Bulgaria faces EU excessive deficit procedure months after euro adoption

According to recent reports, including from the Financial Times, Bulgaria is on track to trigger the EU’s excessive deficit procedure shortly after joining the eurozone on 1 January 2026. The European Commission’s spring 2026 forecast projects the country’s general government deficit at around 4.1% of GDP for 2026, exceeding the Maastricht criterion of 3% of GDP.

This would mark an unusually rapid shift: Bulgaria had long maintained fiscal surpluses and low public debt under its currency board (pegged to the euro since 1997), which helped it meet convergence criteria for euro entry. However, post-adoption spending pressures, political transitions, and alleged data manipulation by the prior government have contributed to the breach. Prime Minister Rumen Radev has publicly accused the previous centre-right administration of fiscal maneuvering to secure timely eurozone entry.

Background under President Radev

Radev, a former air force general and president until early 2026, is now Bulgaria’s prime minister following his party’s landslide victory in the April 2026 parliamentary elections. He assumed office on 8 May, heading a majority government.

As president, Radev was notably cautious – or, critics argued, obstructive-. toward the accelerated euro timetable. In May 2025 (just months before the planned 1 January 2026 adoption), he proposed a national referendum with the question: “Do you agree that the Republic of Bulgaria should adopt the single European currency – the euro – from January 1, 2026?” This move came late in the process, after Bulgaria had largely fulfilled the convergence criteria and received EU/ECB approval.

Parliament rejected the proposal (initially on procedural/constitutional grounds, later by a 135–81 vote in December 2025), citing conflicts with Bulgaria’s EU accession treaty and constitution. Radev escalated the matter to the Constitutional Court, but the referendum did not proceed.

This was a reversal from his earlier position. In 2022, when nationalist parties like Vazrazhdane (Revival) pushed for a referendum, Radev had argued that issues tied to ratified international treaties (including EU obligations) could not be subject to referendum.

Critics, including pro-EU voices and government officials at the time, accused him of populism, exploiting public fears over inflation and loss of sovereignty, and aligning with anti-euro sentiments (often amplified by pro-Russian groups). Polls showed significant public division, with roughly half of Bulgarians expressing reservations about the switch. Radev framed the push for a referendum as ensuring “national consensus” rather than elite-driven decisions.

Despite his reservations, Bulgaria adopted the euro on schedule, replacing the lev at the fixed rate of 1.95583 leva per euro. Radev, in his New Year’s address around the transition, acknowledged it as a step in EU integration but regretted the lack of a public vote.

Latest development under Prime Minister Radev

Radev announced on Friday, shortly after returning from Brussels, that the European Commission will launch an excessive deficit procedure against Bulgaria on 3 June. He described the situation as a result of the heavy legacy left by the previous government – populism, incompetence, voluntarism, and looting of public funds. The Ministry of Finance is expected to hold a briefing on the topic next week.

For 2025, the deficit reached 3.5% of GDP on an accrual basis and 3.1% on a cash basis, both above the allowed 3% limit. The previous authorities had used various accounting maneuvers, such as advance dividends from state companies and shifting expenses, to stay within the limits for eurozone entry. Bulgaria obtained a derogation for higher military spending, but the Commission can still open the procedure based on either actual past data or projected deficits.

The announcement drew sharp reactions from the opposition. Former Finance Minister Temenuzhka Petkova from GERB accused Radev of lying and using misleading interpretations. She stressed that the procedure relates to 2026 projections rather than final 2025 figures, noted that the military derogation reduces the reported 2025 deficit, and confirmed that all data used for euro entry (based on 2024 execution) were verified by Eurostat and the National Statistical Institute. Asen Vasilev from PP argued that the current ruling majority has full power to reduce the 2026 deficit below 3% of GDP and avoid penalties from Brussels.

With Dnevnik, Sega

Caption: Radev met Commission President Ursula von der Leyen in Brussels on 28 May 2026, both made statements, but neither mentioned the upcoming excessive deficit procedure. [Europe by Satellite]