Pen by pen new expenditure, but not on coffee, but on old contracts (Summary, graph)

The Bulgarian government has unveiled its proposed budget for 2026, sparking significant debate over how public funds will be allocated. At the center of this discussion is Vice Prime Minister and Finance Minister Golyub Donchev, who emphasized the need for fiscal responsibility and transparency in managing state expenditures. The budget proposal includes substantial capital investments aimed at infrastructure, defense, and public services, but also highlights areas where spending has been reduced due to the cancellation of indexations on contracts with several state institutions.

Donchev addressed journalists following a cabinet meeting, outlining the main components of the 2026 budget. He noted that while some expenses have increased, others have been cut back significantly. For instance, the government managed to save 383.8 million euros by removing indexations on contracts with the National Road Infrastructure Company (APIC), the Bulgarian Airports Holding (BDJ), and the National Roads Infrastructure Company (NKZI). This move reflects a broader effort to streamline public spending and reduce unnecessary costs.

One of the most contentious points raised by critics, particularly from the "Continuing Change" political movement, involves so-called "pero po pero" (penny-by-penny) analysis of budget allocations. According to ASEN Vaselev, leader of the "Continuing Change" party, the budget includes 1.5 billion euros for operational expenses such as travel allowances, coffee, water, current repairs, and office supplies—amounting to a 35 percent increase compared to previous years. However, Donchev countered that these figures did not account for the Community Investment Program, which was included in the new budget with 2.013 billion euros in capital expenditures for municipalities, up by 1.1 billion euros from the previous year.

This increase is partly attributed to unpaid projects dating back to 2024, along with unclaimed subsidies totaling 96.9 million euros for local governments. Additionally, 139.5 million euros were allocated for maintenance and repair costs of roads from past years, derived from out-of-court agreements signed in 2024 and 2025 regarding delayed payments under contracts. These include interest and court fees amounting to approximately 160 million euros for 2026.

Capital expenditures for the Council of Ministers have seen an increase of 8.5 million euros, primarily due to normative acts adopted by previous governments. Of this, 8.239 million euros are designated for paying judgments from commercial cases, while 270,000 euros cover security costs for the dismantling of the Soviet Army Memorial and 12,000 euros for commemorations of the April Uprising in Vratsa.

Donchev also highlighted funding for domestic events such as the Giro d'Italia, Eurovision, and elections, totaling nearly 200 million euros. Capital expenditures for defense have risen by 158 million euros, while funding for state agencies remains roughly the same as last year at 2 billion euros. Overall, planned capital expenditures for European financing amount to 5.332 billion euros, including 3.329 billion under the recovery plan and 1.426 billion under operational programs.

Prime Minister Rumen Radev announced plans to halt blind payments based on invoices and fictitious protocols, emphasizing the need for accountability among civil servants responsible for signing off on substandard activities. He outlined proposals for legal reforms allowing public infrastructure to be built using private capital, drawing inspiration from best European practices. Radev criticized the existing model for fostering corruption, leading to lower quality and inefficient use of public resources. He mandated inspections of road repairs and construction projects.

In addition to these developments, the poverty line for 2027 is set to increase by 50 euros, reaching 443 euros per month. This adjustment aims to better reflect the living standards required for basic needs. Meanwhile, social partners are set to discuss the 2026 budget project alongside those of the National Health Insurance Fund (NHSF) and the State Social Security Fund (SSSF) during meetings of the National Tripartite Council.

Economist Domuschiev pointed out that the budget's expenses appear inflated while revenues are underestimated. The Crisis Institute (KRIIB) has listed six conditions for supporting the budget, highlighting concerns about its feasibility. Syndicates have staged protests against the proposed budget, citing fears of reduced personnel costs and contributions from public sector employees. Despite these criticisms, Donchev expressed confidence that the budget would address many of the concerns raised by protesters within the framework of tripartite dialogue.

As discussions continue, the government faces pressure to balance fiscal prudence with addressing the pressing needs of citizens and ensuring effective use of public funds. The upcoming debates and potential legislative changes could shape the trajectory of Bulgaria’s economic policies in the coming years.