finance Act, excluding EU funds and other international programmes. Spending is expected to range between 39.5% and 40.0% of GDP throughout the forecast period.

The State debt is projected to increase, reaching BGN 61.7 billion (28.6% of GDP) in 2025, BGN 72.4 billion (31.9% of GDP) in 2026, BGN 81.5 billion (34.3% of GDP) in 2027, and BGN 88.9 billion (36.0% of GDP) in 2028, due to planned new debt financing. Meanwhile, the minimum fiscal reserve is set to remain at BGN 4.5 billion as of December 31, 2025, consistent with the amount established in the 2024 State Budget Act.

Tax and Revenue Measures to Strengthen Fiscal Stability

The budget introduces measures aimed at strengthening fiscal control, improving risk analysis, and increasing State budget revenues. The government will upgrade its information systems and implement stricter oversight mechanisms to combat tax fraud and the shadow economy.

A new excise duty calendar for tobacco products has been proposed, continuing the practice of gradually increasing excise duties. This measure aims to optimize budget revenues while ensuring transparency, predictability for businesses, and stability for consumers. Additionally, in light of expected higher EU tax requirements, the phased increase in excise duties will help reduce Bulgaria’s gap compared to other EU member states.

To tackle VAT fraud in the fuel sector, legal amendments will be introduced to prevent unissued receipts at petrol stations from being used to claim undue VAT credits. This change is expected to significantly limit tax evasion related to receipt “trading” and VAT fraud schemes.

Social Security and Wage Policies to Support Economic Growth

Social security policies for 2025 and 2026 will maintain the contribution rate for the Pensions fund under State Social Security at the 2024 level. Contribution rates for other State Social Security funds and the ratios between insurers and insured persons will also remain unchanged.

From April 1, 2025, the minimum social security income for self-employed individuals will increase to BGN 1,077, applying to farmers and tobacco producers as well. The maximum social security income will rise progressively throughout the forecast period, starting at BGN 4,130 on April 1, 2025, increasing to BGN 4,430 in 2026, BGN 4,730 in 2027, and BGN 5,030 in 2028.

Pensions for work activity awarded before December 31 of the previous year will be updated annually starting July 1, according to Article 100 of the Social Insurance Code. This is known as the Swiss rule, which adjusts pensions based on inflation and wage growth. An additional BGN 1.033 billion has been allocated for pension updates beginning July 1, 2025. The childcare allowance for children up to two years old will stay at BGN 780 per month.

The minimum wage will increase from BGN 933 to BGN 1,077 on January 1, 2025. The draft budget for 2025 also includes a 5% increase in personnel expenses for public sector structures not covered by other approved salary increases. Additionally, the policy to increase secondary education teachers’ salaries to 125% of the average gross wage for 2024 will continue, requiring an additional BGN 499 million.

Investment Strategy for Economic Development and Competitiveness

In 2025, key strategic investment projects will be financially secured through the Priority Strategic Investment Programme, an annex to the draft State Budget Act for 2025. This programme aligns with the preparation of Bulgaria’s National Fiscal-Structural Plan for 2025-2028, ensuring that vital projects receive the necessary funding.

The Investment Programme for Municipal Projects will continue through 2025-2027, with BGN 1.65 billion allocated for 2025. This amount includes BGN 750 million provided from the central budget through the Ministry of Regional Development and Public Works, and BGN 900 million through payments from the Bulgarian Development Bank. These funds will support ongoing municipal projects, improve regional infrastructure, and create favourable conditions for new investments, boosting local competitiveness and economic development.

The 2025 State Budget Act aims to balance fiscal discipline with economic growth, ensuring financial stability, business competitiveness, and socio-economic development. The budget framework reflects long-term economic planning, providing predictability for businesses, enhanced social security policies, and strategic investments in public infrastructure and municipal development.