AGP Executive Report

Parliament & Taxes: MPs rejected on first reading Continue the Change’s VAT Act amendments to raise the VAT registration threshold to EUR 84,874, while also debating other fiscal moves. Euro Adoption: The deadline for companies to convert capital from leva into euro was extended from 12 to 36 months, easing pressure on the Commercial Register. Waste & Fees: Parliament approved at first reading amendments to the Waste Management Act, shifting parts of waste recovery oversight from the Environment Ministry to tax and customs bodies and scrapping a product fee for end-of-life motor vehicles. Energy & Gas: Bulgargaz is expected to keep natural gas prices below European market levels, helped by long-term supply contracts. Tourism 2027: The Tourism Ministry unveiled reforms for 2027, including a new Connectivity and Promotion Fund and rules pushing municipalities to reinvest tourist tax revenues into promotion and air links. Aviation & Logistics: SOF Connect launched a new EUR 15m checked-baggage system at Terminal 2, boosting capacity eightfold to 3,200 bags per hour. Drones & Standards: Dronamics joined an EU Horizon Europe project to integrate large drones into European airspace, working with BULATSA and EUROCONTROL. Cybersecurity: A major international operation disrupted the Sality botnet, active since 2003, by turning its peer-to-peer structure against operators and cutting off thousands of infected machines. EU Biodiversity: Bulgaria is among the countries that missed the 1 September deadline for national nature restoration plans under the EU Nature Restoration Law. Business & Transport Governance: A new board was appointed at BDZ Holding to ensure continuity ahead of a future selection procedure.

Entrepreneurship & Automation: Sofia entrepreneur Dimitar Petrov says his autonomous AI robot coffee kiosk is serving 200+ cups a day 24/7 and turning net profits of over €4,200 a month, aiming for payback in under nine months. Consumer Prices: Bulgaria’s annual inflation accelerated to 5.1% in August (from 4.4% in July), with euro-area inflation at 3.3%, driven mainly by energy costs. Public Finance: The Finance Ministry expects Bulgaria’s cash-basis budget deficit to reach about EUR 3bn by end-August, pressured by NRRP investment payments ahead of the Aug 31 eligibility deadline. Energy & Fuel Costs: The Petroleum and Gas Association warns fuel supply won’t be a problem, but diesel prices may stay elevated as European refining capacity and regional supply dynamics tighten. Logistics & State Services: Transport Minister Georgi Peev says Bulgarian Posts needs better use of equipment, more tech (less manual work), and improved pay and staffing, with plans like POS terminals and barcode scanners. Investment & Industry: Economy Minister Alexander Pulev points to rising investor interest in Stara Zagora, highlighting EU-backed support for industrial zones including Industrial Park Zagore–Elenino. Food Safety: Bulgaria’s Food Safety Agency blocked 16.3 tonnes of Turkish table grapes due to pesticide residues above EU limits. Politics & Business Climate: Youth delegates to the UN met President Iliana Iotova to discuss pessimism among young people and priorities like peace and security. EU-Australia Trade: The Bulgarian Chamber of Commerce and Industry will co-organize an EU-Australia business forum in Sofia on Oct 7, targeting sectors from clean energy to pharma and agri-food.

