{
  "title": "IMF Executive Board Concludes 2025 Article IV Consultation with Bulgaria",
  "publication": "IMF News, November 24, 2025",
  "sourceUrl": "https://www.imf.org/en/news/articles/2025/11/21/pr-25384-bulgaria-imf-executive-board-concludes-2025-article-iv-consultation",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) completed the 2025 Article IV Consultation for Bulgaria and endorsed the staff appraisal on a lapse-of-time basis without a meeting.",
  "publishDate": "2025-11-24",
  "sections": [
    {
      "heading": "Key findings on the economy and outlook",
      "content": "- Domestic demand is driving a robust expansion: GDP grew by 3.4 percent in 2024 and by 3.2 percent in the first half of 2025.\n- Near-term growth outlook: growth is projected to remain at around 3 percent in 2025 and 2026.\n- Inflation: headline inflation is projected to average around 3½ percent in 2025 and 2026, before declining; inflation accelerated in early 2025 and remains elevated.\n- Labor market: record low unemployment with tight labor market conditions and rapidly growing real wages.\n- Credit and external: strong credit growth is underpinning private consumption; external demand is subdued with the current account projected to remain negative in the near term.\n- Euro adoption: adoption of the euro is a major milestone expected to strengthen institutional credibility, investor confidence, and reduce currency risk and transaction costs; benefits already visible in narrowing sovereign spreads and recent credit rating upgrades."
    },
    {
      "heading": "Executive Board assessment and risks",
      "content": "- Economic momentum is strong, the labor market is tight, and inflation is elevated.\n- High wage growth has driven income convergence; productivity growth is lagging.\n- External position in 2024 is assessed to be broadly in line with fundamentals and desirable policy settings.\n- Main risks to the outlook: domestic policy uncertainty, domestic demand pressures, and heightened external volatility.\n- Current account: projected to remain negative in the near term."
    },
    {
      "heading": "Fiscal policy recommendations and public finance issues",
      "content": "- Fiscal stance: fiscal policy is expected to remain expansionary in 2025–26; considering underlying demand strength and cyclical position, a neutral stance is recommended, achievable through a combination of expenditure and revenue measures.\n- Specific fiscal recommendations:\n  - Moderating public wage growth and benefit indexation to generate significant fiscal savings and ease inflationary pressures.\n  - Increase consistency and transparency of public policies to reduce distortions and strengthen credibility of fiscal reporting.\n  - Greater transparency regarding substantial recapitalization of state-owned enterprises (SOEs).\n- Pension reform priorities:\n  - Focus on sustainability and adequacy as the deficit of the pay-as-you-go pension scheme is widening and population aging will increase the shortfall.\n  - Strengthen financial sustainability by increasing contribution revenues; a key measure is removing the cap on insurable income, which has not kept up with wage growth.\n  - Continue efforts to strengthen the system's second and third pillars and improve adequacy to reduce old-age poverty.\n- Revenue policy: the revenue-generating capacity of the flat-tax regime appears insufficient; in the medium term, more revenue could be raised by increasing tax rates for both personal and corporate income and moving to progressive income taxation.\n- Fiscal risks: while overall risk of debt distress remains low, public debt is increasing due to sustained deficits and sizeable recapitalizations of SOEs; spending pressures from aging, defense, infrastructure, and the energy transition will require fiscal space."
    },
    {
      "heading": "Financial sector and macroprudential policy",
      "content": "- Financial sector resilience: the financial sector remains resilient.\n- Credit risks: rapid growth of consumer credit, particularly mortgage loans, has increased systemic risks in the real estate market.\n- Policy recommendations:\n  - The BNB’s close monitoring of the housing market is welcome.\n  - With the drop in reserve requirements following euro adoption, liquidity may flow into lending and further propel household credit; macroprudential policy will need to remain nimble.\n  - Proactive borrower-based macroprudential measures are recommended to manage credit market risks."
