AGP Executive Report

Bulgaria’s Economy & Public Finance: Bulgaria’s Q1 2026 growth is reported at 3.1% year-on-year and among the EU’s strongest, while the European Commission is again moving on fiscal discipline: an excessive deficit procedure is confirmed as a risk, and Bulgaria’s budget deficit is flagged as the highest for May in 20 years, with the finance ministry pushing “lowest possible deficit” measures instead of tax hikes. Energy & Industry: DPM Metals says it has struck a major gold-copper porphyry intercept near its Chelopech mine in Bulgaria—713 metres grading 1.31 g/t gold and 1.16% copper—potentially expanding its resource base. EU Policy Direction: The European Commission unveiled the 2026 European Semester Spring Package, aiming to boost competitiveness, resilience, skills and decarbonisation while tackling housing and social fairness. Business & Compliance: A new SCC board member, Rosen Hristov, says his role is to stop corruption and misappropriation by drafting preventive, transparent procedures after an audit of the state company and subsidiaries. Fraud Watch: Italy has arrested another suspect in the Caritas Luxembourg fraud case, linked to alleged money laundering via fake firms and accounts; earlier arrests included Bulgarian “money mules.” International Trade/Branding: e.l.f. Beauty’s rhode expands into Mexico and adds seven European markets including Bulgaria, signaling continued consumer-brand push into the region. Cost of Living: Fuel prices remain a pressure point across Europe, with Bulgaria listed among higher diesel prices in the latest comparison. Demographics & Talent: A UN projection highlights Europe’s population decline by 2100, with Bulgaria among the biggest losers—an issue that will shape labor supply and demand for years.

Politics & Governance: Bulgaria’s DSB party warns that the new government’s early moves risk “command-style” rule, higher public spending and isolation from EU policies, arguing Bulgaria needs a strong right-wing opposition. Public Administration: Acting Prosecutor General Vanya Stefanova says her priorities are stronger professionalism, better coordination with institutions and investigations that hold up in court. State-Owned Firms & Integrity: A new SCC board member, Rosen Hristov, says he will focus on stopping corruption schemes and drafting procedures to prevent misappropriation. Fraud Probe: Italy arrests Clarissa La Porta in the Caritas scandal, linked to alleged money laundering via fake firms; the case already saw Bulgarian “money mule” convictions. Business & Investment: DPM reports a major Bulgaria gold-copper discovery near Chelopech: a 713m intercept grading 1.31 g/t gold and 1.16% copper. Energy & Security: NATO’s eastern flank is racing to rearm amid defense-gap concerns as US pressure grows. Culture & Tourism: Kazanlak’s Rose Festival draws visitors for the rose-picking ritual and parade; Sofia hosts the 20th Water Tower Art Fest through June 15.

Bulgarian Economy & Finance: Prime Minister Radev said Bulgaria’s deficit is driven by past “hidden costs” and past administrations’ deficit management tactics, citing unpaid invoices surfacing now at over €2.2bn, while the acting Prosecutor General Vanya Stefanova signed an extradition request for Stoyan Mavrodiev, detained in Serbia, for prosecution linked to the Bulgarian Development Bank case. Judiciary & Governance: Acting Prosecutor General Vanya Stefanova outlined priorities for her six-month term, focusing on stronger professionalism, better dialogue with institutions, and investigations that hold up in court. Public Sector & Healthcare: NHIF Deputy Director Momchil Mavrov defended his record after political calls for dismissal over alleged embezzlement schemes, insisting inspections found no irregularities. Innovation & Skills: Green Transition Forum 6.0 in Sofia put AI, education and innovation front and center, with EU and Bulgarian officials urging faster scaling of companies and better future-ready skills. Energy/Industry: Deputy PM and Economy Minister Alexander Poulev said the State Consolidation Company’s executive director will keep his post, while the board was strengthened with international restructuring experience amid concerns about the firms’ real financial condition. EU Policy Watch: A pay transparency deadline study says Bulgaria is among countries delaying implementation until 2027.