Presidential Race: Bulgaria’s former interim PM Andrey Gyurov confirms he will run for president on Oct 25, pairing with Georgi Kandev as vice-president, positioning a pro-EU, reformist campaign focused on an “economy of knowledge.” Pension Reform: From Sept 1, Bulgarians can choose how their second-pension savings are managed under the new multi-fund model starting Jan 1, 2027, with automatic allocation by age if no choice is made. Infrastructure & Justice: Regional Development Minister Ivan Shishkov says Hemus Motorway construction will speed up toward Veliko Tarnovo, while the whole project remains “in the prosecutor’s hands” over alleged illegal works and financing. Business & Trade: The Bulgarian Chamber of Commerce and Industry will co-organize an EU–Australia business forum in Sofia on Oct 7, highlighting opportunities in clean energy, digital/AI, pharma, agri-food and education. Logistics & Services: Transport Minister Georgi Peev calls for modernization at Bulgarian Posts, citing low pay, staffing issues, and underused technology, with plans like POS terminals and better scanners. Energy Prices: BPGA warns Bulgaria has enough fuel, but diesel pricing depends on international markets as European refining capacity shrinks and supply shifts. Digital Innovation Funding: Three Bulgarian European Digital Innovation Hubs will receive nearly EUR 6m extra to expand AI and tech services for SMEs and public bodies. Inflation Watch: Eurozone inflation hits 3.3% in August, driven by energy costs, keeping pressure on ECB rate expectations. Consumer Pressure: Ikea announces a €1.2bn Europe-wide price-cut push to spur demand amid tighter household budgets, with Bulgaria linked via franchise operations.

Border & Travel Flows: Bulgaria’s border traffic stayed heavy as Turkey’s Edirne gates logged about 3.7m passengers and 1m vehicles since June 22, with average waits cut to 27 minutes (down from 39% last year) after coordination with Bulgarian authorities; peak delays still hit up to two hours on busy midweek days. Macroeconomy: Bulgaria’s budget deficit narrowed to EUR 2.201bn (1.8% of projected GDP) at end-July, with the fiscal reserve at EUR 8.525bn, while Inflation: consumer prices rose 5.1% y/y in August (from 4.5% in July), driven mainly by faster transportation costs. Energy & Environment Administration: the Environment Ministry outlined plans to reorganize 15 Regional Inspectorates of Environment and Water and shift water enforcement from Basin Directorates to the new structures. EU/Regional Security & Connectivity: Bulgaria’s FM said Bulgaria is ready to work with Romania for a safer Black Sea and better connectivity, highlighting the Maritime Security Hub and transport links. Business & Startups: Sofia-based DiscreteStack raised EUR 800k, positioning itself as a European alternative to US AI infrastructure providers. Food & Markets: Tsarevo fishermen warned that a strong bonito season could still crush prices and squeeze margins as costs stay put. Culture & Tourism: Burgas presented its bid for European Capital of Culture 2032 at Apollonia, framing it as a community-driven project.

Culture & Cities: Burgas’ bid to become European Capital of Culture 2032 was presented at the Apollonia Arts Festival in a push framed as a community effort involving 12 municipalities. Public Finance: Bulgaria’s budget deficit narrowed to EUR 2.201bn (1.8% of projected GDP) at end-July, with the fiscal reserve at EUR 8.525bn. Inflation Watch: Consumer price inflation accelerated to 5.1% y/y in August, driven mainly by higher transport costs. Black Sea Security: Foreign Minister Velislava Petrova said Bulgaria is ready to work with Romania on safer Black Sea waters, stronger maritime security and connectivity projects, including the Maritime Security Hub and the Vertical Gas Corridor. Food & Agriculture: Fishermen in Tsarevo warn that a strong bonito season could still mean low purchase prices that don’t cover fuel and gear costs. Defense Supply Chain Risk: A fire at WB Electronics’ drone-component plant in Poland is under investigation for possible arson, adding to a pattern of incidents at European defense sites. Business & Tech: Sofia-based DiscreteStack raised €800k, targeting regulated-sector demand for European control over AI infrastructure. Energy & Climate: Drought and heat are worsening river and fish-farm conditions across Central and Eastern Europe, with knock-on effects for crops and shipping.

