AGP Executive Report

Central Banking Clash: Bulgaria’s Finance Minister Galab Donev accused BNB Governor Dimitar Radev of overstepping by commenting on a proposed excess profits tax on banks, while the BNB replied that assessing banking-sector impacts is within its remit and that fiscal decisions remain with the government and parliament. Macroeconomic Outlook: The Finance Ministry lifted its 2026 GDP growth forecast to 3% and inflation to 4.8%, citing fuel-price pressures, and expects unemployment to stay near 3.4%. Credit Signal: Fitch revised Bulgaria’s rating outlook to positive (BBB+), pointing to lower political uncertainty and room for structural reforms. Tourism Push: TUI plans to “significantly” grow Bulgaria arrivals by 2030, including a new 290-room Tui Blue hotel at Golden Sands in summer 2027. Energy & Power Flows: Southeast Europe saw lower gas-fired generation and continued volatility in day-ahead prices, with Bulgaria still exporting despite weaker hydropower. EU Rules Watch: The European Commission opened infringement letters to 18 states over energy-sharing and supplier-choice rules, while Bulgaria was not included. Culture & Community: Varna will host an international forum on Bulgarian chitalishte (community cultural centres), and the film “Lust” won a PerspecTIFF award in Tirana.

Credit Outlook: Fitch revised Bulgaria’s rating outlook to positive, citing lower political uncertainty after elections and room for structural reforms, with growth expected to cool to about 2.4% by 2028. Energy Trade: Weekly power flows show Greece boosting net electricity exports while Bulgaria keeps a much larger export balance despite weaker hydropower. Tourism Push: World Tourism Day in Varna featured free tours and museum visits, while the Tourism Ministry says half of tourism tax revenue will go to promotion and events tied to air connectivity, including a plan to raise TUI arrivals to 400,000. Politics & Rules: A looming constitutional threshold for party registration—rising to 1% of eligible voters from 2028—sparks backlash over potential barriers to new political movements. Business & Finance: Iute Group rolls out iuteMarket inside its Myiute app to let customers browse and buy partner products with embedded financing across SE Europe. Agriculture: Black Sea disruptions could keep wheat demand shifting, with Australia’s crop prospects improving in key regions.

Tax Policy & Competitiveness: Bulgaria ranks fifth in Europe in a Global Citizen Solutions tax optimization index (62.8 points), scoring especially high on tax burden, but the ranking also reflects broader “tax framework” and investment-migration conditions. Insurance Regulation: Bulgaria’s FSC says the bonus-malus system for third-party liability insurance is expected to go live in February 2027, with discounts for clean drivers but no guarantee of cheaper premiums for everyone. Household Costs Watch: Euronews Business reports food prices rose far faster than minimum wages across much of Europe; in Bulgaria, food prices climbed 54% (Aug 2021–Aug 2026). Tourism Funding: The Tourism Ministry plans legal changes so half of tourism tax revenue goes to promotion and events tied to air connectivity, aiming to extend the season and boost visitor numbers (including a TUI target of 400,000 tourists). Energy & Markets: EU energy prices are again framed as a “crisis,” pushing countries toward demand cuts, support schemes and supply diversification. Business & Growth Signals: Fitch affirmed Bulgaria’s rating and lifted the outlook to positive, while IMF coverage notes an upcoming IMF mission to visit Bulgaria from Sept. 28. Local Economy & Culture: Sofia marked World Tourism Day with free tours and museum visits, while the Sofia Urban Art festival transformed an underpass near Ivan Vazov Market with 30+ artists.

Insurance Reform: Bulgaria’s Financial Supervision Commission says the bonus-malus system for third-party liability motor insurance should go live in February 2027, with discounts for clean drivers and pricing based on real claims history rather than blanket state price controls. Credit Watch: Fitch affirmed Bulgaria’s BBB+ sovereign rating and moved the outlook to positive, citing reduced political uncertainty, while warning of overheating risks, inflation, and a wider deficit. Rail Upgrade: Two more Alstom electric trains entered service in Bulgaria under the Recovery and Resilience Plan, expanding zero-emission routes across Sofia–Vidin and Sofia–Burgas corridors. Energy & Diplomacy: Bulgaria’s social economy push got UNGA attention as the labour minister outlined a Social Innovation Competence Centre and a network of social enterprises. Culture & Community: Bulgarians in Latvia showcased Cyrillic heritage at Riga’s European Languages Festival, while archaeologists reported a major Roman residence discovery at Novae on the Danube.

