This Decision is addressed to the Republic of Bulgaria.

3.The release of instalments in accordance with the financing agreement shall be conditional on available funding and a decision by the Commission, taken in accordance with Article 24 of Regulation (EU) 2021/241, that Bulgaria has satisfactorily fulfilled the relevant milestones and targets identified in relation to the implementation of the RRP. In order to be eligible for payment, Bulgaria shall complete the milestones and targets no later than 31 August 2026, subject to the entry into force of the legal commitments referred to in paragraph 1.

2.The Union financial contribution shall be made available by the Commission to Bulgaria in instalments in accordance with the Annex to this Decision.

1.The Union shall make available to Bulgaria a financial contribution in the form of non-repayable support amounting to EUR 6 267 312 124. An amount of EUR 4 636 043 337 shall be available to be legally committed by 31 December 2022. If the update provided for in Article 11(2) of Regulation (EU) 2021/241 results in an updated maximum financial contribution for Bulgaria that is equal to or more than EUR 6 267 312 124, a further amount of EUR 1631268787 shall be available to be legally committed from 1 January 2023 until 31 December 2023. If the update provided for in Article 11(2) of Regulation (EU) 2021/241 results in an updated maximum financial contribution for Bulgaria that is less than EUR 6 267 312 124, the difference between the updated maximum financial contribution and the amount of 4 636 0433 37 shall be available to be legally committed in accordance with the procedure set out in Article 20(8) of Regulation (EU) 2021/241 from 1 January 2023 until 31 December 2023.

The assessment of the RRP of Bulgaria on the basis of the criteria provided for in Article 19(3) of Regulation (EU) 2021/241 is approved. The reforms and investment projects under the RRP, the arrangements and timetable for the monitoring and implementation of the RRP, including the relevant milestones and targets, the relevant indicators relating to the fulfilment of the envisaged milestones and targets, and the arrangements for providing full access by the Commission to the underlying relevant data are set out in the Annex to this Decision.

Article 1 Approval of the assessment of the RRP

(57)This Decision should be without prejudice to the outcome of any procedures relating to the award of Union funds under any Union programme other than the Facility or to procedures relating to distortions of the operation of the internal market that may be undertaken, in particular under Articles 107 and 108 of the Treaty. It does not override the requirement for Member States to notify instances of potential State aid to the Commission under Article 108 of the Treaty,

(56)The support to be provided is to be financed from the borrowing by the Commission on behalf of the Union on the basis of Article 5 of Council Decision (EU, Euratom) 2020/2053. The support should be paid in instalments once Bulgaria has satisfactorily fulfilled the relevant milestones and targets identified in relation to the implementation of the RRP.

(55)In accordance with Article 11(2) of Regulation (EU) 2021/241, the calculation of the maximum financial contribution for Bulgaria is to be updated by 30 June 2022. As such, in accordance with Article 23(1) of that Regulation, an amount for Bulgaria not exceeding the maximum financial contribution referred to in Article 11(1), point (a) of that Regulation should be made available now for a legal commitment by 31 December 2022. Where necessary following the update of the maximum financial contribution, the Council, on a proposal from the Commission, should amend this Decision to include the updated maximum financial contribution, calculated in accordance with Article 11(2) of that Regulation, without undue delay.

(54)The estimated total cost of the RRP of Bulgaria is BGN 13 491 125 932, which equals EUR 6 897 903 157 on the basis of the EUR BGN ECB reference rate of 15 October 2021. As the RRP satisfactorily complies with the criteria for assessment set out in Regulation (EU) 2021/241 and, furthermore, as the amount of the estimated total costs of the RRP is higher than the maximum financial contribution available for Bulgaria, the financial contribution allocated for Bulgaria's RRP should be equal to the total amount of the financial contribution available for Bulgaria.

(53)Following the positive assessment of the Commission concerning the Bulgarian RRP with the finding that the RRP satisfactorily complies with the criteria for assessment set out in Regulation (EU) 2021/241, in accordance with Article 20(2) of and Annex V to that Regulation, this Decision should set out the reforms and investment projects necessary for the implementation of the RRP, the relevant milestones, targets and indicators, and the amount made available from the Union for the implementation of the RRP in the form of non-repayable financial support.

(52)The RRP describes that Bulgaria has consulted a wide range of stakeholders, including social partners, regional and local authorities, civil society organisations, business community and other relevant stakeholders at the initial stages of the RRP preparation. The first draft of the RRP was subject to a public consultation which gathered over 90 positions from interested parties, which served as basis for the subsequent revisions of the RRP. Consultation at the later stages has been more targeted, involving mostly the social partners and specific sectoral representatives. To ensure ownership by the relevant actors, it is crucial to involve all local authorities and stakeholders concerned, including social partners, throughout the implementation of the investments and reforms included in the RRP.

(51)Bulgaria has provided a security self-assessment for investments in digital capacities and connectivity, in accordance with Article 18(4), point (g), of Regulation (EU) 2021/241. Throughout the RRP, several components include a section that explains the adherence of the measures to the Union’s open strategic autonomy and security issues.

(50)The RRP contains measures that are expected to help Bulgaria address the challenges in the area of gender equality and equal opportunities for all, including measures targeting the personal development of young people from vulnerable groups, including Roma, the mobility and opportunities for the independent living of people with disabilities and the quality of life of older people. The RRP also includes measures aimed at promoting equal access to healthcare and education, including investments in kindergartens, with implications for the labour market participation of women. In the plan, Bulgaria commits to ensure that respect for gender equality and equality for all is safeguarded at all stages of preparation and implementation of the envisaged reforms and investments.

(49)The need for establishing systematic complementarities with cohesion policy funding is acknowledged and examples are presented in the components. Demarcation lines are sufficiently developed and should also be taken into account for the finalisation of the partnership agreement and cohesion policy programmes.

(48)The RRP is structured around four coherent pillars supporting the recovery of the Bulgarian economy, the contribution to the green and digital transition, and the enhanced resilience towards more sustainable and inclusive growth. Each pillar is built around components including consistent packages of mutually reinforcing and complementary reforms and investments. The entry into force of reforms early in the timeline of the plan ensures a supportive environment for the realisation of investments, which in turn contributes to the objectives of the reforms. At the level of the RRP, all pillars pursue complementary objectives and represent coherent actions. The RRP does not present inconsistencies or contradictions between pillars or components. All pillars under the plan foresee measures that reinforce the effects on the green transition. Digital solutions included across the RRP, in particular, those in the transport and energy sectors, are also expected to contribute to the decarbonisation of the economy, and to promote smart, sustainable and inclusive growth. Measures to support businesses are expected to contribute to fostering the twin transition. In addition, measures contributing to an improved business environment support all investments included in the RRP, while investments and reforms in education and skills are also expected to foster the digital transition as well as research and innovation.

(47)In accordance with Article 19(3), point (k), of and Annex V, criterion 2.11, to Regulation (EU) 2021/241, the RRP includes to a high extent (Rating A) measures for the implementation of reforms and public investment projects that represent coherent actions.

(46)Specific measures should be implemented to ensure compliance with the rules relating to the prevention, detection and correction of fraud, conflict of interest, corruption and double financing. The RRP provides information on the administrative capacity of the bodies which will monitor, control and implement the RRP in Bulgaria, as well as those bodies that will perform audit activities. It also gives information on the legal mandate of the various bodies. In accordance with Article 20(5), point (e) of Regulation (EU) 2021/241 a milestone on the assessment of the administrative capacity of the responsible authorities and capacity needs constitutes a measure necessary for complying with Article 22 of that Regulation and should be fulfilled before the first payment request as a precondition for any disbursement under the Facility. In addition, a milestone should require the entry into force of the Act approving the Management and Control system and that milestone should also be fulfilled before the submission of the first payment request as a precondition for any disbursement under the Facility.