EU Enlargement Watch: Iceland’s narrow “no” in the referendum to resume EU membership talks closes the door to accession for the foreseeable future, with fisheries control at the heart of the vote. Schengen & Travel Tech: The EU’s summer pause on biometric checks at crowded borders ends on Sept 6, raising the odds of longer airport queues unless more time is granted. Black Sea Grain Markets: Wheat prices on Euronext hit contract highs as Black Sea export squeeze and war-linked disruptions keep shipments tight, with knock-on effects for farmers’ cash flow and next season’s planting. Bulgaria-EU Energy Finance: Bulgaria received its first EUR 489.3 mln payment under the EU SAFE Defence Instrument, while Bulgargaz is also proposing a 5.5% natural gas price increase for September. Tourism & Disaster Risk: Nepal’s flash floods have killed 675 people, with nearly 2,400 still missing; at least 261 foreign tourists have been rescued, including Bulgarians among those reported missing. Local Business & Trade: A Rhodope yogurt festival in Momchilovtsi showcased Bulgarian-Chinese dairy ties, with the Momchilovtsi brand promoted as a longevity-linked product in China.

Schengen & EES Deadline: From September 6, the EU’s summer pause on fingerprint/face scans under EES is set to end, raising the risk of longer airport queues as first-time enrolment and post-summer traffic collide. Eurozone Inflation Watch: ECB survey data shows slightly cooler inflation expectations in July, but Cyprus remains a standout with 4.4% inflation—relevant for Bulgaria’s regionally linked consumer sentiment. Black Sea Grain Pressure: Wheat prices on Euronext hit contract highs as Black Sea exports stay squeezed by war disruptions, with traders also watching knock-on effects on next year’s planting budgets. Bulgaria-EU Finance: Bulgaria received its first EUR 489.3 mln payment under the EU SAFE Defence instrument, while SAFE-related payments also land for Latvia. Energy Security: Europe’s gas storage sits well below the five-year average, with traders bracing for costly replenishment if the Gulf supply situation drags into winter. Tourism & Flood Risk: Nepal’s flash floods have killed 675 so far, with nearly 2,400 missing; 261 foreign tourists were rescued from the Bhotekoshi/Bhotekoshi basin as renewed rain complicates rescue. Local Business Spotlight: Momchilovtsi’s Yogurt Festival showcased Rhodope dairy ties with China’s Bright Dairy, underlining Bulgaria’s food export branding potential. Politics & Elections: GERB leader Boyko Borissov says the party will compete “where it should come first,” and points to Iliana Iotova as a key presidential candidate.

Black Sea Grain Crunch: EU wheat prices hit a contract high as Black Sea exports stay squeezed by war-related disruptions, with traders watching port closures and cash-flow strain for next season’s planting. Disaster Response: Nepal’s flash floods death toll climbed to 675, while about 2,400 people remain missing; 261 foreign tourists were rescued from the Bhotekoshi/Rasuwa areas, but 320 still weren’t accounted for as rain and damaged infrastructure complicate rescue. Bulgaria Food & Trade: The Momchilovtsi Yogurt Festival in the Rhodopes showcased Bulgarian dairy ties with China’s Bright Dairy, highlighting the brand’s popularity in Shanghai and beyond. EU Housing Pressure: A Europe-wide housing affordability crisis is deepening, with prices rising faster than incomes and supply lagging—an issue that also hits Bulgaria as rents and purchase costs climb. Health Policy: Bulgaria’s Health Ministry says blood supply must be secured via a “common mechanism,” stressing that hospitals shouldn’t require families to find donors for elective care. Local Business & Tourism: Sofia continues to market itself as a budget-friendly city break, with low consumer prices and strong visitor value.

Energy Security & Gas Markets: Europe’s gas storage sits around 63% versus a 79% five-year average, as Qatar LNG exports are delayed by damage to Ras Laffan and Iran-war risks keep supplies uncertain—raising fears of a costly late-season scramble. Transport & Trade Routes: The Hormuz bottleneck is reviving interest in the INSTC corridor, an alternative sea-rail-road route linking India, Iran, Azerbaijan, Russia and Europe; Bulgaria remains an observer. Bulgaria’s Policy Moves: Bulgaria plans to fold the Sustainable Energy Development Agency into the Energy Ministry to streamline administration and improve coordination under EU energy-efficiency rules. Health System Governance: The Health Ministry says blood donation must stay voluntary and calls for a “common mechanism” to secure supplies without making relatives responsible for elective surgery needs. Environment Enforcement: Sofia meeting targets illegal poison use in the wild after arrests tied to poisoned vultures in Central Balkan National Park, with tougher consequences and possible legislative fixes. Business & Finance: Household deposits rose nearly 18% y/y to EUR 56.9bn by end-July, while home loans reached EUR 19bn—signaling continued demand despite the wider housing affordability squeeze. International Context: Nepal flash floods keep killing and missing people, while a major gene-therapy trial update is presented at the European Society of Cardiology Congress.