Credit Watch: Fitch affirmed Bulgaria’s BBB+ rating and flipped the outlook to positive, citing reduced political uncertainty but warning of overheating risks, high inflation and a wider deficit. Rail Upgrade: Two more Alstom zero-emission electric trains entered service in Bulgaria under the RRP, expanding new routes across Sofia–Vidin and Sofia–Burgas. Fuel Relief: Parliament approved a temporary zero excise duty on natural gas and LPG used as motor fuel for Q4 2026, aiming to cushion high energy costs (with an estimated EUR 20m revenue hit). Minimum Wage Formula: MPs approved a new minimum wage setting mechanism based on purchasing power, wage levels, wage growth and productivity, with the next year’s figure set by Aug 15. EU Pressure: The European Commission opened five infringement procedures against Bulgaria, including on energy, AML, drugs, consumer rights and environmental rules. Household Demand: BNB data showed household loans up 20.8% y/y in August, while housing and consumer lending accelerated. Energy & Diplomacy: Bulgaria’s social economy push got UNGA attention via plans for a Social Innovation Competence Centre, while EU energy prices kept pressure on economies. Local Connectivity: A new ferry hull for Beloslav–Varna Lake links was launched, backed as key for jobs and regional business. Competition: Bulgaria’s Competition Commission launched an inquiry into Lukoil fuel pricing. China Ties: Hebei province and Plovdiv’s Trakia Economic Zone signed a green-energy and tech cooperation memo, including energy-storage investment plans.

Euro Outlook: Hungary’s central bank says euro adoption could happen as early as Jan 1, 2032 if it meets Maastricht criteria by 2030, with ERM II entry possible by early 2029. EU Compliance Pressure: The European Commission opened/updated five infringement procedures against Bulgaria, including gaps on anti-money laundering rules and other areas. Energy Relief for Households: Parliament approved a temporary zero excise duty on natural gas and LPG used as motor fuel for Q4 2026, expected to cut budget revenues by about €20m. Labour Costs: MPs passed a new minimum wage formula based on purchasing power, wage levels, wage growth and productivity, to be set by Aug 15 each year. Fuel Market Scrutiny: Bulgaria’s competition watchdog asked Lukoil Bulgaria and Lukoil Neftochim Burgas for detailed data on how wholesale petrol and diesel prices are formed. Banking & Credit: Household loans in Bulgaria rose 20.8% y/y in August, while lending to businesses also accelerated. Regional Business Links: Bulgargaz received a 10-year licence to supply natural gas in Serbia. Tourism & Investment: PM Radev pushed for more agri processing and value-added exports, and separately said tourism is a key investment gateway, highlighting TUI’s plans. Transport Infrastructure: A new ferry hull for Beloslav–Lake Varna was launched, aimed at easing local transport bottlenecks. China Ties: Bulgaria’s president met China’s vice president to discuss direct Sofia–Beijing air links and cooperation in agriculture and culture. Aviation & Travel: easyJet added Bristol–Burgas and Bristol–Montpellier routes for summer 2027.

Household credit: Bulgaria’s household loans rose 20.8% year-on-year in August to EUR 32.637bn, with housing loans up 25.2% and consumer loans up to 15.9%, while deposits of households and non-profit institutions also grew. Labour policy: Parliament approved at second reading a new minimum-wage formula based on purchasing power, wage levels, wage growth and long-term productivity, with the next wage set by Aug 15. Energy & infrastructure: A new ferry launched in Beloslav will replace the current link across Lake Beloslav–Lake Varna, while Bulgargaz secured a 10-year licence to supply natural gas in Serbia. Competition & regulation: Bulgaria’s Competition Commission opened a fuel-pricing inquiry, requesting detailed data from Lukoil Bulgaria and Lukoil Neftochim Burgas. EU compliance: The European Commission opened six infringement procedures against Bulgaria, including for incomplete transposition of the hydrogen and decarbonised gas rules and other areas. Fiscal moves: Bulgaria plans a one-off 2027 windfall profits tax targeting sectors that distribute dividends rather than reinvest. IMF check-in: An IMF mission will visit Sofia from Sept 28 to Oct 2 to discuss economic and financial developments.

