Bulgaria

This report assesses the impact of the 2009 recession and the fragile recovery of 2010 on the welfare of Bulgarian households and the effectiveness of Government policies... Show More + in mitigating its costs. By the beginning of 2009, the global economic crisis had affected much of Europe, including Bulgaria. The output decline lasted five quarters, followed by a modest increase during the rest of 2010. However, despite the large fluctuation in output during 2009-10, households preserved their 2008 income level throughout this period. What lies behind this example of successful income smoothing amid a large regional and national recession? Which were the key transmission channels through which the macro crisis filtered through to the household level? What population groups were most affected? What was the role played by public policy in mitigating the impact of the crisis? What lessons can be learned from the Bulgarian experience on protecting households during a crisis, while maintaining prudent fiscal and macroeconomic policies? To answer these questions, the report uses an exceptionally rich survey to assess how households were impacted, how they responded to the crisis and how/if they benefited from a comprehensive government policy package. Show Less -

Although Bulgaria now implements the European Union's (EU's) "common" agricultural policy (CAP), national policymakers still maintain responsibility to tailor CAP implementation... Show More + to meet the specific development needs of the country. The National Rural Development Program (NRDP) very appropriately lays out the challenges that Bulgarian agriculture and rural development face, but the early implementation of a relatively high number of support schemes falls short of adequate administrative capacities and planning. With CAP resources projected to increase substantially over the coming years under pillar two, Bulgarian authorities must take appropriate corrective measures now so that the opportunity to impact long-term sector growth is not missed. The major challenge facing Bulgaria's rural sector is the significant fragmentation of land ownership and the highly polarized farming structure. As of 2003, there were 665,500 agricultural holdings operating in Bulgaria. About 75 percent of agricultural holdings account for less than 7 percent of the utilized agricultural area (UAA). They cultivate plots of no more than one hectare. In contrast, about 78 percent of UAA is farmed by 0.8 percent of holdings. The fragmentation of land ownership is a significant barrier to long-term investments in agriculture, land improvements, and efficient use of agricultural machinery. Other challenges facing the sector include: an aging labor force (54.6 percent aged 55 and over); relatively few young farm-holders (less than half the EU average); low educational attainment of those employed in agriculture; low labor productivity due to worn-out assets and outdated technologies; and poor access to credit for small and medium-sized producers. Show Less -

The Revenue Administration Reform Project for Bulgaria had a satisfactory outcome and moderate risk to development outcome. Both the Bank and the borrower performances... Show More + were highly satisfactory. The main lessons learned were: 1. Early confidence building is crucial. With the transfer of collection responsibility to the revenue administration, the social security agency loses control over its revenue generation. 2. Integration is a process which involves a multitude of stakeholders. It is important to involve these stakeholders actively in the design and monitoring and active management of the reform process. 3. It is important that strong performance standards are set in relation to collection performance for both tax and social contributions and early measures taken to collect and analyze performance data. 4. Transferring the collection responsibility for local taxes to municipalities is a crucial precondition for achieving substantial efficiency gains in national tax revenue collection. 5. Continuity in the leadership of the tax agency provides an important contribution to successful implementation of the reform process. 6. Tax administration reform and integrating the collection responsibility for social contributions is a multi-year process. A medium to long-term strategic vision, owned by the implementing agency, is a prerequisite for the successful completion and sustainability of the reform process. 7. Business process re-engineering and related automated applications must be fully integrated throughout the tax administration, with appropriate management of the organizational transition – including human resource and training aspect – as a central part of the process. 8. Moving to an e-tax system is an essential process for reducing the compliance and administrative burden and the risk of corruption. Increasing the use of electronic tools, in particular e-filing, by taxpayers therefore is important. This requires, in addition to providing incentives for e-filing, to eliminate obstacles and create the necessary legal framework for the use of e-tax. 9. Tax administration reform frequently requires changes in the legal framework. These changes must be initiated as early as possible in order to ensure a clear and sufficient legal basis for the reform. 10. Need for setting realistic, measurable performance targets and avoiding construction works/renovations which often contribute to delays in institutional development projects. Show Less -

There are visible signs that the global financial crisis is affecting economic growth and poverty reduction in Bulgaria. After a period of strong economic growth through... Show More + 2008, Gross Domestic Product (GDP) in 2009 is projected to shrink by 3.5 percent due to the crisis, with important implications for poverty. The note identifies the following channels as having particular relevance for poverty in Bulgaria: (i) the labor market and (ii) foreign remittances. Due primarily to its effect on trade and investment, the global financial crisis could affect household welfare through contraction in the labor market and slowdown in wage growth. Remittances from abroad, which are significant contributor to consumption of nearly 7 percent of the Bulgarian households, are likely to slow down in 2009. The note estimates the potential impact on poverty of the crisis. The poverty impact is projected by simulating the effects of the anticipated slowdown in growth and remittances on household consumption using data from the 2007 Multitopic Household Survey (MTHS) and macro and sectoral growth and employment projections. Given uncertainties regarding the scale of the crisis and how households are likely to cope, the note is intended to provide indicative estimates of the poverty impact of the crisis, rather than precise estimates. Show Less -