EU Defence Funding: Bulgaria received its first EUR 489.3m payment under the EU SAFE defence instrument (15% of its EUR 3.3bn allocation), aimed at speeding up joint procurement of ammunition, missiles and air-defence systems. Sanctions & Business Risk: Foreign Minister Velislava Petrova said Bulgaria backed the removal of Iskander Makhmudov from an EU sanctions list to protect national interest, citing potential economic impacts. Transport & Trade: Bulgaria coordinated with Romania and Serbia over rail works that could disrupt freight flows, as Serbia plans a ~200-day closure and Romania suspends a key route for much of 2027. Food Safety: Bulgarian authorities detained peanut shipments over excessive aflatoxins and seized/blocked imported packaged tea from China for pesticide violations. Aviation Demand: Bulgaria’s four airports logged 91,067 commercial flights in 2025 (+5.2% y/y), with Sofia the biggest hub. Health Policy: The Health Ministry stressed blood donations must stay voluntary, calling for a “common mechanism” rather than making donor-finding a condition for elective care. Environment Enforcement: Sofia meeting agreed tougher, more effective action against illegal poison use in the wild after a Central Balkan National Park case. Energy Administration: Bulgaria plans to fold the Sustainable Energy Development Agency into the Energy Ministry to streamline processes and improve capacity.

EU Defence Funding: Bulgaria received its first EUR 489.3 mln payment under the EU SAFE defence instrument, marking 15% of its EUR 3.3 bln allocation to speed up joint ammunition, missile and air-defence procurement. Border & Trade Controls: The Bulgarian Food Safety Agency detained two peanut consignments at Varna after aflatoxin levels exceeded EU limits—19.921 tonnes from the US and 18 tonnes from Egypt—while a 720 kg packaged tea shipment from China was seized for excessive pesticide residues. Aviation & Mobility: Bulgaria’s four airports handled 91,067 commercial flights in 2025, up 5.2% year-on-year, with Sofia the biggest hub. Public Health After Floods: In flood-hit Strumyani, the Environment Ministry said tap-water quality is being monitored and that Thursday’s samples showed no exceedances in key physico-chemical indicators, with microbiological results due Sept 1. Regional Transport Planning: Bulgaria’s transport ministry discussed with Romania and Serbia how planned rail works could disrupt international freight, urging coordinated timing to protect connectivity. Business Expansion: Voltatron agreed to buy Kurz Elektronik from Prettl Group to expand electronics manufacturing in Lithuania and engineering capacity in Germany. Justice & Security: A Ukrainian citizen wanted for fraud was remanded in custody by the Haskovo court pending extradition. Energy & Sanctions Politics: Foreign Minister Velislava Petrova said Bulgaria sought the removal of Iskander Makhmudov from an EU sanctions list to protect national interest. Disaster Watch: EU pledged EUR 2 mln in humanitarian aid for Nepal after Nepal-Tibet flash floods, as missing lists keep growing.

