Bulgaria on Track to Adopt the Euro, Supporting the Economic Outlook

Pro-Russian President Rumen Radev has backed the idea of a referendum, but the right to call one rests with parliament, where the majority of pro-euro parties have rejected the proposal. Radev has referred the matter to the Constitutional Court, but this is unlikely to disrupt the euro-accession timetable.

Fiscal Position Remains Sound, Although Deficits Have Risen

Another concern for accession has been the government’s fiscal position. The country has a record of moderate budget deficits and comparatively low public debt. But recent increases in state spending on salaries, pensions, defence and measures to ease the cost-of-living crisis have challenged this record.

Nevertheless, the general government deficit was unchanged at 3.0% of GDP last year from the previous year due to strong revenue growth (Figure 2). The authorities have committed to a budget deficit of 3.0% of GDP this year. General government debt will rise steadily, reaching 34% of GDP by 2030 from 24% at end-2024, though remaining among the lowest in the EU.

The EC favourably assessed Bulgaria’s medium-term fiscal-structural plan for 2025-2028 early last month, which is a positive step for euro adoption, suggesting public finances remain stable and sustainable.

Figure 2: Fiscal metrics remain sound, even though deficits are wider and debt is increasing
% of GDP