## IMF Executive Board Concludes 2025 Article IV Consultation with Bulgaria _IMF News, November 24, 2025_ ## Source details **Canonical URL:** [IMF Executive Board Concludes 2025 Article IV Consultation with Bulgaria](https://www.imf.org/en/news/articles/2025/11/21/pr-25384-bulgaria-imf-executive-board-concludes-2025-article-iv-consultation) ## Other formats - [Markdown version](/en/news/articles/2025/11/21/pr-25384-bulgaria-imf-executive-board-concludes-2025-article-iv-consultation/index.md) - [Structured JSON version](/en/news/articles/2025/11/21/pr-25384-bulgaria-imf-executive-board-concludes-2025-article-iv-consultation/index.json) - [Bundle manifest](/en/news/articles/2025/11/21/pr-25384-bulgaria-imf-executive-board-concludes-2025-article-iv-consultation/bundle-manifest.json) ## Bibliographic details - Published: November 24, 2025 --- ### Key findings on the economy and outlook - 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. ### Executive Board assessment and risks - 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 policy recommendations and public finance issues - 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: - Moderating public wage growth and benefit indexation to generate significant fiscal savings and ease inflationary pressures. - Increase consistency and transparency of public policies to reduce distortions and strengthen credibility of fiscal reporting. - Greater transparency regarding substantial recapitalization of state-owned enterprises (SOEs). - Pension reform priorities: - 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. - 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. - Continue efforts to strengthen the system's second and third pillars and improve adequacy to reduce old-age poverty. - 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 and macroprudential policy - 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: - The BNB’s close monitoring of the housing market is welcome. - 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. - Proactive borrower-based macroprudential measures are recommended to manage credit market risks. ### Structural reforms and long-term priorities - 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. ### Selected Economic Indicators, 2024–26 (annual percent change, unless otherwise indicated) - 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 *IMF Press Release No. 25/384, November 24, 2025.* --- ## References - [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) _Source: https://www.imf.org/en/news/articles/2025/11/21/pr-25384-bulgaria-imf-executive-board-concludes-2025-article-iv-consultation_