Black Sea Security: Bulgaria’s parliament approved the purchase of seven mine-hunting ships to expand Black Sea mine countermeasures, with three vessels coming from the Netherlands and four via a Belgium-Netherlands deal; Bulgaria will fund repairs and refurbishment to meet NATO readiness standards. Danube Water Crisis: Record-low Danube levels are forcing renewed calls for long-term action on the Bulgarian-Romanian section, including two hydrotechnical projects and EU funding support, as dredging has fallen sharply since 1990. Banking & Housing Costs: The Bulgarian National Bank reported consumer loan rates rising to 9.12% in July, while house-purchase loan rates edged up to 2.43%; household deposits also grew. Elections Budget: The government approved EUR 116.9m for October presidential election costs, covering everything from voter rolls and polling logistics to security, video recording and abroad voting. EU Sanctions Enforcement: Bulgaria approved a bill making violations or circumvention of EU restrictive measures serious criminal offences, including breaches tied to financial services and procurement. AI & Cyber Risk: A report says Chinese-made white-label routers sold globally contain backdoors, raising supply-chain security concerns for markets including Bulgaria. Disaster Watch (Global): Nepal-China flash floods after a glacier collapse killed at least 469 and left 1,400+ missing, including hundreds of foreign tourists.

Consumer Credit & Banking: Bulgaria’s average interest rate on consumer loans rose to 9.12% in July, while home loans climbed to EUR 19.022 bln and household deposits reached EUR 56.859 bln (+17.8% y/y). Crypto Tax Transparency: Parliament approved tax code revisions enabling exchange of crypto-asset user data across EU and partner states, requiring annual reporting by crypto-asset service providers. Minimum Wage Outlook: The Finance Ministry projects a EUR 660 minimum wage for 2027 (EUR 680 in 2028; EUR 710 in 2029). Energy Prices: Bulgargaz proposed a 5.5% September natural gas price increase to EUR 41.60/MWh, with EWRC to decide on Aug 31. EU Sanctions Enforcement: Government approved a bill making violations or circumvention of EU restrictive measures serious crimes, with prison and large fines. Defence Industrial Base: Cabinet moves to ratify an amendment with Lockheed Martin to support independent maintenance and lifecycle logistics for F-16 Block 70 components in Bulgaria. Health System Leadership: Parliament’s Health Committee heard candidates for NHIF governor and deputy governor, with plans for digitization and quality-based payments. Transport & Logistics: EUR 55 mln de minimis aid approved for heavy-duty road freight competitiveness; Alstom’s first electric trains arrive in Sofia. Climate Pressure on Trade: Unprecedentedly low Danube levels are disrupting grain shipping, while Bulgaria and Romania are urged to pursue long-term river projects with EU funding. Business & Markets: Transferhood launched an airport transfer marketplace with fixed pricing at 100+ airports; ITC found Vietnam, Egypt and Bulgaria rebar harming US firms. Governance & Social Policy: Parliament backed a 33% gender target for directors of listed companies at first reading.

AI Outsourcing Race: A new Ataraxis ranking puts Hungary in 4th for AI-ready outsourcing, with Bulgaria close behind in 9th (Czechia 7th, Poland 11th, Romania 13th), highlighting CEE’s strong AI education pipeline and adoption momentum. Elections & Defence Budget Items: Bulgaria’s Council of Ministers will review the spending plan for the Oct 25 presidential vote and consider amendments tied to the F-16 Block 70 industrial cooperation with Lockheed Martin, plus EU-fund estimates and other transfers. Boardroom Gender Rules: MPs will debate a bill setting a 33% target for the underrepresented sex on boards of listed companies, aligning with an EU directive. Health System Shock: Health Minister Katya Ivkova denies a “purge” at the Health Ministry after the resignation of Chief State Health Inspector Angel Kunchev, citing reform and vacant posts. Gas Security Watch: Bulgargaz storage is 57.29% full, below the EU average, as TTF prices climb—raising winter buffer concerns. Energy Infrastructure: Bulgaria plans a 250–300m levee by Kozloduy after critically low Danube levels forced a precautionary output cut at Unit 5. Fraud Crackdown: EPPO arrests five suspected ringleaders in a €20m AirPods VAT fraud network involving shell firms across multiple countries, including Bulgaria. Judicial Appointments: Seven civic groups nominate Andrey Yankulov and Tanya Radulovska for the Supreme Judicial Council judges’ quota. LNG Push: Bulgargaz offers regional partners LNG procurement and delivery solutions, including regasification, storage and cross-border delivery. Tourism Spending Up: NSI data show Bulgarian domestic trip spending up 20.82% in Q2 2026, with accommodation costs rising 35.09%.

