The government is drawing up a package of tax and spending changes worth around 2.2bn euros for the treasury, finance minister Galab Donev said in a TV interview, with 750m euros of that to come from cuts.

Part of the package is a one-off tax on windfall profits at banks and retail chains. The deficit can't be closed with new revenue alone, Donev said - spending has to be cut too.

The finance ministry is going through all spending, starting with capital projects. Projects that show no results will lose their funding, bloated administrative bodies will have their budgets cut, and state agencies that aren't working well will be restructured. The aim, Donev said, is to move public money to where it works better.

In security, officials are looking for better ways to spend money without touching Bulgaria's NATO defence commitments. Donev spoke yesterday with interior minister Ivan Demerdzhiev about restructuring the ministry, cutting costs and putting more money into public safety. Jobs will be cut among interior ministry staff who don't do police work, though how many has not been decided yet.

On the banks, Donev pointed to a 588% rise in profits over the past five years, which he called a windfall. Joining the eurozone, he said, freed up large sums of money that banks had previously held in reserve at the Bulgarian National Bank.

Neither he nor finance ministry experts think the tax will push up loan rates. Donev explained that bank profits go to shareholders as dividends, while the money banks lend out comes from elsewhere - mainly deposits from people and businesses. Other EU and eurozone countries tax bank interest margins regularly, he added, without this hurting lending or pushing up rates there.

Bulgarian National Bank governor Dimitar Radev has warned the tax could make loans dearer and slow the economy. Donev said this was Radev's personal view, not a position agreed by the bank's governing board. The two are due to meet on Friday.

For retail chains, officials will look at whether profits come from market conditions or from business growth, new technology, better organisation and new products. Donev gave an example: a chain with 50 stores can't be expected to earn as much as one with 100 stores. Hopes that the tax will stop prices rising, he said, are more wishful thinking than a sure bet.

European Commission officials will visit Sofia on 5 and 6 October to talk about the budget. As a eurozone member, Bulgaria must send its budget framework to the Commission by 15 October, after which the draft budget goes to parliament. Donev said the legal deadlines for the 2027 budget will be met. Bulgaria is still under the EU's excessive deficit procedure, which means it has to stick closely to agreed net spending limits each year.

Bulgaria issued new government debt yesterday on very good terms, Donev said. Fears that complaints filed with the Constitutional Court over the budget deficit would hurt financing, he added, did not come true. Last week Bulgaria's credit rating outlook was raised to positive, which the minister called a good sign for the economy and for efforts to deal with the excessive deficit.

Donev linked rising fuel prices to the halt of Russian oil imports and the switch to other suppliers. Bulgaria gave up its exemption from EU sanctions ahead of the allowed deadline, he noted, and the higher cost of crude oil has fed through to pump prices. Fuel in Bulgaria remains among the cheapest in Europe, he said, adding that comparisons should take into account which countries still use Russian oil and which have capped prices by decree. Asked about Lukoil's profits, the minister said he had no data on its current margin and pointed to the economy minister and deputy prime minister for economic affairs for an answer. The company's windfall profits were already taxed once under the EU's 2022 rules, he noted, and taxing the same reference years again would have no effect.

The euro is not to blame for rising prices, Donev said. The previous government misjudged how ready businesses and the public were for the switch, he said, and because no one checked for price gouging, shops and service providers were able to turn one lev into one euro.

A draft bill on rakia aims to stop bars, restaurants, guesthouses and other venues selling rakia made by unclear methods and of unknown quality, because of the health risk to drinkers. The rules on sales in the law on excise duties and tax warehouses stay the same. Home-made rakia traditions will not be touched, Donev said, and no one will be checking people's fridges at home. The ministry has already had proposals during the public consultation and will take them into account when it finishes the text.

Asked about the killing of Filipov, Donev called the case serious and tragic, and said the authorities in charge should be left to establish all the facts.