The country that fears ending up like Romania: analysts' warning about the unforgiving deficit
Romania, with a huge budget deficit and high inflation, represents for Bulgarian analysts the model of economic “no way”, Romania being perceived as a country that postponed reforms until adjustments became inevitable.
“If the government gives in to pressure and weakens its budget again to satisfy all social demands, this means that in three or four years we will be at the level of Romania and we will have inevitable tax increases and drastic reductions in social expenses” – this is the warning issued by the university professor. Radostin Vazov, lecturer at the Faculty of Economics of the University of Sofia and at the New Bulgarian University, in an intervention on the Bulgarian National Radio.
A budget in tension, an economy at a crossroads
Bulgaria currently operates with an extended budget, designed for last year's economic conditions – an insufficient framework in a context marked by soaring oil and fuel prices, fueling rising inflation, writes Mediapool.bg.
Julian Voinov, financial and economic analyst, lecturer at the New Bulgarian University, warned that for several years the part of expenses projected in the budget significantly exceeds the economy's capacity to support it.
“An enormous amount of money is being wasted in Bulgaria, it is not being spent efficiently, literally fueling the corruption schemes of the underground economy,” Voinov pointed out, adding however that the current situation is not “as catastrophic as the politicians like to present it.”
The fiscal bomb of budgetary automatisms
Univ. Assoc. Vazov identified the mechanisms of automatic indexation – enshrined in budget laws – as a “fiscal bomb”. These automatisms, if not eliminated, make it impossible to maintain a balanced budget without excessive deficits or additional tensions in the economy. Voinov shared this view, arguing that structural reforms are the only way to save costs in the long term.
“The big problem is the structure of the long-term budget. The budget is just a tool with which the government implements its own policies,” explained Vazov.
Where money is lost: health, defense and cartel contracts
Analysts have identified several major sources of inefficiency in public spending. The national security sector is, according to Voinov, “the most inflated” from the perspective of expenses per capita – Bulgaria ranks first in the EU in terms of the share of these expenses, especially for salaries. The health system is described as “grossly inefficient”, with huge sums wasted on unwarranted clinical pathways. Added to these are cartel agreements between companies that artificially inflate prices – a problem that can be partially solved by more active inspections and regulators.
Administration reform: possible and necessary
Vazov proposed that civil servants start paying their own insurance premiums and showed that the state administration could be reduced by ten percent without a noticeable deterioration in the quality of services. E-governance is presented as the key tool for this optimization.
Social pressures vs. budgetary discipline: the central dilemma
It is precisely in this context that Vazov's warning becomes crucial. The social pressures for higher spending are real and legitimate – but giving in to them, without concurrent structural reforms, has a well-defined price: the Romanian scenario.
Voinov completed the picture by warning that, as long as there is a budget deficit and the requirement not to raise taxes, the public debt will continue to grow. The new government should not try to suddenly bring the deficit back to 3% – that would create a difficult spiral to manage – but to reduce it gradually in the coming years.
The window of opportunity: now or never
Both analysts were categorical: reforms must be started immediately. “If these reforms are not done now, in a year and a half we will be back in the markets and in a much worse economic situation,” warned Vazov. According to him, the 2026 budget could include mechanisms to take effect in 2027 – a window of opportunity that should not be missed.
Voinov warned that the lack of measures could attract an excessive deficit procedure from the EU, with penalties and additional payments: “Bulgarian finances can be corrected with reforms that are not very severe, but they must be carried out in time. If we continue on this path – with the increase of the debt and the budget deficit, with a waste of money – we will move towards the Romanian scenario. This will hinder the economic development of the entire country.”
On a related topic, Vazov rejected the idea that the euro was responsible for the price increase: “Any claim that the euro is to blame for the price increase is unfounded. We are talking about speculation, energy price increases and wage increases, which automatically puts pressure on inflation.”
