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The Bulgarian government has taken on a new loan of BGN 300 million from the domestic market, bringing the country’s newly accumulated debt since the beginning of 2025 to a record BGN 16.5 billion.
According to the Ministry of Finance, it issued three-year government securities worth BGN 300 million at an average annual yield of 2.40% — the lowest ever achieved for this type of issue.
This marks the tenth domestic auction of government debt since January, raising a total of BGN 2.4 billion. In parallel, the ministry also tapped international markets twice: in April, Bulgaria issued bonds worth €4 billion (BGN 7.82 billion), followed by another €3.2 billion (BGN 6.25 billion) in July.
Thus, the total new debt so far this year has climbed to nearly BGN 16.5 billion — far exceeding the BGN 12 billion needed to cover the planned budget deficit of BGN 6.4 billion and the repayment of maturing debt. The government, however, approved a record borrowing ceiling of BGN 18.9 billion for 2025.
The difference of about BGN 7 billion is expected to be used to recapitalize several state-owned enterprises, including the Bulgarian Development Bank (BDB), Bulgarian Energy Holding (BEH), Irrigation Systems, TEREM, and others. Part of the funds may also be diverted to cover a budget deficit higher than the planned 3%.
Economist Lyubomir Datsov, a member of the Fiscal Council, warned that this year’s deficit could reach 5–6% if all planned spending goes ahead, compared to the official target of 3%. He noted that some revenue projections were “purely wishful,” and even strong performance by tax and customs authorities would not be enough to close the budget gap.
Datsov added that Bulgaria could rely on the EU’s defense spending derogation, which would allow the deficit to rise to around 4–4.1% without triggering an excessive deficit procedure in Brussels. Some savings may also come from reduced capital spending, with signs already emerging of delayed payments.
The most recent Finance Ministry data, from June, showed a deficit of BGN 3.353 billion, or 1.5% of projected GDP. The shortfall is expected to deepen in the second half of the year, when most planned expenditures are usually paid out.
“At this point of the year — late August, early September — the main question is no longer how the 2025 budget is performing, but what will happen with the 2026 budget,” Datsov said, stressing that the government must present its priorities for next year’s framework by the end of September.
He warned that fiscal policy cannot continue on its current path, or it risks “catastrophe.” The only solutions, he said, are either optimizing spending or raising taxes.
Datsov concluded that the situation is worrying, pointing out that Bulgaria’s industry is slowing while the number of public sector employees — and the cost of maintaining them — continues to grow despite a shrinking population.