Tax Policy: Bulgaria’s planned 2027 tax changes sparked sharp parliamentary pushback, with critics warning a 33% excess-profits levy on banks and other sectors could hit business and deter investors, while a proposed excise duty on high-power cars drew calls to exempt electric vehicles. Energy & Trade: Parliament lifted restrictions on petroleum product exports to other EU markets, allowing diesel and aviation fuel shipments to resume under US/UK licensing tied to Lukoil operations. M&A Watch: Schneider Electric is set to bid about €1.2bn for Shelly Group, offering €70 per share; regulators and a 95% acceptance threshold are key hurdles. Tourism Growth: Bulgaria signed a cooperation memorandum with TUI to double visitors to 400,000 a year, with Varna’s airport christening a TUI aircraft named “VARNA.” Defence & Aerospace: Prime Minister Rumen Radev said Bulgaria will rely on Poland to keep MiG-29s operational and to maintain F-16s, with closer cooperation on repairs and training. Black Sea Security: President Iotova urged a UN-backed initiative to secure navigation in the Black Sea and shift it toward “shared security,” while EU officials renewed calls for a grain arrangement to protect shipping. Economy Outlook: The EBRD kept Bulgaria’s growth forecasts at 2.7% for 2026 and 2.5% for 2027, citing resilience but weaker public finances and higher inflation. Transport & Logistics: A new EU-wide protest against “EU Inc” drew trade-union concerns about social dumping, using subcontracting examples across borders.

M&A: Schneider Electric plans a voluntary all-cash takeover of Bulgaria’s Shelly Group at €70 per share, valuing it at about €1.2bn and targeting a close in Q1 2027; founders hold ~57% and have conditionally agreed to sell. Energy & Resilience: Bulgaria’s battery boom is helping it ride out drought-driven power disruptions, with around 100 BESS sites now operating and boosting electricity exports when Danube levels hit nuclear and hydro output. Regulation & Consumer Impact: Bulgaria’s government is pushing major gambling reforms, including a near-complete ban on gambling ads (with limited sports-sponsorship exceptions), tighter controls, and real-time connection of gaming equipment to the National Revenue Agency. EU Policy Watch: The EU is considering speeding up Ukraine loan payouts for early 2027 as Kyiv faces a widening funding gap. Public Finance: Parliament backed first-reading changes letting the Financial Supervision Commission act to cover Guarantee Fund shortfalls. Security & Trade Routes: President Iliana Iotova called at the UN for a Black Sea initiative to coordinate joint actions for freedom and safety of navigation. Business Climate: Bulgaria’s tax ministry proposes higher child tax relief, new child healthcare/education/sports relief, a higher VAT registration threshold, and new windfall taxes.

Gambling Crackdown: Bulgaria’s PM Rumen Radev says the government is preparing a near-total ban on gambling advertising, with tighter oversight and a new taxation model aimed at reducing addiction and boosting transparency. Consumer Credit Rules: Parliament approved at first reading a bill capping the loan APR at five times the statutory interest rate, extending protections to loans up to EUR 100,000 and covering “buy now, pay later” style products. Labour Costs Watch: Bulgaria’s hourly total labour costs rose 9.9% year on year in Q2, with wage and non-wage costs both increasing. Nuclear Financing Push: Sofia will host an International Nuclear Conference on Oct 1-2 focused on Kozloduy’s new units, SMRs and financing. Energy Storage Upgrade: Renalfa IPP completed the repowering of its Devnya solar plant from 5MWp to 65MWp and added a 60MW/165MWh battery. iGaming Compliance Expansion: RiskCherry said it gained approval from Bulgaria’s gambling regulator, expanding its testing coverage to 24 regulated markets. Cross-Border Youth Training: Bulgaria and Romania ran safety and green-economy training sessions under an Interreg project.

