Medium-Term Fiscal-Structural Plans in the Reformed EU Fiscal Framework: Risks, Prospects, and the Case of Bulgaria

Abstract

The paper examines the first cycle of implementation of the European Union's medium-term fiscal-structural plans introduced by the 2024 economic governance reform. It analyses the first net expenditure paths endorsed by the Council, the role of reform and investment commitments, the flexibilities related to defence spending, and the capacity of national institutions to implement the new rules. The study combines a legal-institutional analysis of Regulation (EU) 2024/1263 with a comparative review of the first planning cycle and a case study on Bulgaria. The assessment is based on four criteria: the extent to which the fiscal adjustment is tailored to each country's specificities; whether productive public investment is protected; whether macroeconomic and fiscal assumptions are transparent; and how robust the monitoring is. The main argument is that the new fiscal framework is stronger than the previous one, because it replaces a one-size-fits-all approach with country-specific expenditure trajectories. It also links fiscal adjustment to reforms and investment. However, the procedure remains vulnerable to over-optimistic projections, investment retrenchment as a result of fiscal consolidation, weakening of expenditure control through defence flexibility or uneven implementation. Bulgaria entered the new framework with low public debt, but data for 2025 and projections for 2026 show a deficit above 3% of GDP, rising debt and risks of non-compliance. The overall conclusion is that the reform creates a more flexible and growth-oriented system, but its success depends on transparent methodologies, strong institutions, effective expenditure controls and consistent implementation.