State Finance & Deficit Politics: Prime Minister Rumen Radev blamed past “contortions” for Bulgaria’s deficit, citing hidden costs and unpaid invoices surfacing, while Finance Minister Galab Donev said the government will avoid short-term tax hikes and instead pursue long-term spending cuts to keep the deficit within EU limits. Prosecution & Governance: Acting Prosecutor General Vanya Stefanova signed a request for the extradition of S. M. detained in Serbia—linked to former Bulgarian Development Bank executive Stoyan Mavrodiev—while NHIF Deputy Director Momchil Mavrov defended his record amid calls for dismissal. Economic Performance: Bulgaria’s GDP grew 3.1% year-on-year in Q1 2026, with services still the biggest share of value added, and a negative balance in goods and services. Investment & Industrial Policy: Deputy PM Alexander Poulev said investment will be coordinated at Council of Ministers level, with Sofia’s industrial zones and supplier integration into investor value chains highlighted. EU Policy Watch: Bulgaria is among countries lagging on the EU Pay Transparency Directive, with many member states missing the 7 June deadline. Fintech & Payments: Sofia-based Paypercut raised €5m seed funding to expand its payments platform across Central and Eastern Europe. Space & Tech: Leaf Space and Bulgaria’s EnduroSat plan to test a satellite connectivity service, with TreeNet nodes launching in 2027. Business-Adjacent Security: Cyber researchers flagged the Silent Ransom Group’s fast-flux infrastructure as extortion activity continues.

Romania–EU Energy Deal: The European Commission approved changes to Transgaz’s 2020 antitrust commitments, letting the Romanian gas operator auction competing export capacities that also include options to Ukraine, via interconnections with Bulgaria and Ukraine. Bulgaria Growth Watch: Bulgaria’s economy grew 3.1% year-on-year in Q1 2026, with GDP up 0.7% quarter-on-quarter, placing it among the top performers in the EU. Investment Push in Sofia: Deputy PM and Economy Minister Alexander Poulev said investment will be elevated to Council of Ministers level, with an investment coordination unit to speed approvals and require Bulgarian suppliers in strategic projects. EU Fiscal Pressure: Finance Minister Galab Donev said the EC will proceed with an excessive deficit procedure against Bulgaria, with Bulgaria facing a review before ECOFIN and a final Council decision. SME Funding Scrutiny: An audit was ordered over concerns in an SME support selection process under the Just Transition Fund, with results to be published once the check is complete. Public Finance Oversight: Bulgaria’s National Audit Office blocked BGN 3.37 bln in accounting errors in 2024 public sector statements, with most corrected. Fintech Spotlight: Sofia-based Paypercut raised €5m seed funding to expand payments and BNPL tools across Central and Eastern Europe. Retail Demand Signal: Eurostat data showed euro area retail trade volume fell 0.4% month-on-month in April, and EU retail trade dropped 0.5%.

Counterfeit Crackdown: Bulgarian authorities destroyed a printing house making fake euro banknotes and arrested three suspects after counterfeit notes were used in shops near Sofia; six printers, cutting plotters, UV detectors and inks were seized. EU Fiscal Pressure: Finance Minister Galab Donev says the European Commission will move forward with an excessive deficit procedure against Bulgaria, after a mission reviewed public finances and the Recovery and Resilience Plan; the process now heads for ECOFIN and a Council decision. SME Funding Audit: A government-ordered audit of an SME support procedure is under way due to concerns about project selection and legality; results will be published once finished, with funding paused if breaches are found. Public Finance Accuracy: Bulgaria’s National Audit Office blocked BGN 3.37 bln in accounting errors in 2024 public sector statements, with most errors corrected after auditor intervention. Competition & Consumer Law Pushback: Foreign and local chambers of commerce oppose proposed amendments to Bulgaria’s competition and consumer protection laws, warning they could weaken competition and raise prices. Justice System Snapshot: An EU justice assessment ranks Bulgaria first in court spending as a share of GDP, while noting only moderate public trust in the judiciary. Energy Security Watch: A maritime drone self-detonated in Romania’s Black Sea port of Constanta near an oil terminal, highlighting widening spillover risks from the Ukraine war. Business Growth Signal: Sportforia says it has surpassed 40,000 active users after expanding sports content and launching TV apps across major platforms.