(45)The internal control system described in the RRP is based on robust processes and structures and clearly identifies actors and their roles and responsibilities for the performance of the internal control tasks. The internal control system and other relevant arrangements, including the collection and publication of data on final recipients are expected to prevent, detect and correct corruption, fraud and conflicts of interest when using the funds under Regulation (EU) 2021/241 and to avoid double funding under that Regulation and other Union programmes. A repository system for monitoring of the implementation of the RRP is to be put in place and operational by the time of the first payment request. A milestone should ensure that the system includes, as a minimum, the following functionalities: (a) collection of data and monitoring of the achievement of milestones and targets and (b) collection, storing and ensuring access to the data required by Article 22(2) point (d)(i) to (iii) of that Regulation.

(44)In accordance with Article 19(3), point (j), of and Annex V, criterion 2.10, to Regulation (EU) 2021/241, the arrangements proposed in the RRP are adequate (Rating A) to prevent, detect and correct corruption, fraud and conflicts of interests when using the funds provided under that Regulation, and the arrangements are expected to effectively avoid double funding under that Regulation and other Union programmes. This is without prejudice to the application of other instruments and tools to promote and enforce compliance with Union law, including for preventing, detecting and correcting corruption, fraud and conflicts of interest, and for protecting the Union budget in line with Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council.

Protection of the financial interests of the Union

(43)Bulgaria has provided individual estimated costs for all the measures in the RRP that will generate expenditure. Bulgaria has provided generally clear and sufficient information to justify the cost estimates associated with each of the reforms and investments in the plan, where necessary at the sub-investment level. The evidence provided by Bulgaria is sufficient to conclude that the amount of the estimated total cost of the plan is reasonable and plausible, as the amounts are appropriate and in line with the nature and type of the envisaged reforms and investments. For the majority of measures, calculations behind the cost estimates are provided, and these are for a large degree clear and understandable. For certain measures, more details could have been provided to explain how the final budget was computed. For demand-driven measures (such as investments in energy efficiency in buildings, or support programmes for businesses), a reference to the full budgetary execution, and, where appropriate, to the expected number of beneficiaries, have been included. For the majority of measures, Bulgaria has provided information on the cost of similar measures carried out in the past whenever these were available. Where this was not available, as for instance for novel projects, Bulgaria has provided price quotes or, in some cases, pricing information from publicly available sources. The estimated cost of measures included in the plan is generally consistent with similar measures, including investments funded by other Union programmes if available. The cost estimates of the Bulgarian RRP have been reviewed by the Bulgarian Executive Agency for European Funds Audit, which stated that the cost estimates are complete, reasonable and plausible within the meaning of Regulation (EU) 2021/241, and that they do not have any other source of funding. Bulgaria provided sufficient information and evidence that the amount of the estimated total costs of the RRP to be financed under the Facility is not covered by existing or planned Union financing. Finally, the estimated total costs of the RRP is in line with the principle of cost-efficiency and is commensurate with the expected national economic and social impact.

(42)In accordance with Article 19(3), point (i), of and Annex V, criterion 2.9, to Regulation (EU) 2021/241, the justification provided in the RRP on the amount of the estimated total costs of the RRP is to a medium extent (Rating B) reasonable and plausible, is in line with the principle of cost efficiency and is commensurate to the expected national economic and social impact.

(41)Member States should ensure that financial support under the Facility is communicated and acknowledged in line with Article 34 of Regulation (EU) 2021/241. Technical support may be requested under the Technical Support Instrument established by Regulation (EU) 2021/240 of the European Parliament and of the Council to assist Member States in the implementation of their RRPs.

(40)The RRP defines milestones and targets for all reforms and investments and is consistent with the long-term objectives pursued in the plan. The proposed qualitative and quantitative indicators used for milestones and targets are sufficiently clear, robust and comprehensive to ensure that their completion can be verified and traced. The number of milestones and targets reflects the large number of measures and sub-measures to ensure the efficient monitoring and implementation of the plan. Milestones and targets are also relevant for measures already completed which are eligible pursuant to Article 17(2) of Regulation (EU) 2021/241. The satisfactory fulfillment of these milestones and targets over time is required to justify a disbursement request.

(39)The National Fund Directorate of the Ministry of Finance is the body responsible for collecting and reporting data on progress and for preparing and submitting payment requests and receiving payments from the Commission. It will also act as the focal point at the national level regarding the preparation of common rules and procedures for the implementation of the Facility, for carrying out the checks and controls on the implementation of investments and reforms, including active monitoring of the progress in implementing the measures on the basis of the milestones and targets. The Central Coordination Unit Directorate of the Ministry of Finance will be responsible for monitoring the implementation of the milestones and targets of the plan, including progress on common indicators, green and digital contribution of investments etc. It is also tasked with establishing a strategic framework for information and communication activities in relation to the implementation of the plan and for administration, maintenance and upgrade of the IT systems for programmes under shared management with the EU and under the Facility. The Economic and Financial Policy Directorate of the Ministry of Finance is the authority responsible for reporting on the progress in the implementation of the milestones and targets of the plan within the European Semester cycle. The Executive Agency for the Audit of EU Funds, attached to the Ministry of Finance, is responsible for the implementation of audit and control under the Facility. The following responsibilities also fall within the remit of the body: verification of the reliability of the data on the implementation of the milestones and the way in which they are collected; providing assurances that double funding, fraud, corruption and conflict of interest are prevented in the implementation of the plan and that the principle of sound financial management is respected.

(38)In accordance with Article 19(3), point (h), of and Annex V, criterion 2.8, to Regulation (EU) 2021/241, the arrangements proposed in the RRP are adequate (Rating A) to ensure effective monitoring and implementation of the RRP, including the envisaged timetable, milestones and targets, and the related indicators.

(37)The lasting impact of the plan can also be enhanced through synergies between the plan and other programmes, including those financed by cohesion policy funds, in particular by addressing in a substantive manner the deeply rooted territorial challenges and by promoting a balanced development.

(36)The RRP contains numerous reforms and investments expected to have a lasting impact by supporting the green and digital transition, with a focus on smart and sustainable economy. Significant reforms and investments included in the RRP have the potential to contribute to the decarbonisation of the economy by supporting the increased deployment of renewable energy generation and storage, increasing energy efficiency, contributing to sustainable road and rail mobility as well as sustainable agriculture and water resources management. Investments fostering the acquisition of digital skills, the digitalisation of the public sector, businesses and research organisations and investments in digital connectivity are expected to lastingly increase the efficiency in those sectors. In addition, the plan includes investments to support businesses in the twin transition and to stimulate the smart and sustainable growth.

(35)The implementation of the reforms envisaged in the RRP, notably of the reforms of the institutional framework and the rule of law, is expected to bring about structural changes to the public administration and institutions, contributing to a lasting improvement of their functioning and administrative capacity. The RRP includes key reforms of the judicial system to ensure the effectiveness of criminal investigations, including the accountability and criminal liability of the Prosecutor General, increasing the capacity to fight corruption in the judiciary as well as improvements in the capacity of anti-corruption bodies, the integrity of public servants and the efficiency of the anti-money laundering supervisory authorities. Reform efforts should also focus on improving the governance of state-owned enterprises, increasing transparency and competition in the public procurement process, enhancing the quality of the legislative process, and strengthening audit and control mechanisms. Moreover, the RRP features reforms and investments expected to unlock the potential of e-government and digital public services and thus lastingly increasing the efficiency of the public administration. The RRP aims at enhancing the administrative capacity for strategic planning and implementation of priority policies.

(34)The reforms proposed in the RRP are expected to deliver long-term results and bring about lasting structural changes. In particular, the envisaged reforms that aim at fostering the green and digital transition, the comprehensive reforms in the education and training systems, and the reform of the research and innovation ecosystem are expected to have a lasting impact on Bulgaria’s economy by strengthening skills for the labour market and fostering productivity and sustainable long-term growth. The reforms of healthcare, social services, including long-term care, and of the minimum income scheme are expected to lastingly improve the health care and social protection systems of Bulgaria in terms of inclusiveness, adequacy and effectiveness.