    },
    {
      "heading": "Structural reforms and long-term priorities",
      "content": "- Raise living standards: durably raising living standards will require continued structural reforms, enhanced governance, and strategic investments in human and physical capital.\n- Growth dividends: scaling up quality public investment and reducing structural policy gaps—particularly through the Resilience and Recovery Plan (RRP)—could yield substantial benefits.\n- Governance and institutional quality: improving governance and institutional quality is essential for long-term growth and building trust.\n- Demographics and productivity: addressing productivity and demographic challenges requires sustained investment in human capital and increased labor market participation.\n- Energy transition: reform is crucial for a more resilient, efficient, and cleaner energy sector, with stronger governance and reduced fiscal vulnerabilities."
    },
    {
      "heading": "Selected Economic Indicators, 2024–26 (annual percent change, unless otherwise indicated)",
      "content": "- Real GDP: 2024 — 3.4; 2025 — 3.0; 2026 — 3.1\n- Real domestic demand: 2024 — 4.7; 2025 — 7.1; 2026 — 3.8\n- Public consumption: 2024 — 3.6; 2025 — 5.3; 2026 — 1.7\n- Private consumption: 2024 — 4.9; 2025 — 8.0; 2026 — (not provided)\n- Gross capital formation: 2024 — 5.9; 2025 — 1.3; 2026 — (not provided)\n- Net exports 1/ (contribution to GDP growth): 2024 — -1.1; 2025 — -3.6; 2026 — -0.7\n- Exports of goods and services: 2024 — 1.8; 2025 — -1.6; 2026 — (not provided)\n- Imports of goods and services: 2024 — 3.9; 2025 — 4.8; 2026 — 5.1\n- Resource utilization — Potential GDP: 2024 — 2.9\n- Output gap (percent of potential GDP): 2024 — 0.4; 2025 — 0.6; 2026 — (not provided)\n- Unemployment rate (percent of labor force): 2024 — 4.2; 2025 — 3.5; 2026 — (not provided)\n- Price — GDP deflator: 2024 — 7.2; 2025 — 6.0; 2026 — 4.4\n- Consumer price index (HICP, average): 2024 — 2.6\n- Consumer price index (HICP, end of period): 2024 — 2.1; 2025 — 4.0\n- Fiscal indicators (percent of GDP) — General government net lending/borrowing (cash basis): 2024 — -3.0; 2025 — -3.4; 2026 — -3.5\n- General government primary balance: 2024 — -2.8\n- Cyclically adjusted overall balance (percent of potential GDP): 2024 — -3.2; 2025 — -3.7\n- General government gross debt: 2024 — 23.8; 2025 — 28.4; 2026 — 29.9\n- Monetary aggregates — Broad money: 2024 — 8.7; 2025 — 5.7; 2026 — 9.1\n- Domestic private credit: 2024 — 14.5; 2025 — 13.1; 2026 — 11.8\n- External sector (percent of GDP) — Current account balance: 2024 — -3.8\n- o/w: Merchandise trade balance: 2024 — -4.8; 2025 — -7.8; 2026 — -7.6\n- Net international investment position: 2024 — -4.4; 2025 — -4.9; 2026 — -4.1\n\nIMF Press Release No. 25/384, November 24, 2025.\n\n---\n\n\n References\n\n- Bulgaria and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/11/21/pr-25384-bulgaria-imf-executive-board-concludes-2025-article-iv-consultation"
    }
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    "Published: November 24, 2025",
    "Domestic demand is driving a robust expansion: GDP grew by 3.4 percent in 2024 and by 3.2 percent in the first half of 2025.",
    "Near-term growth outlook: growth is projected to remain at around 3 percent in 2025 and 2026.",
    "Inflation: headline inflation is projected to average around 3½ percent in 2025 and 2026, before declining; inflation accelerated in early 2025 and remains elevated.",
    "Labor market: record low unemployment with tight labor market conditions and rapidly growing real wages.",
    "Credit and external: strong credit growth is underpinning private consumption; external demand is subdued with the current account projected to remain negative in the near term.",
    "Euro adoption: adoption of the euro is a major milestone expected to strengthen institutional credibility, investor confidence, and reduce currency risk and transaction costs; benefits already visible in narrowing sovereign spreads and recent credit rating upgrades.",
    "Economic momentum is strong, the labor market is tight, and inflation is elevated.",
    "High wage growth has driven income convergence; productivity growth is lagging.",
