A 25% rise in global oil prices is expected to put moderate pressure on the Bulgarian budget, with the deficit reaching around 3.3% to 3.6% of gross domestic product, according to a simulation analysis by the Fiscal Council published on March 11. The analysis is studying the potential effects on the Bulgarian economy of the sharp rise in crude oil prices provoked by the military escalation in the Middle East.
According to the analysis, Bulgaria is integrated into the economic market of the European Union, which ensures structural stability through diversified energy supplies, strategic reserves and macroeconomic coordination mechanisms.
The most immediate fiscal effect will be the increase in operational government spending related to energy consumption in public services, transport and state administration. With a 25% shock in the price of crude oil, the deficit could increase by approximately 0.15-0.35 percentage points of GDP. If the baseline budget deficit for 2026 is around 3% of GDP, it could reach the range of 3.25-3.6% of GDP in the absence of compensating policies, the Fiscal Council indicates.
The analysis adds that an increase in oil prices usually increases transport costs, production costs and consumer prices. In Bulgaria, a shock of 25% could add approximately 0.4-1.0 percentage points to inflation, with the exact effect depending on competitive conditions in the domestic market and the pass-through of price changes from the euro area.
The effects on foreign trade will be moderate. Bulgaria imports refined petroleum products and energy raw materials, so higher world oil prices will worsen the trade balance. The current account deficit could increase by about 0.2-0.4% of GDP.
The analysis concludes by stating that despite these risks, Bulgaria has protective mechanisms thanks to its membership in the European Union, and the gradual diversification of the energy sector and investments in infrastructure reduce vulnerability.