IME

Bulgaria is about to enter the excessive deficit procedure for the second time in its recent history. At present, all expectations are focused on the government, which must propose a regular budget for 2026 and give a clear signal that it is reversing the trajectory of public finances.

The new government in Bulgaria is proposing a budget with a deficit of 5.7% of GDP, or EUR 7.2 billion. And this is happening in the country with the lowest unemployment in the European Union — the lowest since records began.

In general, no tax should be considered in isolation, which is why the taxation of individuals\' income must be aligned with the taxation of companies\' income, i.e., corporate tax. Put most simply, the system should tax similar activities and income in the same way, rather than allowing arbitrage/tax avoidance based solely on legal form.

For yet another year, Bulgaria spends the most on its judiciary as a share of GDP among all EU member states — 0.7%. By comparison, Ireland and Cyprus, which spend the least in this respect, allocate only 0.1%. Bulgaria is also the record-holder in terms of the judiciary\'s share of total public spending.

Bulgaria has adopted the euro. After more than 28 years under a currency board arrangement, the country is entering a new stage of its development. The bank failures and hyperinflation of 1996–1997 wiped out people’s savings and pushed Bulgaria to the bottom of Europe, below 30% of the EU average in GDP per capita in purchasing power parity by the end of the 1990s.

The first few weeks after the introduction of the euro have passed, and all indications suggest that the new currency is gradually becoming dominant in everyday circulation. Despite some attempts to stir up tension, the initial days went relatively smoothly—with the expected pressure on cashiers in retail outlets, but without any serious systemic problems.

In 2024, just over 10,000 people moved into the Plovdiv district from other parts of Bulgaria. The largest group, almost 5,000 people, changed their address within the province itself, while there was also a significant inflow (over 700 people) from the capital, a clear sign that Bulgaria’s second-largest city is becoming increasingly attractive.

By a narrow vote, the European Parliament has effectively blocked the entry into force of the partnership agreement with Mercosur. This is yet another failure by the EU to improve its prospects for prosperity and economic transformation. The agreement that was signed is a step in the right direction, but delaying it means accumulating lost benefits—at a time when growth in the core of the euro area is dangerously close to zero.

After the summer recess, the Bulgarian Parliament rushed to change the rules for electing the chair of the National Statistical Institute (NSI). However, under the pretext of improving independence, this is simply an attempt to remove an inconvenient director who refuses to comply with the demands of political parties and institutions, even when they are contrary to the legislation and principles on which the statistical institute is based.

This week, it became clear[1] that hundreds of administrative judges received stuffed rabbits upon taking office. Some may say, ‘So what? It is a harmless gesture. However, such an act is not merely infantile. It: on the one hand, takes away from the judge (or at least some of the administrative judges) the human dignity […]