Bulgaria: Social Security Hikes Could Threaten Private-Sector Jobs, Deficit at Risk

Simeon Dyankov, chairman of the Fiscal Council and former finance minister under Boyko Borissov, warned on bTV that Bulgaria could face a severe public finance crisis in 2027. He predicted that by then, the European Commission would declare the country in an excessive deficit procedure. Dyankov noted that while the current government might initially blame former Finance Minister Asen Vassilev, responsibility could eventually shift to other political figures, including Ivan Kostov, as options for accountability are exhausted. Dyankov criticized the current coalition’s handling of the budget, describing it as chaotic. He highlighted the challenges posed by the broad coalition: left-wing parties like BSP pushing last-minute tax and budgetary changes, TISP attempting to maintain right-leaning discipline behind the scenes, and central parties GERB and DPS-New Beginning aiming to present a socially-oriented budget. According to him, the government is creating confusion and obscuring the real deficit, making it unlikely that the planned 3% deficit will be maintained. A key concern for Dyankov is the planned increase in social security contributions, which he argued disproportionately burdens private-sector employees while leaving public-sector workers largely unaffected. He stressed that around 600,000 public-sector employees do not pay such contributions, and that an increase of one percentage point could cost roughly 30,000 private-sector jobs, with two points potentially eliminating 60,000 positions. Dyankov further explained that only large companies can absorb the rise in contributions, while small and medium businesses might resort to layoffs or under-the-table payments. He concluded that ultimate responsibility for the fiscal trajectory now lies squarely with the current government. While the deficit began rising during Vassilev’s tenure, the current coalition holds full control over the decisions that will determine Bulgaria’s financial stability.