Council declares Bulgaria in excessive deficit, orders fiscal correction

The Council of the European Union has formally declared that an excessive government deficit exists in Bulgaria, opening the excessive deficit procedure (EDP) under Article 126(6) of the Treaty on the Functioning of the European Union (TFEU). The finding is set out in Council Decision (EU) 2026/1758 of 10 July 2026, published in the L series of the Official Journal of the European Union on 1 September 2026. The decision, addressed to the Republic of Bulgaria, concludes that the deficit criterion is not fulfilled and obliges the country to correct its public finances.

The decision follows a report adopted by the European Commission on 3 June 2026 under Article 126(3) TFEU, and an opinion addressed to Bulgaria on 25 June 2026. On 10 July 2026 the Council adopted the decision together with a recommendation under Article 126(7) TFEU, published as Council Recommendation C/2026/3913, setting out the corrective path.

The fiscal picture behind the finding

According to data provided by Eurostat on 22 April 2026, Bulgaria’s general government deficit reached 3.5 % of GDP in 2025, above the 3 % Treaty reference value. The Commission Spring 2026 Forecast projects the deficit at 4.1 % of GDP in 2026 and 4.3 % in 2027, remaining above the reference value throughout.

• General government deficit: 3.5 % of GDP (2025), projected 4.1 % (2026) and 4.3 % (2027).
• General government debt: 29.9 % of GDP at end-2025, projected to rise to 32.3 % (2026) and 35.5 % (2027), still below the 60 % reference value.
• Structural deficit projected at 4.1 % of GDP in 2026 and 2027.
• Net expenditure growth: 12.3 % in 2025 and 5.5 % in 2026.

The Council found that the excess over the reference value in 2025 was exceptional, as it could be fully explained by increased defence spending since the reference year 2024 under the national escape clause activated on 8 July 2025. However, the projected excess for 2026 cannot be fully explained by defence expenditure, so the escape clause does not apply and the deficit criterion is not met.

The corrective path and deadlines

Under Council Recommendation C/2026/3913, Bulgaria must ensure that nominal growth rates of net expenditure do not exceed the maxima set out in the recommendation, and must bring the excessive deficit situation to an end by 2029. The corrective net expenditure path supersedes the maximum growth rates endorsed in the Council Recommendation of 20 June 2025 on Bulgaria’s medium-term fiscal-structural plan.

• Deadline for effective action: 15 October 2026, with measures to be presented together with the 2027 Draft Budgetary Plan.
• Reporting thereafter: at least every six months, by 30 April (annual progress report) and 15 October (draft budgetary plan).
• Minimum annual structural adjustment of at least 0.5 % of GDP, with flexibility for defence expenditure until 2028.

The Council also established that the excessive deficit procedure may only be abrogated under Article 126(12) TFEU once the deficit is brought below 3 % of GDP and is projected to remain so in the current and following year.

What it means

The decision places Bulgaria under the corrective arm of the Stability and Growth Pact, subjecting its budgetary policy to EU surveillance until the excessive deficit is corrected. For Bulgarian public finances, it means binding net expenditure ceilings, regular reporting obligations and pressure to consolidate while preserving investment and growth. The decision was signed in Brussels on 10 July 2026 by the President of the Council, S. Harris.

Source: Official Journal of the European Union, L series, 1.9.2026 (official reference: Council Decision (EU) 2026/1758, CELEX L_202601758; Council Recommendation C/2026/3913).