This three year Country Partnership Strategy (CPS) builds on Bulgaria's considerable achievements over the last eight years which have brought it to the threshold of... Show More + European Union (EU) accession. However, key challenges remain for Bulgaria's successful integration with the EU. The CPS seeks to help Bulgaria meet these challenges and facilitate Bulgaria's economic and social integration with the EU. Within this broader strategic framework, the consultations with the Government resulted in a focused set of priorities for initial Bank involvement. In line with Bulgaria's achievements, the Bank will adjust its business model in future country assistance, and move towards a partnership model with greater flexibility. The new business model will involve: 1) a more flexible approach to defining lending and non-lending activities within the broad CPS strategic priorities, with an agreed assistance program for FY07, and an indicative program for FY08-09 to be revisited by an annual consultation process with Government; 2) lending up to an agreed ceiling based on continued sound macroeconomic performance, and prudent country risk assessment and IBRD exposure management, including greater choice in lending instruments and the share of fast disbursing operations; and 3) a move towards programmatic approaches in lending, coupled with gradual alignment of Bank procedures with country systems, while ensuring compliance with prudent Bank fiduciary standards. The proposed lending program would involve three operations per year, based on a series of Development Policy Loans (DPLs) and programmatic investment loans in support of priority areas. The CPS includes upfront core analytical and advisory activity (AAA) on strengthening the investment climate for private sector growth and employment, and a second phase Public Finance Policy Review. Furthermore, the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) will support Bulgaria's EU integration agenda. The risks to macroeconomic stability, particularly from widening current account deficit and external developments in interest rates, oil prices and foreign direct investment (FDI) flows, are reduced by the government's strong record of sound macroeconomic and fiscal management, and the surveillance roles played by the International Monetary Fund (IMF), and the EU's stability and growth pact upon Bulgaria's EU accession. Show Less -

As Bulgaria approaches European Union accession, it has the opportunity to narrow the income gap, and raise productivity and investment, and set the economy on a higher... Show More + growth path. To address these challenges and accelerate convergence with the European Union, this report proposes a reform agenda focused on five areas: productivity and growth, trade and investment integration, public expenditure policy, labor market adjustment, and the regulatory and institutional framework. Chapter 1 focuses on stability, growth dynamics, and integration. The analysis of these three fundamental dimensions over time is complemented with cross-country comparisons. Chapter 2 examines the foundations of Bulgaria's growth performance over the last several years in terms of the drivers of growth, intra-sectoral restructuring, growth accounting, and potential output growth. Trade policy, trade and FDI dynamics, and recent trends in trade performance are examined in Chapter 3, while Chapter 4 discusses the reforms needed in public expenditure policies to support deepening trade integration. Chapter 5 covers labor market performance and labor market policies and institutions. In Chapter 6, selected dimensions of the institutional framework for growth and competitiveness are examined, and Chapter 7 discusses macroeconomic policies aimed at addressing risks and vulnerabilities and supporting progress in monetary integration. Finally, Chapter 8 presents a summary of the main conclusions drawn from the report. Show Less -

This Country Assistance Evaluation (CAE) report provides an independent assessment of the role of the Bank assistance in Bulgaria during 1991-2000, and covers activities... Show More + that comprise ninety three percent of total lending in this period. The evaluation includes assessments of the role of the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA) assistance to the country. Throughout the 1990s, the Bank focused on supporting Bulgaria's transition to a market economy, particularly on stabilization and growth, private sector development, and poverty alleviation. However, Bulgaria's transition has been relatively difficult, due to unfavorable initial conditions - high external debt, and loss of external markets - combined with reckless lending by state banks to state enterprises, which precipitated the financial crises of 1994, and 1996. Outcomes only improved in mid-1997 following a successful stabilization program, supported by the Bank and the International Monetary Fund. As of 1997, once the Government adopted a Currency Board, and began implementing reforms, the Bank adopted a prudent stance, gradually launching a full lending program, providing advice on structural reforms, and supporting reforms through a broad sectoral adjustment lending. Progress in areas supported by the Bank, and assistance objectives have been substantial, and the overall outcomes of the Bank's strategy since 1997, are considered satisfactory, though institutional development impacts are rated modest. In the future, the Bank should foster ownership of structural reforms, and focus on public expenditures, poverty alleviation, and reinforce sustainability of institutional reforms of regulatory bodies, particularly the State Energy Regulatory Commission. Show Less -

This is an environmental impact assessment of the Environmental Liability Pilot Project, a project financing Bulgaria s cleanup of critical environmental hazards resulting... Show More + from past operations of the MDK Copper Smelter Complex. Negative impacts and mitigations are listed here: (1) Operate the smelter with a consistent throughput of higher grade copper concentrate to reduce sulfur dioxide emissions, low-level fugitive emissions, and dust. At the same time modify or replace gas cleaning equipment. (2) Reduce treated drainage water and runoff plus water from the slag treatment process by (a) modifying the existing neutralization plant; (a) installing more equipment to produce a solid residue to be deposited safely in lined trenches; (c) later upgrading the plant to a double stage treatment process employing the best technique for treating effluents; and (d) finally, optimizing the smelter operation to reduce the volume of acidic effluent requiring treatment. (3) Wastewater treatment sludge will be stored in a suitably designed lagoon; the fayalite tailings pond, from which dust emissions are blown, will be doubly protected with plastic and a thick soil cover; an old slag dump will be covered to prevent contaminating the sub-surface; and the variety of waste materials, disused equipment, and derelict structures contributing to ground and groundwater contamination will be deposited in the slime pond. Show Less -