Topical Information

On 22 June 2026, the third round of negotiations on the 2026 State Budget took place between the leadership of the Ministry of Finance and the Managing Board of the National Association of Municipalities in the Republic of Bulgaria (NAMRB). The previous two rounds were held in October and December 2025 on draft versions of the 2026 State Budget Act that were subsequently not adopted by the National Assembly.

The current negotiations are being conducted within the framework of the 2026 budget preparation process. During the discussions, both sides reaffirmed their shared understanding that, despite the challenging fiscal environment and the pressures facing public finances, the development of Bulgarian municipalities must remain a national priority. The third round of consultations on the draft 2026 State Budget further reinforced the commitment to a sustainable dialogue between local and central government and outlined prospects for closer cooperation during the mandate of the regular Government.

The meeting was attended by Deputy Prime Minister and Minister of Finance Galab Donev, Deputy Minister of Finance Rositsa Velkova, and Zheni Nacheva, Director of the Municipal Finance Directorate. NAMRB was represented by Executive Director Silvia Georgieva; Deputy Chairs of the NAMRB Managing Board Donka Mihaylova, Mayor of Troyan Municipality; Ivo Dimov, Mayor of Dimitrovgrad Municipality; and Radoslav Revanski, Mayor of Belitsa Municipality; as well as Managing Board and Control Board members Dr Emil Kabaivanov, Mayor of Karlovo Municipality, and Prof. Hristo Hristov, Mayor of Shumen Municipality, together with members of the Association’s expert team.

At the outset of the meeting, Deputy Prime Minister and Minister of Finance Galab Donev highlighted the complex fiscal environment in which the budget is being prepared, noting that:

“Budgets over the next one to two years will need to be tightened and expenditure will have to be restrained.”

At the same time, he stressed that the Government is seeking a balance between expenditure restraint and revenue growth. For municipalities, this includes projected increases in revenues from local taxes and fees, as well as new opportunities for electronic information exchange and improved revenue collection.

On behalf of NAMRB, Deputy Chair Donka Mihaylova expressed support for the provisions concerning municipalities in the proposed budget framework and welcomed many of the planned parameters. According to her, municipalities are currently facing four major issues that need to be addressed through the budget: the future of the Municipal Investment Programme, the introduction of the new municipal waste fee model, financing of state-mandated activities, and forthcoming amendments to tax legislation as a step towards greater fiscal decentralisation.

Municipal Investment Programme Remains a Central Priority

A key topic of discussion was the future of the Municipal Investment Programme. NAMRB representatives raised concerns regarding financing for projects already underway and the need for a predictable payment mechanism.

Deputy Chair Ivo Dimov pointed out that a large number of projects are currently being implemented and warned that any interruption could leave:

“excavated streets, parks and roads unfinished for an indefinite period of time.”

On this issue, the Ministry of Finance and NAMRB reached agreement that all projects that have already been contracted and commenced should receive the necessary financial support and be completed.

Minister Donev committed that:

“all projects for which implementation has already begun will be paid for,”

and assured participants that the Government’s objective is to ensure their successful completion regardless of any future adjustments to the programme’s management mechanism.

Gradual Introduction of the New Municipal Waste Fee Model

Substantial attention was also devoted to the continued phased implementation of the new municipal waste fee system based on the “polluter pays” principle.

NAMRB expressed support for the reform but insisted that implementation should proceed gradually and only after local administrations and information systems have been adequately prepared.

Dr Emil Kabaivanov noted that currently only around fifteen municipalities have introduced the new model and that a number of essential preconditions remain absent, including a national deposit return system and reliable data infrastructure.

Addressing the same issue, Donka Mihaylova emphasised that one of the underlying causes of existing imbalances is the outdated methodology used for determining property tax valuations, which has not been updated for many years. In this context, NAMRB reiterated its long-standing call for reform of the system to ensure a fairer and more realistic basis for setting local taxes and fees.

The Ministry of Finance expressed support for revising the methodology for determining property tax valuations on real estate.

Commitment to Continued Dialogue

At the conclusion of the meeting, both parties confirmed their willingness to continue expert-level dialogue on the 2026 budget as well as on longer-term reforms related to local government finance, municipal investments and the strengthening of the financial autonomy of Bulgarian municipalities.

The discussions demonstrated a shared commitment to maintaining constructive cooperation between central and local government and to identifying practical solutions that support sustainable municipal development despite the current fiscal challenges.