Rail Modernisation: Bulgaria has received the first two Alstom electric multiple units, with audits of completed tests due June 17 and further vehicle-type checks planned for July, as the Transport Ministry sets up a working group to speed procedures and get trains running safely. Competition & Consumer Protection: Parliament’s Budget and Finance Committee approved second-reading changes that introduce fines for monopolies charging excessive prices, expand unfair supply-chain practices, and create an electronic register to spot market distortions, with the CPC able to fine violators up to 10% of turnover. Investment Framework: Lawmakers adopted amendments to the Investment Promotion Act, setting up an Investment Coordination Council under the Council of Ministers to coordinate investment policy and propose a national strategy, while also defining “low-risk” jurisdictions for investment screening. Energy & Connectivity: Bulgaria and Greece reaffirmed a strategic partnership after Rumen Radev met Kyriakos Mitsotakis, highlighting €6bn annual trade, Greek investment above €3.5bn, and progress on gas and transport interconnectors plus future green corridors. Tech for Language: Bulgaria’s INSAIT launched Mamay AI Chat for Ukrainian speakers, expanding access to a sovereign AI chat built on MamayLM v2.0. Cross-border Business: Cosmos Health says its Sky Premium Life products are now shipped across all 27 EU member states via Skroutz, including Bulgaria. Local Economy & Culture: Sofia will host the European Design Festival 2026 (June 11–14), with talks, exhibitions and city tours spotlighting European and Bulgarian design talent.

EU Oversight Clash: The European Parliament voted to keep immunity for four MEPs linked to Belgium’s Huawei corruption probe, blocking Belgian prosecutors from questioning them—deepening the standoff between EU lawmakers and the judiciary. Bulgarian Parliament Watch: Parliament adopted second-reading amendments requiring the special commercial administrator for oil and petroleum products to file monthly reports, and approved a new Investment Coordination Council under the Council of Ministers to steer investment policy and remove barriers. Energy Corridors & Defence: Bulgaria’s strategic ties with Greece were underlined in Sofia talks on trade, euro and Schengen membership, plus gas and transport connectivity; separately, U.S. Abrams tank readiness training continued at Novo Selo, reinforcing NATO’s eastern posture. Tech for Language & Skills: INSAIT launched Mamay AI Chat for Ukrainian speakers, adding document, image and audio help on a sovereign platform. Local Business & Events: Sofia will host the European Design Festival (June 11–14) and the Heat Fest climate festival (June 4–6). Mining Update: DPM Metals reported a new high-grade gold-copper porphyry discovery near Chelopech, expanding drilling plans.

Deficit Pressure & Euro Rules: The European Commission has recommended opening an excessive deficit procedure against Bulgaria, projecting a 4.1% deficit in 2026 and 4.3% in 2027, while Finance Minister Galab Donev says a new debt ceiling of €3.8bn is unavoidable and that a deficit cut to 3% hinges on unpopular steps like freezing incomes. Budget & Pensions: From 1 July, pensions rise by 7.8% under the “Swiss rule,” but the COVID supplement will stop for newly granted pensions. Water Reform: Parliament adopted on second reading amendments to the Water Act under the Recovery and Resilience Plan, aiming for minimum water and sanitation costs, differentiated pricing, and consolidation around one operator per territory. Defence & Industry: HEMUS 2026 opened in Plovdiv, with F-16 Block 70 flyovers and a forum on Bulgaria’s defence industrial role; Bulgaria also signed Amendment No. 1 with Lockheed Martin to support local maintenance capabilities. Energy & Gas Security: The EU eased spending rules for energy shock resilience, while Moldova cut the natural gas transit tariff to Ukraine by 90% from Oct 1, 2026. Tourism & Business Links: BTA launched a Romanian-language LIK magazine issue on Bulgaria’s spa sector, highlighting nearly 1m Romanian check-ins in 2025, and a Bulgarian-Argentine forum pushed cooperation in energy, chemicals, infrastructure, agriculture and tourism. Corporate/Finance Watch: The government replaced the special commercial administrator of Lukoil assets in Bulgaria, appointing Evgeni Simeonov. Mining Deal: DPM Metals reported a major gold-copper discovery near Chelopech, with a 713m intercept grading 1.31 g/t gold and 1.16% copper.