(33)In accordance with Article 19(3), point (g), of and Annex V, criterion 2.7, to Regulation (EU) 2021/241, the RRP is expected to have a lasting impact on Bulgaria to a large extent (Rating A).

(32)Increasing the level of digital skills of the population is another priority supported by the RRP, including through targeted reforms and investments in the education system, such as setting up STEM laboratories in schools, and investment for upskilling and reskilling to increase employability of the workforce by enhancing digital skills.

(31)The RRP has a strong focus on the digital transition, with measures included throughout the components, which reflects the broad and crosscutting nature of the envisaged digitalisation efforts. Significant investments and reforms in digital connectivity should increase the coverage of very high capacity networks in rural and sparsely populated areas that are lagging behind in terms of digital inclusion and create a favourable environment for the deployment of 5G networks and digital infrastructure. The RRP also includes a comprehensive package of reforms and investments aimed at supporting the development of e-government and digitalisation of the public administration and judiciary, which contributes to reducing the administrative burden on citizens and businesses and increasing the quality and effectiveness of public services in areas such as justice, health, agriculture and environment, culture, employment and social protection. The RRP also supports the digitalisation of the transport and energy sectors thus contributing to their progressive decarbonisation. As regards the private sector, the investments in the digital transformation of business processes and increased cybersecurity capabilities should contribute to improving their efficiency and productivity. Moreover, digital technologies and infrastructure are expected to enhance Bulgaria’s innovation capacity, with a particular focus on green and digital technologies. In addition, several universities and research organisations should have access to ultra-fast connectivity needed to participate in European research networks.

(30)In accordance with Article 19(3), point (f), of and Annex V, criterion 2.6, to Regulation (EU) 2021/241, the RRP contains measures that contribute to a large extent (Rating А) to the digital transition or to addressing the challenges resulting from it. The measures supporting digital objectives account for an amount which represents 25.8% of the RRP’s total allocation calculated in accordance with the methodology set out in Annex VII to that Regulation.

(29)The RRP also contributes to the Union’s environmental policy objectives such as improving water management, promoting sustainable agriculture, and preserving biodiversity. The RRP features reforms and investments in the water supply and sewerage services, including the modernisation and digitalisation of water management and improving control of water use. The measures dedicated to protecting and restoring ecosystems and natural habitats are expected to contribute to building effective Natura 2000 management structures in the country as well as to restoring climate-related ecosystems and protecting biodiversity. Reforms and investments, including targeting the management and protection of environmental and natural resources in the area of sustainable agriculture and promoting the technological and ecological transition of the Bulgarian agricultural sector, aim to enhance the sustainable management and competitiveness of the sector in the context of the green transition. These measures should ensure a lasting impact of the Bulgarian RRP on the green transition, including on biodiversity and environmental protection.

(28)In addition, an investment in the electricity network infrastructure with the aim to modernise the electricity grid through the inclusion of digital tools and methods is expected to lay the basis for increased penetration of electricity from renewable sources and greater integration with neighbouring countries. The combination of reforms and investments included in the RRP are expected to deliver an additional 3.5 GW of renewable power generation and new storage facilities with 6000 MWh of usable energy. The RRP also includes measures to support the development of pilot projects enabling the introduction of green hydrogen and biogas for industrial applications and for future use in transport and for the production of electricity and heat. Substantial investments in energy renovation of public and private buildings, and street lightning are expected to increase energy efficiency. Reforms and investments are expected to make a significant contribution to advancing the decarbonisation and climate objectives as set out in the Bulgarian National Energy and Climate Plan and long-term strategy for decarbonisation. This includes binding targets for the reduction of the carbon dioxide emissions associated with electricity generation by 40% below 2019 levels, to be achieved at the latest in 2025, and legislation on decarbonisation, including a calendar for the phase-out of coal and lignite power plants and a regulatory cap on their carbon dioxide emissions applicable as of 1 January 2026. In addition, the RRP supports the shift to sustainable mobility with a reform on promoting electric mobility and with numerous investments aimed at the modernisation and digitalisation of public transport through the acquisition of a zero-emission rolling stock, the deployment of the European Rail Traffic Management System and the construction of a new segment of the metro in Sofia, which are expected to contribute to the decarbonisation of the transport sector. Road safety measures included in the RRP should contribute to making transport more sustainable by addressing transport safety and attractiveness also through reduction by half of road safety blackspots/hotspots.

(27)In terms of contribution to the Union 2030-2050 climate and energy-related targets and the objective of climate neutrality by 2050, the RRP addresses some of the key policy challenges and contributes to attaining these objectives, while remaining effort will be needed to fully attain such objectives, in particular as Bulgaria has the highest carbon intensity in the EU, four times the EU average. The measures in the Bulgarian RRP include long-lasting reforms and investments that are expected to effectively contribute to the green transition. This includes reforms and investments to support the deployment of renewable energy generation and large-scale electricity storage and a clear commitment to phase out coal and lignite power generation as soon as possible and at the latest by 2038.

(26)In accordance with Article 19(3), point (e), of and Annex V, criterion 2.5, to Regulation (EU) 2021/241, the RRP contains measures that contribute to a large extent (Rating A) to the green transition, including biodiversity, or to addressing the challenges resulting therefrom. The measures supporting climate objectives account for an amount which represents 58.9% of the RRP's total allocation calculated in accordance with the methodology set out in Annex VI to that Regulation. In accordance with Article 17 of that Regulation, the RRP is consistent with the information included in the National Energy and Climate Plan 2021-2030.

(25)The RRP is expected to ensure that no significant harm is done to environmental objectives by selecting measures that either contribute substantially to an environmental objective or have no or an insignificant foreseeable impact on environmental objectives. Other measures, including broad support schemes, are designed to ensure compliance with this principle. Milestones or targets should ensure that the requirements for compliance with the principle of ‘do no significant harm’ are enshrined in the design of the schemes and of all stages of implementation, including during the tendering process, where applicable, and in all cases in the final outputs. For measures requiring a substantive assessment in accordance with the Commission’s technical guidance, such as renewables power production, sustainable mobility and building renovations, specific milestones and targets should be established to ensure that no significant harm is done to any of the six environmental objectives. As such, ‘do no significant harm’ criteria should be integrated into the milestones related to the selection process for relevant projects and, where applicable, references to an exclusion list in the relevant milestones and targets.

(24)In line with Regulation (EU) 2021/241 and the ‘do no significant harm’ Technical Guidance adopted by the Commission (2021/C 58/01), Bulgaria has provided evidence and assurances that the measures for the implementation of reforms and investment projects included in the RRP should not lead to significant harm to any of the six environmental objectives, namely climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. Particular attention has been paid to measures with impact on environmental objectives that warrant close scrutiny.

(23)In accordance with Article 19(3), point (d), of and Annex V, criterion 2.4, to Regulation (EU) 2021/241, the RRP is expected to ensure that no measure (Rating A) for the implementation of reforms and investments projects included in the RRP does significant harm to environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852 of the European Parliament and of the Council (the principle of 'do no significant harm').

(22)The RRP includes various interventions to contribute to the implementation of the European Pillar of Social Rights through the promotion of policies for children and youth. Reforms and investments are expected to improve equal access to quality education and promote participation in early childhood education, through the mandatory inclusion of four-year olds in pre-school education and promoting the personal development of young people, via the establishment of youth centres. In addition, the RRP focuses on the modernisation of schools, including by setting up science, technology, engineering, and mathematics (STEM) laboratories, which ensures continuous adaptation to current learning challenges, in particular digitalisation.

