BULGARIA Trends and Developments Contributed by: Yordan Naydenov and Hristian Gueorguiev, Boyanov & Co.
Welcome to Bulgaria Bulgaria, a medium-sized European nation encom - passing 111,000 sq km, boasts a population of 6.5 million individuals. In 2025, its gross domestic prod - uct (GDP) reached USD127 billion (nominal, 2025) or USD266 billion (PPP, 2025) (IMF.org), with an annual GDP growth rate of 3.0%. A parliamentary republic, Bulgaria is a member of both the European Union and NATO. It is evident that Bulgaria’s economy, like any small economy, is highly influenced by global events. Sev - eral international factors are poised to significantly impact Bulgarian businesses in the next 12 months and beyond. Foremost among these is Bulgaria’s long-awaited admission to the eurozone. As of 1 January 2026, Bulgaria became the 21st fully-fledged member of the eurozone, after joining the Exchange Rate Mech - anism (ERM II), the “waiting room” for the euro, on 10 July 2020 and after having had its currency, the lev, pegged to the deutschmark and then to the euro for almost 30 years. The state budget projections for 2026 are subject to conservative measures, aiming at maintaining the budget deficit below 3% while keeping the public debt-to-GDP ratio around 24%. Current Bulgarian legislation is fully compatible with the eurozone requirements, and a special law regulat - ing the transition from the lev to the euro has already been enacted. Among business circles, there is a high degree of confidence that the Bulgarian economy is expected to rise in 2026, that debt servicing costs for both the state and businesses will likely decrease, and that funds could be redirected to various social or investment programmes. It is estimated that Bulgaria was incurring losses of nearly EUR1 billion annually due to its economy not fully transitioning to the euro. In addition, the admission to the eurozone will ensure larger access by Bulgarian businesses to the EU loan market, which many local players may be tempted to try in the pursuit of better opportunities and lower costs. Naturally, this is expected to enhance competi - tion across the local banking ecosystem. Following Bulgaria’s inclusion in the Schengen Area by air and sea from 1 April 2024, the country became a full member of the Schengen Area effective as of 1
January 2025. Following a long-lasting political effort started in 2011, when Bulgaria was reported to cover the admission criteria, the last remaining land border controls on the country’s roads and railways border - ing Romania and Greece were effectively removed in the early hours of 1 January 2025, thus removing a huge administrative burden on business in general, and on logistics and transport foremost. Judging by the results of the Schengen Area inclusion, all the extended efforts of the country paid off well in terms of lower costs of logistics, decreases in travel times, and the overall effectiveness of movement of people or goods. After successfully joining the eurozone and the Schen - gen Area, Bulgaria may boast that it is one of the EU member states that are fully integrated into the diverse EU ecosystem of institutions, organisations and initia - tives. It marks the climax of Bulgaria’s inclusion into the EU project, which started with the submission of a formal application for EU membership in 1995 and adoption into the EU family in 2007. Regrettably, the ongoing war in Ukraine continues to exert a profound negative impact on Bulgaria. Although the war’s direct effects, such as bombings, daily murders and large influxes of refugees, are not being experienced in Bulgaria, its presence is felt dai - ly. This includes the increased dissemination of Rus - sian propaganda, the Russian fifth column’s influence in all spheres of Bulgarian public life, and constant unrest at the parliamentary and governmental levels. The uncertainty of conducting large-scale business near such an intense military conflict persists. Despite the four years since the war’s inception and the uncer - tain military aid to Ukraine from the United States, the initial optimism of 2023 evolved into moderate realism with pessimistic elements in 2025, though the inau - guration of President Trump came with some timid notes of optimism only to vanish away in the course of the year. Except for the peace talks held so far and the prospect of potential bilateral Russian-Ukrainian peace talks, rumours of which towards the end of 2025 brought some sense of optimism, judging from the ongoing battle activities (2025 was arguably the most devastating year of the war for Ukraine), regret - tably, the end of the war does not seem to be close.
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