Lukoil Deal Shake-Up: A Financial Times report says US billionaire Todd Boehly, backed by Gulf investors tied to the Trump family, is emerging as a prospective buyer of Lukoil’s international assets, reopening a contest that many thought Carlyle had already won—though any move still needs US regulatory clearance and Russian consent. EU Sanctions Politics: EU economy commissioner Valdis Dombrovskis warned against “sanctions fatigue” after an agreement extended Russia-related measures for three years while delisting oligarchs Alisher Usmanov and Mikhail Fridman. Consumer Credit Rules: Bulgaria’s Council of Ministers is set to send a new consumer credit bill to parliament, proposing caps on total costs for short-term loans, tighter lender conduct, and stronger creditworthiness checks. Budget Oversight: The Cabinet will review 2025 budget execution and government debt reports, alongside waterway, humanitarian integration, and Criminal Code amendments. Pharma Exports: Polpharma Santo shipped its first Kazakhstan-made sitagliptin batch to EU countries, after securing EU GMP certification. Culture & Business Links: Bulgaria’s UNGA diplomacy also featured President Iliana Iotova pushing EU cohesion and farm policy continuity with Slovakia’s president. Fuel Pressure: Eurostat data shows Bulgaria among the biggest annual fuel-price risers, with the steepest increase at 34.5%.

Middle Corridor Digital Boost: A Polish editorial highlights Azerbaijan–Kazakhstan fibre-optic links across the Caspian as a “digital Middle Corridor,” aiming to complement rail/port routes and cut distance to the EU versus the Russia route. Energy Prices Pressure: EU transport fuel prices hit record highs amid Middle East-driven oil futures and disrupted refined-product shipping; Bulgaria saw the steepest annual rise (34.5%), while Hungary’s smaller increase (1.3%) doesn’t mean prices are cheap. Bulgaria Tax Crackdown: The National Revenue Agency found 20 violations in 27 checks in Veliko Tarnovo, targeting receipt and fiscal-device breaches around Independence Day crowds. Renewables Upgrade: Renalfa IPP repowered and hybridised its Devnya solar plant to 65MWp and added 60MW/165MWh battery storage. Crypto Payments: Bitpace integrated Fireblocks to expand stablecoin (USDC) cross-border settlements without correspondent banking friction. Defense Expo Watch: Azerbaijan’s ADEX 2026 and Securex Caspian (Sept 30–Oct 2) will host 270+ companies from 29 countries, including Bulgaria. EU Diplomacy & Security: Foreign Minister Velislava Petrova in New York focused on security and connectivity, including preparations for Bulgaria’s 2027 Regional Connectivity Summit.

Fuel Prices & Consumer Protection: Bulgaria’s consumer watchdog has started inspections of petrol stations over unjustified fuel price hikes, with interim results due next week; the focus also extends to food and non-prescription medicines. Macroeconomy Watch: UBB’s chief economist says Bulgaria’s economy grew steadily in H1 (real +2.8% y/y), driven by consumption and investment, while exports fell and industry contracted. Markets: Bulgarian Stock Exchange turnover hit nearly EUR 617 mln by Sept 18, already above 2025’s full-year level, helped by euro-area membership and an MSCI upgrade. US-Bulgaria Business Ties: Deputy PM Poulev urged conditions for US firms to expand in Bulgaria, while trade between Sofia and Washington jumped 239% over a decade. Digital Payments: Visa reports POS terminals in Bulgaria up 30% under the BezBroi initiative, with SMEs driving adoption. Transport Policy: Transport Minister Peev called for clear EU rules and guaranteed safety as connected and autonomous vehicles advance. Social & Human Capital: UN talks move toward a treaty to secure free education rights, while Targovishte expands foster care support for children. Health & Environment: A new report highlights air pollution’s massive health toll, with Sofia’s main sources tied to transport and wood-burning heating.