(21)The RRP features significant reforms and investments to support economic, social and territorial cohesion, which contribute to the European Pillar of Social Rights. Social vulnerabilities should be mitigated through the improvement of the social support system, notably the reform of the minimum income scheme and the modernisation of long-term care for older people and people with disabilities. The envisaged measures are expected to contribute to increasing social resilience to shocks, reducing social inequalities, and creating opportunities for the most vulnerable groups to enter the labour market. Measures related to education and skills, including digital skills, should increase socioeconomic resilience by addressing the persistent and significant skills gaps and strengthening the employability and productivity of the workforce. Measures in the area of education are expected to support equal access to quality education and training and reduce drop-out rates. In addition, the measures in the area of health are expected to strengthen the responsiveness and accessibility of healthcare and contribute to improving the geographical distribution of health workers. The RRP should further contribute to reducing territorial disparities through reforms supporting a territorial, bottom-up approach as well as dedicated infrastructure investments in the water sector in regions outside of the capital city, and investments to secure better transport connections in the north of the country. Other investments in transport and digital connectivity across the country and increased availability of e-government and other administrative services in remote and sparsely populated areas are also expected to enhance territorial cohesion. Finally the reforms and investments towards decarbonisation of the economy should set the ground for investments under the Just Transition Fund to ensure that the coal regions are supported through the transition and that no one is left behind.

(20)The set of reforms and investments presented by Bulgaria is expected to stimulate growth and increase the resilience of the economy by addressing important structural deficiencies and long-standing vulnerabilities. The measures included in the RRP to improve the business environment, including by strengthening the institutional framework and digitalisation of the public administration, judiciary and the construction sector, are expected to create significantly more favourable conditions for private investments in the country. In addition, reforms and investments in education and skills, research and innovation, decarbonisation and digitalisation as well as support for businesses, especially for SMEs in their twin transition are expected to make a significant contribution to sustainable long-term economic growth and job creation.

(19)Simulations by the Commission services show that the RRP, together with the rest of measures of the European Union Recovery Instrument, has the potential to increase the GDP of Bulgaria by 1.9% to 3% by 2026, not including the possible positive impact of structural reforms, which can be substantial. The most significant persistent positive effects on growth and productivity over the medium to long run are expected to stem from investments in decarbonisation of the economy, including the deployment of renewable energy generation and storage and increased energy efficiency, as well as from investments supporting businesses and measures expected to attract industrial investment and develop industrial ecosystems.

(18)In accordance with Article 19(3), point (c), of and Annex V, criterion 2.3, to Regulation (EU) 2021/241, the RRP is expected to have a high impact (Rating A) on strengthening the growth potential, job creation, and economic, social and institutional resilience of Bulgaria, contributing to the implementation of the European Pillar of Social Rights, including through the promotion of policies for children and youth, and on mitigating the economic and social impact of the COVID-19 crisis, thereby enhancing the economic, social and territorial cohesion and convergence within the Union.

(17)The recommendations related to the immediate fiscal policy response to the pandemic can be considered to fall outside the scope of Bulgaria’s RRP, notwithstanding the fact that Bulgaria has generally responded adequately and sufficiently to the immediate need to support the economy through fiscal means in 2020 and 2021, in line with the general escape clause of the Stability and Growth Pact.

(16)The RRP includes measures focused on increasing the availability of digital infrastructures, access to distance working and the enhancement of digital skills, which support the digital transition, in particular through measures on the large-scale deployment of digital infrastructure, the digitalisation of administrative services and a revised regulation on remote working. The RRP also promotes skills relevance and adult learning, with a focus on digital skills. Moreover, the RRP addresses the recommendation to foster investments in the green and digital transition through an extensive package of reforms and investments. In addition to the measures focused on the transition to green, circular and digital-oriented business practices for SMEs, the RRP includes measures targeting the restructuring and further development of the research and innovation ecosystem and enhancing the innovation output of Bulgaria, with a particular focus on the field of green and digital technologies. The RRP is expected to contribute to the competitiveness and sustainable development of the regions of the country and to local development. This includes a reform of the management of the water and agricultural sectors as well as the construction or renovation of the water supply and sewage system. Moreover, local development should be promoted through a new regional policy approach and through dedicated reforms expected to foster the direct involvement of local communities in the management of Union funds.

(15)A reform of the minimum income scheme aimed at increasing its adequacy and coverage is expected to contribute to addressing challenges identified in relation to social inclusion. In addition, the RRP is also expected to improve access to education and adult learning and to promote social inclusion through reforms and investments including mandatory pre-school education as of the age of four, the construction and renovation of educational facilities and the development of an online platform for adult learning linked to the public employment services. With regard to healthcare, the measures in the RRP are expected to contribute to addressing the shortages in the number of healthcare professionals, including their unbalanced geographical distribution, increasing the availability of healthcare services across the territory of the country through outpatient units, enhancing telemedicine services and establishing an air ambulance service, thus strengthening the accessibility and resilience of the healthcare system. However, the plan does not address the high level of out-of-pocket payments.

(14)The comprehensive package of reforms and investments in the RRP contributes to addressing the main challenges of the Bulgarian energy and transport sectors as identified in the Council recommendations. In particular, measures included in the RRP are expected to accelerate the deployment of renewable energy sources and storage and to significantly reduce greenhouse gas emissions from power production, thus contributing to the progressive decarbonisation of the economy, including in the coal regions. The RRP also includes key reforms aiming at establishing a competitive wholesale and retail markets, thereby improving the access of renewable energy to the market, and at improving corporate governance in the energy sector. With regard to fostering sustainable transport, the RRP includes an e-mobility reform, aimed at promoting the use of zero-emission vehicles, such as increasing public charging points, and the introduction of the low-emission zones in some of the biggest and most polluted district cities. The RRP also includes a reform of the public transport system and the introduction of a single ticket system for public transport, and investments in the digitalisation and modernisation of railways, including the acquisition of zero-emission rolling stock.

(13)The RRP includes key structural reforms and investments that address long-standing recommendations in relation to the business environment and improving the institutional framework. In particular, the reform of the insolvency framework is expected to contribute to a more effective and flexible system for the restructuring of businesses, the improvement of the governance of state-owned enterprises and the reform of the public procurement procedures should contribute to more transparent and efficient allocation of public resources. Reforms included in the RRP support a stronger institutional framework, including through improvements in the capacity and functioning of the anti-corruption framework, judicial reforms to ensure the effectiveness of criminal investigations, including the accountability and criminal liability of the Prosecutor General, as well as improved implementation of the anti-money laundering framework. Further measures supporting the improvement of the business environment include a reform of the legislative process aimed at increasing its quality and predictability and regulation of lobbying activities in the context of public decision-making. The RRP also includes a set of reforms and investments aimed at minimising administrative burden to companies by improving the effectiveness of public administration and reinforcing eGovernment, including through the digitalisation of the justice system and the increased provision of digital public services also in rural and remote areas.

(12)The RRP includes an extensive set of mutually reinforcing reforms and investments that contribute to effectively addressing all or a significant subset of the economic and social challenges outlined in the country-specific recommendations addressed to Bulgaria by the Council in the European Semester in 2019 and in 2020, notably in the areas of social inclusion, education and skills, healthcare, decarbonisation and digital transition and business environment.

(11)In accordance with Article 19(3), point (b), of and Annex V, criterion 2.2, to Regulation (EU) 2021/241, the RRP is expected to contribute to effectively addressing all or a significant subset of challenges (Rating A) identified in the relevant country-specific recommendations addressed to Bulgaria, including fiscal aspects thereof or challenges identified in other relevant documents officially adopted by the Commission in the context of the European Semester.

Addressing all or a significant subset of challenges identified in country-specific recommendations

(10)The pillar on health, economic, social, and institutional resilience includes measures that are expected to contribute to improving access to education, lifelong learning and healthcare, and promoting social inclusion. Relevant measures in the field of education and training include measures enhancing the relevance of higher education, with the aim of addressing labour market shortages and promoting research, and the development of a platform for lifelong learning. The relevant measures in the field of healthcare also include the adoption of a new national strategy on health, the implementation of the National Health Information System, and the establishment of a network of outpatient units, supported by a reform targeting the unbalanced distribution of medical professionals. To foster social inclusion, the RRP covers a reform to enhance the coverage and adequacy of the minimum income scheme and measures in the area of social services, including long-term care. With respect to social and territorial cohesion, the support of broadband roll-out in rural and remote areas is expected to help ensure that all citizens have access to high-speed connectivity, while social cohesion is expected to be fostered through the reform of the minimum income scheme benefitting adults and children, investment in the social economy, the modernisation of the social and employment services and the provision of telemedicine and e-government services in remote areas through a repurposing of the country’s postal network. The Bulgarian RRP is expected to contribute to policies for the next generation with measures such as the mandatory inclusion of four-year olds in pre-school education and the modernisation and construction of educational infrastructures, including kindergartens and school laboratories, and the establishment of youth centres across the country.

