The Council has initiated an excessive deficit procedure as Bulgaria faces a deadline in October to demonstrate how it will bring its public finances back within EU limits.
Bulgaria has been subjected to the EU’s excessive deficit procedure, increasing the scrutiny of its public finances during its first year using the euro. The Council of the EU requires Sofia to submit corrective measures by 15 October 2026 and to follow a path to reduce the deficit below the 3% threshold by 2029.
The Council decision, made on 10 July, notes Bulgaria’s anticipated government deficit of 4.1% of GDP in 2026, with expectations of remaining above 3% in 2027. It also mentions that Bulgaria’s use of the national escape clause for defense spending does not fully justify the breach.
A new euro member is under scrutiny.
The decision arrives shortly after Bulgaria joined the euro area on 1 January 2026. The European Times previously reported that the EU approved Bulgaria’s adoption of the euro, which was seen as a means to lower exchange costs, enhance price transparency, and deepen integration with the single currency area.
Now, Bulgaria encounters a different aspect of euro-area membership: stricter fiscal oversight. The excessive deficit procedure aims to guide member states back toward sustainable budgets when deficits exceed Treaty reference values. The Council specifies that Bulgaria should limit cumulative net expenditure growth to 4.2% in 2026, 7.7% in 2027, 11.4% in 2028, and 15% in 2029.
Why the procedure matters.
The matter is not merely a technical budget exercise. For households, Bulgaria’s correction plan may influence public investment, social support, wages, taxation, and reform pace. For investors and EU partners, it will be viewed as an early indicator of the newest euro-area member’s ability to maintain fiscal credibility under pressure.
The EU’s excessive deficit framework allows the Council to issue recommendations and deadlines. If a euro-area country does not take effective measures, sanctions may follow, including fines. These measures are not yet automatic, but the procedure places Bulgaria under increased scrutiny.
Bulgarian authorities now have limited time to demonstrate how they will reduce the deficit without compromising social fairness or economic confidence. The political challenge is evident: fiscal repair must be credible in Brussels while being manageable for citizens adjusting to the currency change.
The Council’s action also coincides with EU finance ministers urging governments to balance competitiveness, energy security, defense needs, and social protection without letting public finances drift. Bulgaria’s situation highlights how quickly the broader European debate can become a national deadline.
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