Bulgaria is a country of about 7.2 million people, and has been a member of the European Union (EU) since 2007.
Bulgaria has undergone a significant transformation over the last twenty years. It has moved from being a highly centralized, planned economy to an open, market-based, upper middle income economy securely anchored in the European Union. In its initial transition to a market economy, the country went through a decade of slow economic restructuring and growth, high indebtedness, and loss of savings.
However, advancement of structural reforms starting in the late 90s, the introduction of the currency board and expectations of EU accession unleashed a decade of exceptionally high economic growth and improved living standards of Bulgarians. Yet, some legacy issues from the early period of transition, the global economic crisis of 2008 and a period of political instability in 2013-14 undid some of the gains achieved during the high growth period.
Now, in its pursuit of boosting growth and shared prosperity, Bulgaria is moving to address these issues. It will take a shift towards growth-enhancing and poverty-friendly policies, as well as sustained efforts to build strong institutions that protect the rights of all Bulgarians and ensure well-functioning markets, to put Bulgaria on a higher growth trajectory.
Today Bulgaria faces the two inter-related challenges of raising productivity and addressing issues related to the country’s rapid demographic change. Higher productivity growth is critical for accelerating convergence as Bulgaria’s income per capita is only 47 percent of the EU average, the lowest in the EU. Productivity will need to grow by at least 4 percent per year over the next 25 years for Bulgaria to catch up with average EU income levels and thus boost shared prosperity. Since 2008, however, productivity growth has been slowing down.
At the same time, Bulgaria is facing a significant decline in the size of the working age population, putting at risk future growth prospects in an already challenging global environment.
Within only three decades, Bulgaria has become the third oldest country in Europe and by 2050 its working age population is projected to be lower than in 2010, the steepest decline in the world. Bulgaria’s geographic location also places it on the EU’s frontline of many geopolitical and energy security issues of the day.
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.
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.
Last Updated: Jul 11, 2016