BTA: Bulgaria Faces Difficult Path to 3% Deficit Target While Preserving Economic Stability, Deputy PM Pekanov Says

It is very difficult for Bulgaria to achieve a 3% budget deficit in 2026 without risking excessive pressure on the economy and slowing it down, which would also affect people’s standard of living, Deputy Prime Minister Atanas Pekanov said in a Nova TV interview on Saturday.

Pekanov recalled that Bulgaria is set to receive nearly EUR 1 billion under the fourth payment of the Recovery and Resilience Plan (RRP). He said that until recently Bulgaria had received around 50% of the total allocated funds, and with the upcoming disbursement this share would rise to 68%, while the EU average currently stands at around 75%. Work is continuing on securing the fifth payment, which, according to him, is crucial for the budget and for receiving funds as quickly as possible. His goal, he said, is for Bulgaria to absorb 100% of the funds, although he questioned how realistic this is given delays and the need for still unimplemented reforms.

He warned that there had been a risk of irreversible loss of funds due to the actions of the governing coalition during the Zhelyazkov cabinet period in 2025, when anti-corruption reforms were, in his words, treated as something that could be tailored for political purposes and potentially used against opponents. As a result, Bulgaria faced sanctions and funds from both the second and third payments were withheld, money that could have been lost by May, Pekanov said.

According to the Deputy PM, under the fourth payment there are currently three pending conditions-related disbursements that still need to be released. He stressed that the deadline of August 31, 2026, for implementing all projects under the Recovery and Resilience Plan is binding and cannot be changed. Only measures completed by that date can be reported under the plan, while anything unfinished will not be eligible for reimbursement, according to him.

Pekanov added that, compared to expectations three weeks earlier, when he anticipated Bulgaria would receive around EUR 600 million under this tranche, the actual amount of around EUR 1 billion represents a significantly improved outcome, describing it as a “rescue” of a large portion of the funds.

Pekanov also commented that previous leaderships of the Finance Ministry had allowed liquidity shortages for payments to final beneficiaries, which he said was one of the reasons for the current borrowing.

Regarding Bulgaria’s position on EU sanctions against Russia, Pekanov clarified that the country has not imposed a veto but has instead expressed reservations on certain elements of the proposed next sanctions package. He said that negotiations are ongoing and that any member state seeing potential risks to its economy or energy sector is entitled to raise concerns. Bulgaria, the Deputy PM added, continues to support Ukraine and seeks further partnerships.

On the phase-out of Bulgaria’s coal-fired power plants, Pekanov said the topic had often been subject to speculation. He pointed out that this country had reduced its emissions by 40% compared to 2019 without severe consequences. Between 2030 and 2038, he said, Bulgaria is expected to retain between 1.2 and 1.6 gigawatts of coal capacity as part of its energy system, given global instability, describing it as a sovereign resource that would need to be maintained as a cold reserve. He also suggested that some of the workers currently employed in the sector could be redirected to jobs with longer-term prospects.