(9)Several components in the RRP are expected to contribute to the pillar on smart, sustainable, and inclusive growth, with a wide array of measures aiming to strengthen competitiveness and enhance research and development. The RRP contains investments to support businesses, especially SMEs via grants and financial instruments aimed at promoting digitalisation, circular economy, and use of renewables for own consumption to allow businesses to deal with the energy transition. Measures in the plan also contribute to creating favourable conditions for investments in industrial parks and zones and to support the cultural and creative sectors. Moreover, reforms and investments should support the improvement of the research and innovation ecosystem thus increasing the innovation output of Bulgaria, fostering technology transfer and commercialisation of research results, which should lastingly spur its economic growth. The RRP strongly focuses on the decarbonisation of the energy sector, sustainable agriculture, sustainable mobility (rail and public transport), modernisation of the educational system and infrastructure, modernisation of healthcare provision and support for the deinstitutionalisation of care. The RRP also aims to reinforce the business environment and the rule of law with measures addressing corruption issues such as reformed anti-corruption institutions, new legislation on lobbying and on the protection of whistle-blowers, reforms of the judicial system to ensure effectiveness of criminal investigations, including the accountability and criminal liability of the Prosecutor General, reforms to improve the legislative process, reforms on public procurement to reduce the use of non-transparent procedures, reform of the governance framework of state-owned enterprises and a reform on improving the insolvency and restructuring proceedings.

(8)The RRP includes important measures to accelerate the twin transition. In the area of climate action and energy transition, significant efforts are dedicated to accelerating and facilitating the deployment of renewable energy generation and storage, cutting the greenhouse gas emissions in the power sector by almost half, liberalising the wholesale and retail electricity markets, and boosting renovations of the building stock with a view to improving energy efficiency. Significant investments and reforms also aim at promoting low-emission mobility and use of less polluting modes of transport, notably rail transport. There is also a strong focus on the digital transformation of Bulgaria’s economy and society, with measures to support the acquisition of digital skills across the whole population, the digitalisation of businesses, public administration, including the judiciary, as well as enhancing the connectivity and broadband deployment in remote and sparsely populated areas. Investments in areas like power storage capacities, digitalisation and sustainability of rail transport, and smart water management make an important contribution both to the green and digital objectives.

(7)The RRP includes measures that contribute towards all six pillars, with almost all of its components addressing multiple pillars. Such an approach contributes to ensuring that each pillar is addressed comprehensively and in a coherent manner.

(6)In accordance with Article 19(3), point (a), of and Annex V, criterion 2.1, to Regulation (EU) 2021/241, the RRP represents to a large extent (Rating A) a comprehensive and adequately balanced response to the economic and social situation, thereby contributing appropriately to all of the six pillars referred to in Article 3 of that Regulation, taking into account the specific challenges faced by and the financial allocation for Bulgaria.

(5)The implementation of the Member States' RRPs will constitute a coordinated effort involving reforms and investments across the Union. Through coordinated and simultaneous implementation and the implementation of cross-border and multi-country projects, such reforms and investments will mutually reinforce each other and generate positive spillovers across the Union. Therefore, about one third of the impact of the Facility on Member States' growth and job creation will come from spillovers from other Member States.

(4)The RRPs should pursue the general objectives of the Recovery and Resilience Facility established by Regulation (EU) 2021/241 (the 'Facility') and of the European Union Recovery Instrument set up by Council Regulation (EU) 2020/2094 in order to support the recovery in the aftermath of the COVID-19 crisis. They should promote the Union's economic, social and territorial cohesion by contributing to the six pillars referred to in Article 3 of Regulation (EU) 2021/241.

(3)On 15 October 2021, Bulgaria submitted its national RRP to the Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. That submission followed a consultation process, conducted in accordance with the national legal framework, involving local and regional authorities, social partners, civil society organisations, youth organisations and other relevant stakeholders. National ownership of the RRPs underpins their successful implementation and lasting impact at national level and credibility at European level. Pursuant to Article 19 of Regulation (EU) 2021/241, the Commission has assessed the relevance, effectiveness, efficiency and coherence of RRP, in accordance with the assessment guidelines set out in Annex V to that Regulation.

(2)On 9 July 2019 and on 20 July 2020, the Council addressed recommendations to Bulgaria in the context of the European Semester. In particular, the Council recommended Bulgaria to take all necessary measures to effectively address the pandemic, sustain the economy and support the ensuing recovery and pursue fiscal policies aimed at achieving prudent medium-term fiscal positions and ensuring debt sustainability, while enhancing investment. Also in relation to public finances, the Council recommended improving tax collection through targeted measures in areas such as fuel and labour taxes and upgrading the corporate governance of state-owned enterprises. The Council further recommended Bulgaria to ensure the stability of the banking sector by reinforcing supervision and promoting adequate valuation of assets. In relation to the non-banking sector, it was recommended to ensure effective supervision and the enforcement of the anti-money laundering framework and the effective functioning of the insolvency framework. Furthermore, it was recommended to improve the quality and effectiveness of public administration, minimise the administrative burden and reinforce digital government. In addition, the Council recommended Bulgaria to strengthen the resilience, accessibility and capacity of the health system, ensure a balanced geographical distribution of health workers, and improve access to health services, including by reducing out-of-pocket payments and addressing shortages of health professionals. Particularly relevant to social challenges were the recommendations to improve the quality, inclusiveness and labour market relevance of education and training, in particular for Roma and other disadvantaged groups, strengthen active labour market policies, strengthen employability by reinforcing skills, including digital skills, and to address social inclusion through improved access to integrated employment and social services and via more effective minimum income support. To tackle the COVID-19 crisis, Bulgaria was recommended to improve access to distance working, promote digital skills and equal access to education. Moreover, the Council recommended Bulgaria to provide effective support to small and medium-sized enterprises (SMEs) and the self-employed, also ensuring their continued access to finance and flexible payment arrangements and to front-load mature public investment projects and promote private investment to foster the economic recovery. It was recommended to focus investments on the green and digital transition, in particular on clean and efficient production and use of energy and resources, environmental infrastructure and sustainable transport, contributing to a progressive decarbonisation of the economy, including in the coal regions. The Council also recommended to focus investment-related economic policy on research and innovation, transport, notably on its sustainability, water, waste and energy infrastructure and energy efficiency, taking into account regional disparities, and improving the business environment. Having assessed progress in the implementation of these country-specific recommendations at the time of submission of the recovery and resilience plan ('RRP'), the Commission finds that substantial progress has been achieved with respect to the recommendations on ensuring the stability of the banking sector by reinforcing supervision, strengthening the non-banking financial sector by effectively enforcing risk-based supervision, providing an immediate fiscal policy response to effectively address the pandemic, sustain the economy and support the ensuing recovery, and the recommendation to streamline and accelerate the procedures to provide effective support to SMEs and the self-employed. Some progress has been made with the recommendation on the improvement of the tax collection system and there are several projects planned under the Technical Support Instrument to support further progress in this area.

(1)The COVID-19 outbreak has had a disruptive impact on the economy of Bulgaria. In 2019, the gross domestic product (GDP) per capita of Bulgaria was 28% of the Union average. The real GDP of Bulgaria declined by 4.4% in 2020 and by 0.4% cumulatively in 2020 and 2021. Bulgaria has one of the highest levels of poverty and income inequality in the EU and its health system remains weak and characterised by limited access to healthcare services. Bulgaria is the most carbon- and energy-intensive economy in the Union. It is highly reliant on coal and lignite, despite having a vast potential for renewable energy and increasing energy efficiency, especially for the building stock. Improving the quality of institutions and fighting corruption remain key challenges for fostering a favourable business environment. Labour and skills shortages as well as skills mismatches relative to the labour market needs represent a significant barrier to business investment and limit productivity gains. The uptake of digital technologies is slow in both public and private sectors. Bulgaria ranks last in the Union in digital skills.