Russian Hybrid Sabotage: The Telegraph reports Russia is recruiting local criminal groups across Europe via Telegram to carry out arson and sabotage on weapons-factory targets, using crypto payments to keep the Kremlin at arm’s length. Judicial Appointments: Seven civic groups nominated Andrey Yankulov and Tanya Radulovska for the Supreme Judicial Council judges’ quota, pushing for stronger rule-of-law and independence. EEA Funding: Parliament’s Labour Committee backed at first reading the EEA Financial Mechanism memoranda with Iceland, Liechtenstein and Norway, with Bulgaria set to receive about EUR 110.9m net for programmes including energy security and water resilience. Private Security Rules: Amendments to the Private Security Activity Act cleared first reading, aiming for equal licensing-fee treatment and broader contracting options for threatened managers and staff. Air Quality Compliance: The Environment Committee approved first reading changes to the Clean Ambient Air Act to implement new EU ozone-layer and fluorinated-gas rules, with a single fixed fine for certificate breaches. Health Ministry Row: Health Minister Katya Ivkova denied a “purge” after Chief State Health Inspector Angel Kunchev’s resignation, citing administrative reform and staffing vacancies. Tourism Demand: NSI data show Bulgarians’ domestic trip spending rose 20.8% Q/Q in Q2 2026, with accommodation costs up 35.1%. Energy & Gas Security: Bulgaria’s gas storage is 57.29% full (below the EU average 62.99%), while Danube low water levels are forcing Kozloduy output adjustments and prompting plans for a 250–300m levee near the plant. Regional LNG Push: Bulgargaz is offering partners LNG supply and delivery solutions for 2026/27 onward, including regasification, storage and transmission capacity. Digital Services Act Coordination: Three regulators (CRC, CEM, CPDP) signed coordination rules for implementing the EU Digital Services Act. Business & Markets: Zalando launched in Bulgaria with 200,000+ products and an AI assistant; CT Interactive expanded its Bulgarian iGaming content via SLYBET.bg. Transport & Trade: Renovation at Kapitan Andreevo border crossing aims to cut truck congestion and boost capacity for Bulgaria–Türkiye trade flows. Aviation Route: Direct Sofia–Yerevan flights resume Nov 7, operated twice weekly by GullivAir. Culture & Research: Over 600 researchers from 55 countries meet in Sofia for the 65th ERSA Congress, highlighting how universities can drive regional development.

GPS & Security: Bulgaria’s Communications Regulation Commission says the Dragalevtsi jammer in Sofia could be detected and located only while switched on, after SANS and Interior identified the device and launched pre-trial proceedings. Defense & Iran Tensions: Defence Minister Dimitar Stoyanov says there are currently no plans for US KC-135 tanker aircraft to return to Bulgaria, while also warning that Iran’s “hybrid operation” allegedly involved Bulgarian politicians—sparking demands from MPs for names. Public Finance: The Finance Ministry raised EUR 95 mln via a 10-year government securities auction on the domestic market, with a 4.39% average yield. Education Policy: Parliament’s Education Committee reviewed changes to university fees and scholarships, while the new school year is set to start on September 15 by law. Transport Modernisation: Alstom’s first two electric trains for Bulgaria’s RRP are expected to enter service in early September, with certification ongoing. Energy & Water Stress: Low Danube levels continue to raise economic risk, with drought-linked impacts on cooling and logistics highlighted in the week’s coverage. Business & Markets: Bulgaria’s advertising market hit EUR 372 mln in 2025, and mortgage demand is expected to stay steady in Q3 2026. Culture & Tourism: A direct Sofia–Yerevan–Sofia air route resumes from November 7, and Bulgaria’s participation in Bookfest 2026 is set to boost interest in a Bulgarian novel translated into Romanian.