Bulgaria’s Ministry of Finance has issued an announcement on the draft law for the 2025 State Budget on 4 December 2024, which will be submitted to the National Assembly.

“An analysis of revenues and expenditures for the next calendar year revealed a budget gap of BGN 18 billion. The difference between revenues and expenditures is based on current legislation, existing policies, and the macroeconomic forecast for 2025. The measures we will propose amount to BGN 12 billion, aiming to reduce the deficit to 3% or BGN 6 billion,” said Deputy Prime Minister and Minister of Finance Lyudmila Petkova during a briefing at the Council of Ministers.

Petkova noted that for the past month to month and a half, she has been holding meetings regarding the proposed measures with employer and trade union organizations, the National Association of Municipalities in the Republic of Bulgaria, and the parliamentary political parties in the 51st National Assembly. As a result of these meetings, some revenue measures will not be submitted, such as the proposal to increase social security contributions.

The proposed revenue measures, explained Petkova, include taxing banks’ excess profits, a tax on underground resources, and two tax amnesties—one related to declaring unpaid taxes and social security contributions on time, and the other related to undeclared income. There will be an increase in excise duties on tobacco, tobacco products, and alcoholic beverages, as well as some proposals related to the removal of reduced VAT rates.

“Our priority is not to increase the main taxes—VAT, corporate tax, personal income tax, and social security contributions, as they directly impact either inflation or economic development. Therefore, we propose these measures, which have the least negative effect on the country’s economy,” explained the Finance Minister.

Regarding expenditures, the increases in salaries for police officers, military personnel, and teachers in 2025 will be provided as voted in the laws by the National Assembly, promised the Deputy Prime Minister. She explained that a new income policy is planned, with a 10% increase, as well as updating pensions according to the Swiss rule.

The Ministry of Finance has conducted a comprehensive analysis of projects under the capital program to ensure that funds from the 2025 budget are allocated for projects that have started and will not be completed in 2024. The capital program will include funds necessary for completing projects from 2024, as well as new projects, explained the Finance Minister.

The capital program will be structured into three main areas. The first is related to administrative capital expenditures, such as current repairs and activities necessary for the functioning of the respective institution. The second area is related to IT systems, as overall digitalization is necessary for both the administration and the economy. The third area will be expenditures for national strategic projects.

Lyudmila Petkova explained that the draft Law on the State Budget for 2025 will be discussed in the National Council for Tripartite Cooperation with social partners and will then be adopted by the Council of Ministers and submitted to the National Assembly next week. “All proposals for changes in the respective laws related to revenue and expenditure measures will be included in the transitional and final provisions of the draft law. Proposals related to the project for creating a Unified Revenue Agency will also be included,” said Petkova.