Having regard to the proposal from the European Commission,

Having regard to Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility and in particular Article 20 thereof,

Having regard to the Treaty on the Functioning of the European Union,

on the approval of the assessment of the recovery and resilience plan for Bulgaria

on the approval of the assessment of the recovery and resilience plan for Bulgaria

EUROPEAN COMMISSION Brussels, 7.4.2022 COM(2022) 172 final ANNEX

to the Proposal for a COUNCIL IMPLEMENTING DECISION on the approval of the assessment of the recovery and resilience plan for Bulgaria {SWD(2022) 106 final}



ANNEX SECTION 1: REFORMS AND INVESTMENTS UNDER THE RECOVERY AND RESILIENCE PLAN 1.Description of Reforms and Investments A. COMPONENT 1: Education and skills This component of the Bulgarian recovery and resilience plan aims to improve the quality and effectiveness of the education and training systems. It encompasses two reforms and four investments, covering the following areas: -access to education: construction and renovation of educational infrastructures and youth centres across the territory, implementation of distance and hybrid forms of learning, and the progressive inclusion of four-year-olds in the educational system; -development of digital skills and promotion of science, technology, engineering and mathematics (STEM) fields in Bulgarian schools: update of curricula and construction of STEM centres, including school laboratories; -skills relevance and adult learning: reform of the regulatory frameworks for higher and vocational education and training and development of an online platform for adult learning linked to the public employment services. The component contributes to addressing the challenges identified in the country-specific recommendations to improve employability by enhancing skills, including digital skills and to improve equal access and increase the quality, labour market relevance and inclusiveness of education and training (country-specific recommendation 4 from 2019 and 2 from 2020). It is expected that no measure in this component does significant harm to environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852, taking into account the description of the measures and the mitigating steps set out in the recovery and resilience plan in accordance with the DNSH Technical Guidance (2021/C58/01). A.1. Description of the reforms and investments for non-repayable financial support Reform 1 (C1.R1): Reform in preschool and school education and lifelong learning The objective of this reform is to increase quality and access to education and training. The reform consists of the entry into force of a legislative package, which shall include: 1.amendments to the Preschool and School Education Act, including secondary legislation. The amendments shall introduce: revisions to curricula, with a focus on science, technology, engineering and mathematics (STEM) subjects; additional hybrid forms of learning, combining in-presence and distance options; as well as the mandatory inclusion of four-years-old in preschool education, which shall be implemented progressively and completed by the school year 2023/2024; 2.amendments to the Employment Promotion Act, which shall expand eligibility for trainings participation and introduce new options for trainings and for the validation of competencies; 3.amendments to the regulatory framework for vocational education and training (VET), which shall introduce changes to the list of professions for VET and their programmes, in accordance with the needs of professional competences, including in the green and digital sectors. The reform shall also include the adoption of an action plan containing the measures addressing the recommendations of the Strategic Framework for the Development of Education, Training and Learning in the Republic of Bulgaria (2021-2030). This Strategic Framework shall set out the priorities for the development of the Bulgarian education system until 2030 and provide recommendations, with a particular focus on access to quality education for vulnerable groups, including Roma;

The implementation of the reform shall be completed by 30 September 2023. Reform 2 (C1.R2): Higher education reform The objective of the reform is to enhance the effectiveness of higher education across the territory of Bulgaria. The reform includes: 1.the entry into force of the amendments to the Higher Education Act. The amendments shall include the introduction of fees exemption for students who sign a traineeship agreement with an employer; new programmes targeting sectors with expected labour market shortages; as well as an updated system of accreditation of higher education institutions; 2.the adoption of the National Map of Higher Education, which shall provide an analysis of the offer of higher education and resources available across the territory; 3.the adoption of an action plan containing the measures addressing the recommendations of the Strategy for the Development of Higher Education in the Republic of Bulgaria 2021-2030. The Strategy shall set key objectives and make recommendations to foster access to quality higher education, increase the labour market relevance of higher education and promote research, including via the development of international research networks. The implementation of the reform shall be completed by 31 December 2022. Investment 1 (C1.I1): STEM centres and innovation in education This investment complements reform 1 ‘Reform in preschool and school education and lifelong learning’. The objective of the investment is to modernise teaching tools and enhance the learning in the fields of science, technology, engineering and math (STEM) subjects in Bulgarian schools, via the construction and/or refurbishment of a national and three regional STEM centres, as well as the establishment of more STEM laboratories in schools, including high-tech classrooms, which are expected to complement the measures of the national programme “Construction of School STEM environment”. STEM laboratories in schools, including high-tech classrooms are expected to promote digital literacy and enhance teaching methods of STEM subjects. The national STEM centre is expected to act as a centralised unit that develops content, tools and methodologies to support the trainings of both teachers and students. The three regional centers are expected to support the trainings of the teachers and the students, as well as organise conferences, congresses and seminars. The implementation of the investment shall be completed by 30 June 2026. Investment 2 (C1.I2): Modernisation of educational infrastructures This investment complements reform 1 ‘Reform in preschool and school education and lifelong learning’. The investment shall consist of the construction and renovation of educational facilities. These educational facilities shall encompass kindergartens, schools, including vocational upper secondary schools, student dormitories and university campuses. The locations of the newly built educational infrastructures and the existing educational infrastructures to be renovated shall be selected on the basis of objective criteria, notably national priorities stated in National Strategies, and, where relevant, analysis of the educational needs across the territory and other relevant documents, such as Maps and Methodologies adopted by the Ministry of Education and Science. The implementation of the investment shall be completed by 30 June 2026. Investment 3 (C1.I3): Provision of digital skills trainings and set-up of a platform for adult learning This investment complements reform 1 ‘Reform in preschool and school education and lifelong learning’. The objective of the investment is to improve the up- and re-skilling of the workforce, with a focus on digital skills. This shall be achieved by establishing a digital platform and electronic resources, to promote the uptake of distance learning for adults. The investment shall consist of two parts: 1. Sub-investment 1: platform for e-learning for adults The platform for e-learning for adults shall offer access to online courses and learning resources. To cover the needs of the population with low digital skills and the lack of internet connection, this sub-investment shall also include the establishment of a network of digital clubs throughout the country and equipped with laptops and staffed, thus enabling users to access the digital platform for adult learning free of charge. Digital clubs shall be located in existing infrastructures, such as administrative buildings, regional information centers, libraries, and Labour Office Directorates.

2. Sub-investment 2: Training on digital skills The second sub-investment shall cover the provision of trainings for digital skills. The trainings shall be free of charge and cover basic and medium digital skills, consistent with the European Digital Competences Framework DigComp2.1, for unemployed and for employed people. The successful completion of the training shall be testified by a certificate. The implementation of the investment shall be completed by 30 June 2026. Investment 4 (C1.I4): Youth centres The objective of the investment is to foster young people’s skills, encompassing digital, entrepreneurial and financial literacy, in order to promote social inclusion and employability of young people, encompassing those from vulnerable groups, including Roma. This investment shall include: -the construction of youth centres across the territory. The locations of the youth centres shall encompass district and non-district cities and shall be selected on the basis of relevant criteria, in particular, youth unemployment and share of young people from vulnerable groups, including Roma; -the establishment and construction of a national focus centre, which is expected to coordinate the activities and set out the objectives of the youth centres. The implementation of the investment shall be completed by 30 June 2026. A.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support Seq N° Related Measure (Reform or Investment) Milestone / Target Name Qualitative indicators

(for milestones) Quantitative indicators

(for targets) Indicative timeline for completion Description of each milestone and target Unit of measure Baseline Goal Quarter Year 1 C1.R1: Reform in preschool and school education and lifelong learning Milestone Entry into force of the amendments to the Pre-school and School Education Act and to secondary legislation. Provision in the law indicating the entry into force of the amendments to the Pre-school and School Education Act and to secondary legislation Q4 2020 The amendments to the Preschool and School Education Act and to secondary legislation shall include: -the update of the STEM core curricula and syllabus as follows: introduction of new IT skills (encoding) in classes five-seven; increase in mathematics hours in classes five-seven; increase in geography and economics hours in class six; -additional distance learning opportunities, including hybrid forms of learning combining in-presence and online learning; -the inclusion of four-year-olds in the mandatory preschool programme. The amendment shall provide for a gradual phase-in of the mandatory inclusion which shall be completed no later than for the school year 2023/2024. 2 C1.R1: Reform in preschool and school education and lifelong learning Milestone Entry into force of the amendments to the Employment Promotion Act Provision in the law indicating the entry into force of the amendments to the Employment Promotion Act Q4 2022 The amendments to the Employment Promotion Act shall: -introduce the possibility of combining vocational training with participation in a training course for persons over 16 years of age; -introduce the option of validating professional skills and key competences acquired through non-formal learning or self-learning; -Increase the flexibility of training opportunities, including by increasing the offer of online trainings. 3 C1.R1: Reform in preschool and school education and lifelong learning Milestone Action Plan for the implementation of the Strategic Framework for the Development of Education, Training and Learning in the Republic of Bulgaria (2021-2030) Adoption by the Council of Ministers Q4 2022 The action plan for the implementation of the Strategic Framework for the Development of Education, Training and Learning in the Republic of Bulgaria (2021-2030) shall formulate measures and actions, including their timeline, to address the objectives of the Strategic Framework. The objectives of the Strategic Framework shall include: -better access to quality education for children from vulnerable groups, including Roma; -larger coverage of children in the education system; -the introduction of a revised system of teacher qualifications and effective management practices of educational institutions; -innovation in schools, with a focus on the digital transformation and sustainable development. Prior to adoption, the action plan shall have been reviewed by an Advisory Council responsible for the monitoring and reporting on the implementation of the strategic framework. 4 C1.R1: Reform in preschool and school education and lifelong learning Milestone Entry into force of the amendments to the regulatory framework in the field of vocational education and training Provision in the law indicating the entry into force of the amendments to the regulatory framework in the field of vocational education and training Q3 2023 The amendments to the regulatory framework for vocational education and training (VET) regulatory framework, in accordance with the needs of professional competences, including in the green and digital sectors, shall: -update the list of professions for VET and state educational standards, plans and programmes for acquiring professional qualification; -update learning content and training programmes, including by introducing training systems in cooperation with employers (such as, Work-based Learning) and Dual VET; introduce flexible training offers, including online training offers. 5 C1.R2: Higher education reform Milestone Entry into force of the amendments to the Higher Education Act Provision in the law indicating the entry into force of the amendments to the Higher Education Act Q1 2020 The amendments to the Higher Education Act shall: -introduce a revised system of accreditation of higher education institutions, as well as the status of ‘Research University’; -allow for the exemption from fees at state higher education institutions for students or recent graduates who sign a traineeship agreement with an employer; -update the list of ‘protected specializations’ based on expected labour market shortages; -introduce the possibility to conclude up to two agreements between state higher schools and state or municipal schools in the system of preschool and school education. The agreements is expected to promote the acquisition of specialized training in secondary education. 6 C1.R2: Higher education reform Milestone National Map of Higher Education Adoption by the Council of Ministers Q3 2021 The National Map of Higher Education shall support the formulation of recommendations to promote a more balanced distribution of the higher education offer across the territory. The map shall provide analysis covering: -the territorial distribution of higher education offer in the Republic of Bulgaria, including information on the national and regional socio-economic and labour market developments; -the resources available in higher education institutions, including academic staff and students. 7 C1.R2: Higher education reform Milestone Action plan for the implementation of the Strategy for the Development of Higher Education in the Republic of Bulgaria (2021-2030) Adoption by the Council of Ministers Q4 2022 The action plan for the implementation of the Strategy for the Development of Higher Education in the Republic of Bulgaria (2021-2030) shall formulate measures and actions, including their timeline, to address the objectives of the strategy. The objectives of the strategy shall cover: -the development of a mechanism for updating existing and developing new curricula; -a revision of existing provisions regarding state-controlled subsidised admission to public higher education institutions. Changes shall be made in accordance with national and regional developments of the labour market; -research enhancement and promotion of higher educations by developing scientific networks; -the introduction of additional specialisations and programmes in higher educations with double diplomas; -the establishment of training centres for life-long learning in higher education institutions 8 C1.I1: STEM centres and innovation in education Milestone Establishment of the national STEM centre Provision in the national legislation indicating the establishment of the national STEM centre Q4 2022 The main responsibilities of the national STEM centre shall include: -the organization of trainings for teachers and other pedagogical professionals; -the development of teaching material and the set-up and maintenance of an electronic portal and library with publicly available educational resources; -the coordination and support of student activities in STEM fields, including participation in scientific olympic competitions. 9 C1.I1: STEM centres and innovation in education Milestone Signature of contracts for the provision of construction or renovation works for the national and regional STEM centres and to the STEM laboratories in schools Signed contracts Q4 2023 The contractors shall be selected following successful public procurement procedures. The contracts shall cover: -construction or renovation works for the national STEM center and for the three regional STEM centers; -construction or renovations works for STEM laboratories in schools, including high-tech classrooms. 10 C1.I1: STEM centres and innovation in education Target Finalisation of the construction and renovation works for the national and three regional STEM centres Number 0 4 Q2 2026 Following the signature of contracts (milestone 9), the construction or renovation works for the national and three regional STEM centres shall be finalised. In addition, equipment and devices shall be delivered and installed in each centre. 11 C1.I1: STEM centres and innovation in education Target Schools with newly built and/or equipped STEM laboratories, including high-tech classrooms