Fiscal Shock: Bulgaria faces an EU excessive deficit procedure after the European Commission flagged a breach of the 3% deficit rule, with Brussels projecting deficits of 4.1% of GDP in 2026 and 4.3% in 2027; Finance Minister Galab Donev says a deficit cut to 3% is possible only if society accepts measures like freezing incomes and removing wage-link mechanisms, while he also warned “a new debt is unavoidable” and set a €3.8bn ceiling. Pensions & Social Costs: From 1 July, pensions rise by 7.8% under the “Swiss rule,” while the COVID supplement ends for new pensions but remains for existing ones. OECD Readiness: Bulgaria has completed OECD accession reviews in 18 of 25 working bodies, with remaining gaps tied to state-owned enterprise governance, a deposit-return system, and strengthening anti-corruption and political finance rules. Defence & Industry: Bulgaria signed Amendment No. 1 with Lockheed Martin for F-16 Block 70 industrial cooperation, aiming to build local maintenance capacity for generators. Energy Security: The Energy Community reports improving gas storage security across South East and Eastern Europe as storage-rule implementation advances. Crime & Finance: A Bulgarian ATM-skimming suspect in the Bahamas was denied bail, with police suggesting he may be part of a wider fraud network. Inflation Watch: Eurostat data show Bulgaria among the highest inflation rates in the euro area at 6.3% (May), as Greece also accelerates to 5%. Business & Jobs: Mega Group plans a new plant in Dimitrovgrad’s Beles Industrial Zone, targeting up to 175 jobs. Tourism Links: BTA highlights growing Romania–Bulgaria tourism cooperation, citing nearly 1 million Romanian check-ins in 2025.

Mega-Industry Push: Bulgarian Mega Group plans a new production and business space in Dimitrovgrad’s Beles Industrial Zone, aiming to hire up to 175 workers, with local authorities stressing the investment’s role in jobs and zone momentum. Green Transition & Skills: At Green Transition Forum 6.0 in Sofia, the EC’s Bulgaria head said sustainable business is now a must, while BICA warned the biggest enterprise hurdle is a lack of sustainable management specialists and time/resources to implement RBC. Budget & Debt Tensions: Bulgaria’s Fiscal Council says May’s deficit hit the highest level in 20 years, while lawmakers debate budget extension measures including pension supplement changes and a withdrawn proposal to raise the government debt ceiling by up to EUR 3.8bn. Inflation Watch: Eurostat data shows eurozone inflation rebounded to 3.2% in May, with Bulgaria the highest in the bloc at 6.3%, keeping pressure on policy decisions. Competition & Consumer Rules: AmCham Bulgaria opposed amendments to the Protection of Competition Act and Consumer Protection Act, arguing they would restrict free enterprise and harm market practices. Energy & EU Cooperation: The new government signals stronger cooperation with China, and employers’ groups met PM Radev to discuss competitiveness and energy-intensive industry support. Governance & Enforcement: Interior Minister Demerdzhiev said inspections into alleged illegal construction in Baba Alino near Varna will not be limited, as investigations continue. Business Climate Signals: Parliament advanced amendments to the Water Act and oil-sector regulation on second reading, tied to recovery-plan commitments and supervisory oversight.

Eurozone Inflation Watch: Eurostat says euro area inflation hit 3.2% year-on-year in May, with energy prices tied to the Middle East war driving the jump; core inflation rose to 2.5%. Bulgaria Price Pressure: Bulgaria recorded the highest eurozone inflation at 6.3% (monthly +0.3%), placing it alongside Lithuania (5.1%) and Greece (5%). Fiscal Tightening Risk: Bulgaria’s Finance Ministry expects a cash-basis deficit of EUR 2.5bn by end-May (about 2% of forecast GDP), while the European Commission is set to move Bulgaria into the excessive deficit procedure. Euro Adoption & Business Climate: BNB Deputy Governor Karina Karaivanova says euro entry is now about using the system to build trust and competitiveness, with digital euro and AI framed as stability issues. Energy Corridor Moves: TurkStream will suspend gas transmission June 2–7 for maintenance; Georgia is also weighing a green hydrogen pipeline alongside a Black Sea electricity cable. Security & Crime: A Bulgarian man accused of card-skimming on Bahamian ATMs was denied bail; Europol also reported an international operation targeting criminal assets. Local Disruption for Drivers: Giurgiu–Ruse Friendship Bridge traffic will be restricted on 4–5 June for repairs.

