Bulgaria has come a long way from its turbulent political and economic transition in the 1990s to becoming a member of the European Union (EU) in January 2007. Today, it is an upper middle-income economy of 7.2 million people with a per capita income of US$7,420. (GNI per capita, 2014)

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 13.3 percent in 2008, the second lowest debt level in the EU. Between 2000 and 2008, GDP per capita rose by 6.6 percent per year, the highest growth on record, and convergence with EU income levels accelerated.

Since 2008, economic growth has remained sluggish and income gains of the bottom 40 percent of the population have been week. Between 2008 and 2014 annual GDP per capita growth slowed to just 1.3 percent. About 400,000 Bulgarians lost their jobs limiting opportunities for the bottom 40 percent.  Supported by prudent macro-fiscal management, Bulgaria showed resilience during the global economic crisis with reduced imbalances and a sound public debt level (27.6 percent of GDP in 2014). Yet, convergence has slowed and Bulgaria’s income per capita are just 45 percent of the EU average in 2013.

Building on Bulgaria’s achievements, the World Bank Group has adapted its business model to support the country’s goal of EU convergence. Its partnership with Bulgaria is based on a flexible framework that takes into account Bulgaria’s priorities as an EU member state. Accelerating EU integration and the convergence of living standards are the Government’s key medium-term goals. Bulgaria’s National Reform Program maintains an overarching focus on boosting competitiveness to achieve the Europe 2020 Strategy goals of smart, sustainable, and inclusive growth.

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 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.

On September 1, 2015, the World Bank’s Vice President for Europe and Central Asia Cyril Muller and Bulgaria’s Deputy Prime Minister for EU Funds and Economic Policies Tomislav Donchev signed a new MoU on partnership and support in the implementation of the European Structural and Investment Funds for 2014-2020 period.

The new MoU opens the door for new RAS work in the areas of but not limited to: (i) competitiveness, innovations and SMEs; (ii) environment; (iii) transport;  (iv) energy; (v) agriculture and rural development; (vi) forestry;  (vii) fisheries; (viii) water sector; (ix) financial instruments; and (x) public administration. Two agreements have been signed under the new MoU so far: with the Bulgarian Energy Holding (BEH) for WB advisory support for Bulgaria Power Sector Financial Stabilization and Market Liberalization, and with the Ministry of Finance for advisory support on the Setting up a Fund-of-Funds for Managing Financial Instruments under EU Operational programs 2014-2020.

The World Bank Group’s Country Partnership Strategy for Bulgaria (CPS), endorsed in 2011, provided a framework for support for the period of 2011-2013. The partnership focused on Bulgaria as an EU member state with the World Bank Group’s principle role as a provider of knowledge and advisory services.

Following up on the corporate commitment to end extreme poverty and promote shared prosperity, the World Bank Group team has prepared a Systematic Country Diagnostic (SCD) for Bulgaria. The diagnostic aimed to identify the most critical constraints to, and opportunities for, growth and development in Bulgaria, with a particular focus on fostering income growth of the bottom 40 percent of the population.

The Systematic Country Diagnostic is expected to inform a new Country Partnership Framework (CPF) for Bulgaria. The CPF will focus on the World Bank Group program of support for Bulgaria in light of the findings of the SCD. Discussions on the CPF with the Government and other stakeholders are taking place now.

The International Financial Corporation (IFC) comprises an important element of the World Bank Group strategy in Bulgaria. It focuses its private sector investments on climate change–related infrastructure and industries, social sector private investments, and, selectively, agriculture. In the short term, IFC addresses the impact of the crisis in Bulgaria by supporting the recovery of the private sector and reducing unemployment.

As of September 2015, the IFC had 39 projects (completed and ongoing) in Bulgaria, with total commitments of over US$996 million. IFC’s single biggest investment in the country is in renewable energy in the form of a loan for the construction of the largest photovoltaic park in Bulgaria. The 60 megawatt peak (MWp) park helps the country to achieve its goal of 16 percent renewable energy output of the total production of power by 2020. IFC is also involved in a number of sizable investments in various projects in the manufacturing, oil and gas, financial markets, and agriculture sectors. IFC also provides advisory support in the area of Corporate Governance and Risk Management to systemic local banks.

The Multilateral Investment Guarantee Agency (MIGA) provided 10 guarantees between 1994 and 2006, for a total of US$232 million. The last MIGA guarantee was in infrastructure in 2006 for US$117.8 million.

As of September 2015, the active portfolio of World Bank–financed projects consisted of two operations with net commitments totaling US$149 million equivalent.

The World Bank’s program in Bulgaria to date comprises 45 International Bank for Reconstruction and Development (IBRD) operations, with a total original commitment of roughly US$3 billion equivalent, consisting of 15 adjustment loans (US$1.73 billion), 23 investment projects (US$1.12 billion), one debt reduction loan (US$125 million), four World Bank–managed Global Environment Facility (GEF) grants, two World Bank–managed Prototype Carbon Fund (PCF) operations, and two Institutional Development Fund (IDF) grants.

World Bank-financed projects have helped deliver tangible results:

  • More than 700,000 people benefited from small social infrastructure improvements and services through the Social Investment and Employment Promotion Project.
  • Supported by the Revenue Administration Reform Project, improvements in revenue administration contributed to increased tax and social contribution revenues by 4.6 percent of GDP between 2002 and 2008, the highest revenue gain among new EU member states.
  • Turnaround times for registering a real estate transaction and mortgage were reduced to a single day – down from seven days – through the Registration and Cadastre Project.

The active portfolio of World Bank financed operations focuses on infrastructure and social inclusion.


Bulgaria: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments