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Partnering for Bulgaria's European Future

May 18, 2011

What is the role of the World Bank Group, as a development institution, in a European member state? Bulgaria – the most recent EU member – knows. And the answer is revealing – it’s not about money, it’s about tailored knowledge and timely support for further convergence of living standards with the EU and speeding up the absorption and making the most of available EU grant funding.

Bulgaria came a long way from its turbulent political and economic transition of the 1990s to a modern market economy. Today, Bulgaria – with just over 7 million people – is an upper middle-income economy. In 2009, its GDP per capita was $6,423. But it wasn’t easy. A decade of reforms – some of them tough – preceded its 2007 accession to the EU. Drawing on World Bank policy advice, Bulgaria established prudent macroeconomic policies and fiscal stability, and it increased revenue collection. Bulgaria has enjoyed a decade of sustained economic growth, but the global financial crisis of 2008-2009 had a serious impact. Now the Bulgarian economy has begun to recover well, with positive prospects for achieving smart, sustainable and inclusive growth – in line with the Europe 2020 strategy. And here comes the World Bank Group’s new partnership model – to provide global and regional knowledge and good practice in a tailored manner.

Open Quotes

Historically, the partnership was built around the lending program and pieces of analytical work and reports we would write. The partnership now is a very different one. Bulgaria is a member of the European Union, and the European Union provides resources. Bulgaria at the same time has massive potential. We, from the World Bank Group, are going to use our knowledge to help realize both of these things, better absorbing EU funds to tap the country’s potential. Close Quotes

Peter Harrold
World Bank Country Director for Central Europe and the Baltic Countries

In particular, the World Bank Group’s new Country Partnership Strategy for Bulgaria will provide support for knowledge services for roads and water infrastructure; improving the business regulatory environment; strengthening public administration and public finance; boosting the national green growth agenda, including energy efficiency; as well as support to the railway, to education and to social inclusion of vulnerable groups, especially Roma. Future World Bank Group financial support will be complimentary and concentrated on financing policy reforms and results-focused implementation of these reforms. Such financing will seek to be innovative in terms of supporting difficult reforms, focusing on results related to reform implementation, or financing innovative private sector activities by the International Finance Corporation (IFC), the private sector arm of the World Bank Group.

New lending for the first year would support modernization of the railway sector through the first operation in a programmatic series of development policy loans (DPL) and one investment loan. The DPL series would consist of three €80 million operations to support the design and implementation of railway reforms and to ensure that public financial support to railway infrastructure and passenger services are consistent with transport market demand, EU transport policies, and Bulgaria’s prudent fiscal policy. The €70 million Railway Infrastructure Rehabilitation Project would finance the acquisition of infrastructure maintenance equipment for the National Railway Infrastructure Company (NRIC) to improve the quality and efficiency of railway infrastructure services in Bulgaria. Read more about railway reforms here.

As Markus Repnik, Word Bank Country Manager for Bulgaria, concludes, the new partnership model would be based on “a two-way approach, providing knowledge but also learning from Bulgaria for the benefit of other countries.”

Stepping up cooperation
Following up on the Bulgarian government’s request for World Bank support in accelerating the utilization of EU funds, with a focus on transport and water sectors, a Memorandum of Understanding between Prime Minister of the Republic of Bulgaria Borissov and World Bank Group President Zoellick was signed in August 2010 to step up cooperation in the development of Bulgaria’s infrastructure and to accelerate utilization of EU funds.Read more about the MoU and stepping up cooperation here

Results
Since 1990, when Bulgaria joined the World Bank Group, the Bank has helped to foster economic growth in the country and supported reforms in areas such as banking, revenue administration, health, social welfare, and environmental protection. Several projects within the previous Country Partnership Strategy have produced tangible results. Read more about World Bank Group results here.