Macroeconomy: Bulgaria’s economy kept steady momentum in H1, with UBB’s chief economist Emil Kalchev citing 2.8% real growth y/y, driven by consumption (+7.1%) and investment (+7.2%), while exports fell (-4.7%) and industry contracted (-4.4%). Inflation Watch: KBC lifted its 2026 inflation forecast for Bulgaria to 5% (from 4.7%), pointing to higher fuel and transport costs and drought risks. Markets: Bulgarian Stock Exchange turnover hit nearly EUR 617m by Sept 18, already above the full 2025 total, with SOFIX up 26% since the start of 2026. Digital Payments: Visa says POS terminals in Bulgaria rose 30% under the Bulgaria BezBroi initiative (Dec 2022–June 2026), supported by preferential terms for SMEs. Business & Policy: PM Rumen Radev told AmCham Bulgaria the government has removed oligarchic influence from political power and is pushing US investment in AI, robotics, semiconductors and large computing centres. Transport & Travel: Wizz Air launched year-round Sofia–Berlin flights (4x weekly). Consumer Protection: Ombudsman Velislava Delcheva urged tougher rules for water and sewerage services, including fairer allocation for “common consumption” in condominiums. Food Safety: BFSA detained over 2 tonnes of yogurt from North Macedonia at Gyueshevo due to certificate/label discrepancies. Infrastructure: Sofia Ring Road’s last unfinished section got its detailed development plan approved after a long delay.

Space & Investment: EnduroSat, a Bulgarian space company, closed a record €178m (about $205m) funding round—its biggest ever—led by Riot Ventures and Atreides, to scale satellite production and build an EU/defence hub near Sofia. Black Sea Trade & Food Security: Escalating attacks on ports around Odesa and other Black Sea nodes are disrupting grain shipments and raising fears of another global food supply shock, with buyers scrambling for alternatives including Bulgaria. Telecom Connectivity: A1 says its NRRP-funded fibre build delivered high-speed internet to 181,000 people across 64 municipalities in northwestern and north central Bulgaria, plus upgrades to mobile coverage. Agriculture Under Pressure: Bulgaria’s drought risk is worsening, threatening wheat and other crops and pushing farmers toward new varieties and heritage crops. Food Prices: Wholesale prices of key vegetables rose week-on-week, with cucumbers up sharply, while some fruit prices fell. Public Health: Bulgaria’s Food Safety Agency confirmed sheep and goat pox in two Plovdiv-area farms, triggering protection and surveillance zones and movement restrictions. Tourism Push: Bulgaria targets doubling foreign tourist numbers to 8m annually by term-end, with a push to extend the season on the southern Black Sea coast. Energy & Business: Lukoil says it is operating with minimal markup while staying profitable, citing refinery costs and fuel-price pressures.

Political Economy: GERB leader Boyko Borissov urged the party to return to conservative roots, calling for a “zero deficit” approach, support for entrepreneurs and a break from populism. Tourism & Connectivity: Tourism Minister Ilin Dimitrov said Bulgaria aims to double foreign arrivals to 8 mln a year by term-end, using a longer Black Sea season and events in September-October. Infrastructure: A1 says its NRRP fiber project has brought high-speed internet to 181,000 people across 64 municipalities in northwestern and north central Bulgaria. Agriculture & Food Prices: Drought risk is intensifying for Bulgarian farms, while wholesale vegetable prices rose week-on-week, with cucumbers up sharply. Public Health: Bulgarian Food Safety Agency confirmed sheep and goat pox in a Plovdiv-area village, with protection and surveillance zones and movement restrictions. Culture & Media Funding: BNR musicians warned low pay is driving vacancies and talent loss, with protests calling for sustainable state funding. EU Business Climate: Eurostat reported EU construction output fell in July, with mixed performance across member states. Sanctions & Diplomacy: Bulgaria secured EU exclusion of Patriarch Kirill from the 21st Russia sanctions package, while Bulgaria’s ambassador to the UAE was temporarily recalled amid a corruption probe. Energy & Industry: Lukoil said it is operating with minimal markup while staying profitable, citing broader European Green Deal costs and regulation.