Bulgaria's ruling coalition agreed on Wednesday a stimulus package worth 2 billion levs ($1.08 billion) to shield companies and low-income consumers from the surge in energy and food prices caused by the Ukraine conflict, Prime Minister Kiril Petkov said.

Under the plan, the Balkan country will raise state pensions by more than 20%, slash taxes on bread, heating and natural gas for households for a year and increase support for young parents among other measures.

The stimulus package is not expected to push up the country's budget deficit target of 4% of economic output this year and will be financed by increased tax revenues, officials said.

($1 = 1.8593 leva)

(Reporting by Tsvetelia Tsolova, Editing by Louise Heavens)