EU opens deficit procedure against Bulgaria | Ecofin decision 10.07.2026

Council's reasoning

In its communication, the Council also pointed out that the national escape clause for defence spending does not fully explain the breach of the deficit threshold. The Council stated verbatim: "Bulgariens Nutzung der nationalen Ausnahmeklausel für Verteidigungsausgaben im Rahmen des Stabilitäts- und Wachstumspakts hat das Überschreiten der Defizitschwelle von 3 Prozent nicht vollständig erklärt".

Under the rules of the deficit procedure, Bulgaria is obliged to notify its planned countermeasures by 15 October at the latest. These may include consolidation measures, spending cuts or additional revenue. The EU Commission and the Council will then assess whether these steps are sufficient to correct the excessive deficit.

Next steps and deadlines

The opening of the procedure increases the fiscal pressure on the government in Sofia. Although the immediate consequences are initially limited, continued failure to meet the requirements can result in gradual sanctions being imposed, ultimately including financial penalty payments. The Pact provides for multi-year deadlines for correction.

The background is Bulgaria's adoption of the euro, which was only completed at the beginning of 2026. By joining the currency union, Sofia committed itself to complying with the Pact's fiscal rules, which include, among other things, a limit on the annual budget deficit of 3 percent of gross domestic product. The procedure now opened shows that fiscal discipline continues to be monitored even after euro adoption.

At EU level, the deficit procedure will continue to be formally processed in the coming weeks. On the basis of Bulgaria's response, the EU Commission can draw up recommendations to the Council, which will then decide on the further course of action. Observers expect that, given the ongoing consolidation efforts, Sofia will seek to reach an early agreement with Brussels.

The procedure comes at a time when several EU member states are facing fiscal challenges. In recent months, the EU Commission has repeatedly pointed to the need for sound budgetary policy, particularly against the backdrop of rising defence spending in many member states. The Stability and Growth Pact provides that such additional expenditure can be claimed under a time-limited escape clause.

The decision was reported by Dow Jones Newswires on 10 July 2026 at 1:00 p.m. ET (5:00 p.m. GMT). According to the report, the decision was adopted by the member states' finance ministers on the basis of a proposal from the EU Commission.