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.