Bulgaria revises 2027 deficit target as EU pressure mounts

Bulgaria said on Friday it aimed to narrow its fiscal deficit to 3.5% of economic output next ‌year, lower than its latest official forecast, as the European Union increases pressure on the euro zone's newest member to reduce spending.

Brussels opened a disciplinary action against Bulgaria in July for running a budget deficit beyond the 3% ‌target ceiling set under EU rules, forcing the country to seek further savings. Presenting its 2027 budget on ‌Friday, the Bulgarian government said spending will be cut by 3.9% next year as some 5,000 public administration jobs will be axed, while some taxes will be increased, as it expects the economy to grow by 2.5%.

In a letter to the European Commission ⁠dated November ​2, Bulgaria said it would ⁠aim for a deficit of about 5% of gross domestic product this year, which it aims to reduce to 4.2% in 2027 ⁠and 3.5% in 2028. It said that it expects to get within EU limits in 2029.

Bulgaria, which adopted the euro ​in January, is among the poorest EU states and has struggled with corruption. It published its first ⁠euro-based budget in the middle of the year after snap elections which led to a new government in May. Despite its high deficit, ⁠Bulgaria's ​public debt stood at 28.7% of GDP at the end of the second quarter, the fourth-lowest level in the EU, Eurostat data showed.

The European Commission raised concerns over what it said was a projected 10% ⁠rise in spending this year, compared with its recommendation for a rise of up to 4.2%. Sofia has cited ⁠increased spending, including for ⁠speeding up the uptake of EU funds and structural imbalances carried over from previous years, for the excessive deficit.

It has said there was limited time to implement ‌additional measures this year.