    "External position in 2024 is assessed to be broadly in line with fundamentals and desirable policy settings.",
    "Main risks to the outlook: domestic policy uncertainty, domestic demand pressures, and heightened external volatility.",
    "Current account: projected to remain negative in the near term.",
    "Fiscal stance: fiscal policy is expected to remain expansionary in 2025–26; considering underlying demand strength and cyclical position, a neutral stance is recommended, achievable through a combination of expenditure and revenue measures.",
    "Specific fiscal recommendations:",
    "Pension reform priorities:",
    "Revenue policy: the revenue-generating capacity of the flat-tax regime appears insufficient; in the medium term, more revenue could be raised by increasing tax rates for both personal and corporate income and moving to progressive income taxation.",
    "Fiscal risks: while overall risk of debt distress remains low, public debt is increasing due to sustained deficits and sizeable recapitalizations of SOEs; spending pressures from aging, defense, infrastructure, and the energy transition will require fiscal space.",
    "Financial sector resilience: the financial sector remains resilient.",
    "Credit risks: rapid growth of consumer credit, particularly mortgage loans, has increased systemic risks in the real estate market.",
    "Policy recommendations:",
    "Raise living standards: durably raising living standards will require continued structural reforms, enhanced governance, and strategic investments in human and physical capital.",
    "Growth dividends: scaling up quality public investment and reducing structural policy gaps—particularly through the Resilience and Recovery Plan (RRP)—could yield substantial benefits.",
    "Governance and institutional quality: improving governance and institutional quality is essential for long-term growth and building trust.",
    "Demographics and productivity: addressing productivity and demographic challenges requires sustained investment in human capital and increased labor market participation.",
    "Energy transition: reform is crucial for a more resilient, efficient, and cleaner energy sector, with stronger governance and reduced fiscal vulnerabilities.",
    "Real GDP: 2024 — 3.4; 2025 — 3.0; 2026 — 3.1",
    "Real domestic demand: 2024 — 4.7; 2025 — 7.1; 2026 — 3.8",
    "Public consumption: 2024 — 3.6; 2025 — 5.3; 2026 — 1.7",
    "Private consumption: 2024 — 4.9; 2025 — 8.0; 2026 — (not provided)",
    "Gross capital formation: 2024 — 5.9; 2025 — 1.3; 2026 — (not provided)",
    "Net exports 1/ (contribution to GDP growth): 2024 — -1.1; 2025 — -3.6; 2026 — -0.7",
    "Exports of goods and services: 2024 — 1.8; 2025 — -1.6; 2026 — (not provided)",
    "Imports of goods and services: 2024 — 3.9; 2025 — 4.8; 2026 — 5.1",
    "Resource utilization — Potential GDP: 2024 — 2.9",
    "Output gap (percent of potential GDP): 2024 — 0.4; 2025 — 0.6; 2026 — (not provided)",
    "Unemployment rate (percent of labor force): 2024 — 4.2; 2025 — 3.5; 2026 — (not provided)",
    "Price — GDP deflator: 2024 — 7.2; 2025 — 6.0; 2026 — 4.4",
    "Consumer price index (HICP, average): 2024 — 2.6",
    "Consumer price index (HICP, end of period): 2024 — 2.1; 2025 — 4.0",
    "Fiscal indicators (percent of GDP) — General government net lending/borrowing (cash basis): 2024 — -3.0; 2025 — -3.4; 2026 — -3.5",
    "General government primary balance: 2024 — -2.8",
    "Cyclically adjusted overall balance (percent of potential GDP): 2024 — -3.2; 2025 — -3.7",
    "General government gross debt: 2024 — 23.8; 2025 — 28.4; 2026 — 29.9",
    "Monetary aggregates — Broad money: 2024 — 8.7; 2025 — 5.7; 2026 — 9.1",
    "Domestic private credit: 2024 — 14.5; 2025 — 13.1; 2026 — 11.8",
    "External sector (percent of GDP) — Current account balance: 2024 — -3.8",
    "o/w: Merchandise trade balance: 2024 — -4.8; 2025 — -7.8; 2026 — -7.6",
    "Net international investment position: 2024 — -4.4; 2025 — -4.9; 2026 — -4.1",
    "[Bulgaria and the IMF](http://www.imf.org/external/country/BGR/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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