The country's two-month-old Socialist-led government is expected to pass the draft with no major changes on Monday and submit it for parliament's approval, a senior government source who asked not to be named told Reuters.
The EU aspirant plans to keep spending capped at 40 percent of GDP - near this year's projected levels in accordance with plans to end 2005 with a surplus of 1.0-2.0 percent of GDP, the draft, obtained early by Reuters, showed.
"The 2006 balanced budget takes into account the high deficit in the current account, helps further reduce state debt and increases financial discipline and stability of public finances," it said.
Analysts, who had originally expressed concern at promises made by the Socialists ahead of elections held in June to raise spending, were cautiously optimistic but said the government needed to keep spending under control due to the large external shortfall.
"What the market is looking for is tight fiscal policy, understood as a balanced budget with some potential for a surplus," said Agatha Urbanska, a market analyst with ING Bank.
Bulgaria has maintained one of Europe's tightest monetary policies in recent years due to a currency board which keeps its lev pegged to the euro and restricts central bank operations.