Bulgaria has come a long way from its turbulent political and economic transition in the 1990s to becoming a member of the European Union in January 2007. Today, it is an upper middle-income economy of 7.3 million people with a per capita income of $6,870. (GNI per capita, 2012.)
In the decade leading up to EU accession, Bulgaria embraced difficult reforms to build macroeconomic stability and stimulate growth. It built fiscal buffers by accumulating fiscal surpluses between 2004 and 2008, and reduced public debt from over 70 % of GDP in 2000 to 18.5 % in 2012, the second lowest debt levels in the EU. Between 2000 and 2010, average annual growth reached 4.7 %. During that same period, Bulgaria’s per capita income as a share of the EU average increased dramatically from 28 % to 44 %.
To build on the achievements of the last decade and move to a higher growth path in the current economic environment requires bold government actions and investments. To stimulate private sector-led growth, the Government of Bulgaria has placed better roads, rail and water infrastructure and creating an enabling business environment at the top of its agenda. It also pledged to strengthen the delivery of public services and work towards ensuring all citizens reap the benefits of growth.
At a time of tight government budgets, removing constraints to development and financing much-needed investments pose a daunting challenge. This is where EU Structural and Cohesion Funds can play a critical role in Bulgaria’s quest for growth. Under the previous EU financial perspective covering the years 2007-2013, Bulgaria had access to approximately €7 billion in grants. The Government estimated low absorption rates and has identified the efficient use of EU funds as an important opportunity to finance public investments and accelerate EU integration.
With the objective of boosting EU funds absorption and supporting the National Reform Program, the Government of Bulgaria and the World Bank signed a Memorandum of Understanding (MoU) in January 2012, marking an important shift in the 20-year partnership from traditional lending operations to a greater focus on knowledge and advisory services. The evolving partnership represents an important step taken by the Government of Bulgaria to draw on the World Bank’s expertise to develop and implement strategies and programs in a range of sectors under Operational Programs financed by EU Structural Funds. In the first phase, the World Bank delivered, on a cost-recovery basis, knowledge and advisory services in the areas of roads, water, and innovation.
The MoU is consistent with the World Bank Group’s Country Partnership Strategy for Bulgaria for 2011-2013, aimed at supporting the Government in achieving smart, sustainable and inclusive growth – in line with the European Commission’s Europe 2020 Strategy.