Banking & Fraud: A Bulgarian man was arrested in the Bahamas over alleged ATM card-skimming, with prosecutors saying he installed skimmers and pinhole cameras on Royal Bank of Canada and Commonwealth Bank machines. Energy Prices & Policy: A survey finds 94% of Bulgarians worry about rising energy prices, while the government pushes an administrative reform drive aimed at cutting paperwork, speeding up services and reducing red tape for businesses. Inflation & Credit: Bulgaria’s inflation hit 7.0% in May, and the BNB reports consumer-loan rates rising to 8.81% in April; at the same time, claims on loans to the non-government sector grew 16.3% year-on-year to EUR 63.8bn. Parliament & EU Funding: Parliament’s chair outlined priorities tied to NRRP commitments, EU directive transposition and more predictable conditions for SMEs. Energy Infrastructure: TurkStream gas flows will be paused for maintenance June 2-7, and Bulgaria is also advancing regional gas and electricity corridor plans with Azerbaijan, Türkiye and Georgia. Governance & Costs: Incumbents propose cutting per-vote party subsidies, removing the COVID pension supplement and revising the government debt ceiling. Security & Industry: Authorities seized a helicopter suspected in drug trafficking and arrested four people, while a former energy minister linked to a costly Turkey gas deal was nominated to a state holding company board.

Energy Security & Regional Interconnectors: Bulgaria is in the final stages of building its Vertical Gas Corridor to move Azerbaijani gas and LNG across Southeast Europe, while the Energy and Water Regulatory Commission set June 2026 natural gas at EUR 35.62/MWh—about 25% below European exchange levels—helping shield consumers ahead of a July contract update. Azerbaijan–Türkiye Energy Push: Azerbaijan and Türkiye used Baku Energy Week to underline expanding cooperation, including new long-term Absheron gas supplies to Türkiye and plans for an “electricity version of TANAP” linking Türkiye, Azerbaijan, Georgia and Bulgaria. EU Rules & Compliance Pressure: The European Commission opened infringement procedures against 20 EU states, including Bulgaria, for not fully transposing the green claims and sustainability label rules ahead of the September 2026 start. Business & Investment: GoodMills Bulgaria plans to invest €5m in equipment modernization to boost milling efficiency and product quality. Public Health: Bulgaria launched a free national flu vaccination scheme for children aged 6 months to 7 years (2026–2030), targeting lower hospitalisations and complications. Labour Market Snapshot: Eurostat data show Bulgaria’s unemployment at 2.8% in April, the lowest in the EU alongside Poland and the Czech Republic.

Eurozone & Public Finance: Bulgaria is set to be hit with an excessive deficit procedure after its deficit is projected to breach the 3% threshold just months after euro adoption, raising the risk of EU sanctions and higher borrowing costs. Food Prices: Even as inflation cools, grocery bills stay painful across Europe; in Bulgaria, wholesale prices for several staple items fell week-on-week, with notable drops in tomatoes and peppers. Eurovision 2027 Tourism Push: Sofia is already seeing early accommodation demand for Eurovision 2027, with some hotels not yet opening sales and concerns about short-term rent pressure in central areas. Aviation & Travel Costs: Ryanair cut flights at 19 European airports, including Bulgaria, urging passengers to check schedules ahead of the summer timetable. Defence & Industry: Bulgaria’s participation in HEMUS 2026 in Plovdiv is up sharply, with more exhibitors and a focus on drones, counter-drone tech, cybersecurity and AI. Flood Support: After central Bulgaria floods, authorities report 220+ aid applications and payments expected to start next week, with assistance capped near EUR 4,000 depending on damage. Business & Growth: A Sofia career forum highlighted education and entrepreneurship as key levers for innovation, while speakers also pushed for stronger return-and-investment by Bulgarians abroad.

Eurozone Watch: Bulgaria risks an excessive deficit procedure after its annual deficit hit 3.5% and Brussels is expected to act next week, raising the spectre of sanctions and higher borrowing costs. Flood Response: In central-north Bulgaria, authorities carried out 500+ inspections and received 220+ aid applications after May floods; up to nearly EUR 4,000 is available depending on damage, with payments expected soon. Food Prices: Bulgaria’s wholesale prices for staple foods fell week-on-week, with notable drops in tomatoes, peppers, cabbage and cucumbers, while some fruit and dairy items edged up. Culture Budget: Culture Minister Evtim Miloshev denied a planned 10% culture budget cut, saying changes are part of wider public administration reform and won’t reduce funding for cultural institutions. Defence & Industry: Plovdiv’s HEMUS 2026 defence exhibition (June 3-6) is set to grow, with Bulgarian exhibitors up to 107 and a bigger focus on drones, cybersecurity and civil protection. Tourism & Careers: Bulgaria’s “Across Five Oceans” career forum pushed return-and-invest messaging, while the tourism ministry said it wants year-round travel and expects 2026 performance similar to 2025. Transport & Travel: Ryanair cut flights at 19 European airports, including Bulgaria, urging passengers to check schedules.