SOFIA, August 10, 2010―World Bank Group President Robert B. Zoellick and Prime Minister of the Republic of Bulgaria Boyko Borissov today signed a Memorandum of Understanding (MOU) to step up cooperation in the development of Bulgaria’s infrastructure, including accelerating maintenance and investment in roads and railways. The signing ceremony was attended by EC Commissioner Kristalina Georgieva.
To boost the EU member state’s competitiveness and foster economic growth, the Government of Bulgaria has made it a priority to better absorb, manage, and implement European Union (EU) funds, particularly for infrastructure. This involves leveraging EU funds with financing and support from International Financial Institutions (IFIs), such as the European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), and the World Bank.
The Memorandum of Understanding seeks to build on activities already supported by ongoing World Bank projects such as rehabilitation of existing major road networks and improving reliability and quality of water supply in municipalities.
“Bulgaria has a tremendous opportunity to make the most of EU funds to restore growth. As a longstanding partner, the World Bank Group remains committed to supporting Bulgaria’s efforts to accelerate EU convergence and help the Bulgarian people to achieve the higher living standards enjoyed by advanced European economies,” said World Bank Group President Robert B. Zoellick at the signing of the MOU at the Council of Ministers. “Like other countries in the region, the global economic crisis had a severe impact on Bulgaria, and the government now faces the daunting challenge of generating economic recovery by deepening structural reform, delivering strong fiscal outcomes, and deeper integration within the EU.”
In the wake of the economic crisis of the late 1990s, Bulgaria adopted sound macroeconomic policies and succeeded in stabilizing the economy and spurring growth over the last decade. However, it remains the poorest country in the European Union, with a per capita income of approximately 4,500 Euro. With the onset of the global economic crisis that hit Europe particularly hard, Bulgaria entered into recession with GDP declining by 5 percent in 2009, but prudent macroeconomic policies and fiscal discipline helped provide a cushion against the immediate impact of the crisis.
“Greater productivity and modern infrastructure are vital to unleashing Bulgaria’s growth potential,” Zoellick emphasized. “EU membership helped spur an economic boom in Bulgaria, but the crisis has shown that the country needs to further strengthen its competitiveness and invest more in productive assets such as transport infrastructure and the skills of its people.”
Today’s signing ceremony was attended by Deputy Prime Minister and Minister of Finance Simeon Djankov, as well as World Bank Vice President for Europe and Central Asia, Philippe Le Houérou; the International Finance Corporation Director for South Europe, Middle East and North Africa Dimitris Tsitsiragos; World Bank Country Director for Central Europe and the Baltic Countries, Peter Harrold; and the World Bank’s Country Manager for Bulgaria, Markus Repnik.
The World Bank President was in Bulgaria on the first leg of a European trip, which will also include Moldova and Latvia. The visit is aimed at assessing the impact of the crisis in the region and focusing on how the World Bank can best support efforts to bring about economic recovery.
Upon his arrival in Varna on August 9, President Zoellick, together with Prime Minister Boyko Borissov, Minister of Regional Development and Public Works Rosen Plevneliev, and Minister of Economy, Energy and Tourism Traicho Traikov, visited the World Bank-supported Road Infrastructure Rehabilitation Project (Euro 90 million). They discussed the impact of the economic crisis on government financing of public works and ways to expedite construction to deliver rapid results and facilitate the movement of people and goods – critical to reviving the economy and building future growth.
Bulgaria started retrofitting its road infrastructure to EU standards and requirements during the last decade. However, continued underfunding of roads infrastructure has left the country with a large backlog of road maintenance and investment. Prime Minister Borissov pledged to improve the roads networks across the country and restore troubled motorway programs by accelerating absorption of EU funds and expanding cooperation with IFIs, including the World Bank.
President Zoellick also took the opportunity to visit the Romani Baht NGO in the Sofia suburb of Fakulteto. Together with Minister of Labor and Social Policy Totyu Mladenov, Minister of Education Sergei Ignatov, and Mayor of Sofia Yordanka Fandakova, he met with Roma students who had benefitted from scholarships from the Roma Education Fund, and heard from NGO members about the challenges faced by Bulgaria’s Roma population, one of the largest in Europe.
During his two-day visit, President Zoellick was joined by EC Commissioner Georgieva, who had served as Vice President and Corporate Secretary of the World Bank Group. Together they met with President Georgi Parvanov, Prime Minister Boyko Borissov, Deputy Prime Minister and Minister of Finance Simeon Djankov, Minister of Foreign Affairs Nickolay Mladenov, and Minister in charge of EU funds management, Tomislav Donchev. The World Bank Group President also met with private sector executives with whom he discussed challenges facing Bulgaria coming out of the crisis and ways the World Bank Group, including its private sector arm, the International Finance Corporation (IFC), can best support growth and competitiveness.
Since Bulgaria joined the World Bank Group* in 1990, the total value of its support is roughly $4 billion, for 45 IBRD operations, 10 MIGA projects, and over 35 IFC projects in support of reforms in areas such as banking, revenue administration, health, social welfare, environmental protection, general manufacturing, agribusiness, infrastructure, and renewable energy sectors. World Bank projects have helped deliver tangible results in many areas:
- 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 World Bank Group is currently engaging with the Government of Bulgaria on a new Country Partnership Strategy for the period 2011–14.
* The World Bank Group consists of the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products, and other financial services to members, as well as analytical services, capacity building, and technical services; the International Development Association (IDA), which provides interest-free loans and grants to the poorest countries; the International Finance Corporation (IFC), which makes equity investments and provides loans, guarantees, and advisory services to private-sector business in developing countries; and the Bank Group’s political risk insurance agency, the Multilateral Investment Guarantee Investment Agency (MIGA).