At a recent press briefing following Bulgaria's latest issuance of foreign debt, Finance Minister Temenuzhka Petkova avoided the term ?debt? altogether. Instead, she framed the move with phrases like 'successfully placed emissions? and ?optimally structured instruments,? leaving critics questioning the government's transparency on financial matters.

Economist and former deputy finance minister Georgi Kadiev, writing for Banker newspaper, criticized the Ministry of Finance for accumulating ?3.2 billion in fresh debt without providing adequate explanations. This followed a ?4 billion issuance in April, with little public clarity on whether these are being used to roll over older obligations or simply to cover new expenditures. ?They?re chasing the BGN 18 billion debt target from the budget, and that's it,? Kadiev remarked.

The new debt was issued shortly after Bulgaria received approval for eurozone accession and an upgraded credit rating. Structured into two tranches - 10-year and 20-year bonds - the issue was deemed successful by financial analyst Nikolay Vanyov, who noted narrowing spreads and solid investor interest. However, he also expressed concern about the increasing frequency of such issuances, which may reflect a widening budget deficit and a loosening grip on fiscal discipline.

According to Vanyov, eurozone accession has spurred demand for Bulgarian bonds, which were once considered ?boutique? investments. With the scale of new debt rising, these instruments are becoming more mainstream. He expressed hope for a shift toward tighter budget controls and fiscal consolidation.

Kadiev warned that the government is preparing to inject capital into key state institutions - the Bulgarian National Bank, Bulgarian Energy Holding, and the state-owned Motorways company. ?There will be something to steal,? he remarked, suggesting mismanagement or misuse of funds is likely. He also noted that Bulgaria is now borrowing at worse interest rates than Italy, despite Rome's significantly higher debt and deficit levels.

According to Kadiev, the Ministry of Finance is dragging its feet on publishing June's budget execution data, allegedly because the figures are grim. Sources indicate a budget deficit of BGN 5 billion by the end of June, with expectations that by the end of August, most of the 2025 budget will already be depleted. Kadiev pointed out that while inflation has risen, potentially boosting VAT revenues, it's a symptom of deeper issues.

Former MP and financial expert Vladislav Panev welcomed the relatively low interest rates on the new debt, averaging around 4%, which is significantly better than the over 6% on equivalent Romanian bonds. However, he stressed that the total borrowed so far this year - BGN 16.2 billion - is concerning, especially since only a fraction is used to refinance old debts. The bulk, he said, is going toward covering the deficit and recapitalizing troubled state entities such as the Bulgarian Energy Holding and the Bulgarian Development Bank. Panev emphasized that energy companies are in dire financial straits.

Panev warned that populist pressure is pushing spending beyond sustainable limits, particularly through wage hikes for security forces. These raises set benchmarks for other public sector demands, fueling a wave of street-level protests and further budgetary strain.

He explained that such deficits inevitably feed inflation. The government's attempts to fight 'speculation? are ineffective, he argued, because the real cause of rising prices is expansionary fiscal policy. When the money supply grows while production stagnates or falls, price increases are inevitable.

Panev believes this course mirrors Greece's path two decades ago - relying heavily on cheap debt, which eventually spiraled into a full-blown crisis. To change direction, he said, Bulgaria must rein in government spending. While reducing subsidies and inefficient expenditures is essential, deeper structural reforms are also needed. Overstaffing in state institutions, inflated public procurement costs, and chronic losses in the energy sector must be addressed.

Analyst Stoyan Lenov added that the government is essentially borrowing to pay salaries. He noted a worrying trend: public sector wages are now outpacing those in the private sector, despite the state contributing little to economic productivity.