Number 0 2243 Q2 2026 Following the signature of contracts (milestone 9), construction and renovation works of STEM laboratories, including high-tech classrooms, shall be finalised. This shall cover -construction works in 1980 schools. -renovation works in another 263 schools. In addition, high-tech equipment and devices shall be delivered and installed. 12 C1.I2: Modernisation of educational infrustructures Milestone Signature of contracts for the provision of construction or renovation works to educational facilities Signed contracts Q3 2023 The contractors shall be selected following successful public procurement procedures. The contract shall cover: -renovation of existing buildings of 57 kindergartens and 59 schools; -renovation of 24 vocational upper secondary schools; -construction works for eight new schools and eight new kindergartens; -renovations of 23 dormitories -construction works for three higher education student campuses. 13 C1.I2: Modernisation of educational infrustructures Target Finalisation of renovation of schools and kindergartens Number 0 140 Q2 2026 Following the signature of contracts (milestone 12), renovation activities in 57 kindergartens, 59 schools and 24 vocational upper secondary schools shall be finalised. In addition, equipment and furniture, shall be delivered and installed. 14 C1.I2: Modernisation of educational infrustructures Target Finalisation of the construction of kindergartens and schools Number 0 16 Q2 2026 Following the signature of contracts (milestone 12), construction activities for eight kindergartens and eight schools shall be finalized and shall achieve a Primary Energy Demand (PED) that is at least 20% lower than the NZEB requirement (nearly zero-energy building, national directives). 15 C1.I2: Modernisation of educational infrustructures Target Finalisation of renovation activities in student dormitories Number 0 23 Q2 2026 Following the signature of contracts (milestone 12), the renovation activities in 23 dormitories shall be finalised. 16 C1.I2: Modernisation of educational infrustructures Target Finalisation of construction and/or renovation works of campuses Number 0 3 Q2 2026 Following the signature of contracts (milestone 12), the construction or renovation works of three campuses shall be finalised. Construction or renovation works may encompass sidewalks, alleys for pedestrian, bicycle and car parking, outdoor and indoor sport areas. 17 C1.I3: Provision of digital skills trainings and set-up of a platform for adult learning Milestone Signature of contracts for the development of the platform for e-learning for adults Signed contracts Q2 2023 The contractors shall be selected following successful public procurement procedures. The contract shall cover the development of the platform for e-learning for adults. The functionalities of the platform shall include: -synchronous and asynchronous training options; -online module for registration of training providers and participants; -online registers of people who have successfully completed training obtaining a certificate, and of people who successfully validate their digital skills obtaining a certificate; -a library of offline content; -an online catalogue of available training courses 18 C1.I3: Provision of digital skills trainings and set-up of a platform for adult learning Target Fully operational digital clubs Number 0 760 Q3 2024 The digital clubs shall provide free access to the platform for e-learning for adults (milestone 17) and its online training courses. The clubs shall be: -open to public and free of charge; -staffed and equipped with computers which ensure connection to the platform for e-learning for adults. In addition, the staff of the clubs shall have received trainings to support the activities of the clubs. 19 C1.I3: Provision of digital skills trainings and set-up of a platform for adult learning Milestone Fully operational platform for e-learning for adults Platform developed and publicly available Q3 2024 The platform for e-learning for adults shall include the modules implementing the functionalities outlined in milestone 17. 20 C1.I3: Provision of digital skills trainings and set-up of a platform for adult learning Target Number of people with a certificate in digital skills acquired through participation in a training Number 0 200000 Q2 2024 To count towards the achievement of the target, a registered unemployed or employed person must have obtained a digital skills certificate, attesting basic and/or medium level of digital skills, after having attended a training in digital skills. 21 C1.I3: Provision of digital skills trainings and set-up of a platform for adult learning Target Number of people with a certificate in digital skills acquired through participation in training Number 200000 500000 Q2 2026 To count towards the achievement of the target, a registered unemployed or employed person must have obtained a digital skills certificate, attesting basic and/or medium level of digital skills, after having attended a training in digital skills. 22 C1.I4: Youth centres Target Finalisation of the construction and renovation works for youth centres and for a national focus centre Number 0 21 Q1 2025 Following the successful public procurement procedures, construction and renovation works for 10 youth centres located in district centres, for 10 youth centres located in non-district centres and for one national focus centre shall be finalised. 23 C1.I4: Youth centres Target Students/young people registered in at least one of the activities of the youth centres. Number 0 19500 Q2 2026 19500 young people (under 29), encompassing those from vulnerable groups, including Roma, shall register in at least one of the activities of the youth centres, including trainings or group counselling. In addition, 4700 young people, included in the target of 19500, shall have successfully completed an examination of digital competence after participating in trainings at the youth centers. B. COMPONENT 2: Research and Innovation The Research and Innovation component of the Bulgarian RRP contains measures aimed at improving the innovation output of Bulgaria, thus spurring its economic growth in the medium and long term. The component contains a reform that aims to highlight research and innovation as a clear priority of the country’s future development and pooling national and EU resources in order to overcome the current fragmentation of the ecosystem. The key elements of the reform are: the establishment of a new Ministry for Innovation and Growth, replacing the State Agency for Research and Innovation, as well as the adoption of a Research and Innovation Act. The component further includes investments to foster the research and innovation performance of public research institutions and innovative business. The investments introduce new financing channels to support research and innovation activities and enhance the innovation capacity of the Bulgarian Academy of Sciences. The measures included in the component contribute to addressing country-specific recommendation 3 of 2019 (‘Focus investment-related economic policy on research and innovation’) and country-specific recommendation 3 of 2020 (‘Streamline and accelerate the procedures to provide effective support to small and medium-sized enterprises and self-employed’). B.1. Description of the reforms and investments for non-repayable financial support Reform 1 (C2.R1): Common policy for the development of research and innovation.

The objective of the reform is to foster an efficient policy coordination in all phases of research and innovation and to spur the Bulgarian innovation outcome. This will be done through the creation of a research and innovation ecosystem that ensures close links between academia and the business sectors. The reform shall include the following elements: oEntry into force of the Research and Innovation Act and related legislative acts; The Research and Innovation Act shall: -define the legislative parameters of the national policy for the development and financing of research and innovation; -regulate the role and responsibilities of each of the institutions involved in the process of policy design, implementation, monitoring and evaluation in the field of research and innovation; -regulate technology transfer activities; -amend the legislation on intellectual property rights, building on the recommendations of the World Bank received in the country report on knowledge transfer, as well as on the recommendations of the Joint Research Centre. The preparation of the Act shall be carried out with the involvement of the relevant ministries, agencies, and stakeholders, including higher education institutions and representatives of the private sector. oEstablishment of the Innovation Board; The Innovation Board shall be an advisory body to the Ministry of Education and Science and the Ministry of Innovation and Growth, co-chaired by the two ministers. The members of the Innovation Board shall be selected among Bulgarian and international scientists and business representatives. The Board shall include at least 17 representatives of the business sector. They shall be selected based on a transparent procedure and appointed for a period of at least 5 years.

The Innovation Board shall be permanent and meet at least 6 times a year. It shall advise the Ministry of Education and Science and the Ministry of Innovation and Growth on all the matters related to the research and innovation policy. The implementation of this reform shall be completed by 30 September 2023. Investment 1 (C2.I1): Programme to accelerate economic recovery and transformation through research and innovation The investment’s objective is to enhance Bulgaria’s research and innovation performance and the effectiveness of technology transfer and foster information-sharing among research universities in Bulgaria; the investment consists of putting in place an effective financing system of research and innovation activities that rewards project proposals by innovative small and medium enterprises and higher education institutions. The investment shall include the following activities: -Financing of 38 projects by Bulgarian small and medium enterprises which have been awarded the quality label "Seal of Excellence" under Horizon Europe; -Financing of 10 projects by Bulgarian higher education institutions which were given a high "above the threshold" evaluation (i.e. above 10 points) by the European Commission, but did not receive European budget funding in the area "Widening Participation and Spreading Excellence" of FP Horizon Europe; -Financing for two European Research Area (ERA) Chairs; -Funding the implementation of innovation programmes by nine research higher education institutions in Bulgaria. In order to ensure that the measure complies with the ‘Do no significant harm’ Technical Guidance (2021/C58/01), the eligibility criteria contained in terms of reference for upcoming calls for projects shall -exclude the following list of activities and assets: (i) activities and assets related to fossil fuels, including downstream use; (ii) activities and assets under the EU Emission Trading System (ETS) achieving projected greenhouse gas emissions that are not lower than the relevant benchmarks; (iii) activities and assets related to waste landfills, incinerators and mechanical biological treatment plants; and (iv) activities and assets where the long-term disposal of waste may cause harm to the environment; and -require that only activities and assets that comply with relevant EU and national environmental legislation may be selected.



The implementation of this investment shall be completed by 30 June 2026. Investment 2 (C2.I2): Enhancing the innovation capacity of the Bulgarian Academy of Sciences

The investment aims to enhance the innovation capacity of the Bulgarian Academy of Sciences (BAS). The investment includes projects to: -modernise the physical and digital infrastructure of BAS and in particular to renovate two buildings; -restore the infrastructure at 14 BAS locations, upgrade the Joint Innovation Centre; -install fibre connectivity and deploy a Euro Quantum Communication Infrastructure (QCI) network. Furthermore, it includes the financing of research projects to enhance the innovation output of BAS, with a particular focus in the field of green and digital technologies. In order to ensure that the measure complies with the ‘Do no significant harm’ Technical Guidance (2021/C58/01), the eligibility criteria contained in terms of reference for upcoming calls for projects shall -exclude the following list of activities and assets: (i) activities and assets related to fossil fuels, including downstream use; (ii) activities and assets under the EU Emission Trading System (ETS) achieving projected greenhouse gas emissions that are not lower than the relevant benchmarks; (iii) activities and assets related to waste landfills, incinerators and mechanical biological treatment plants; and (iv) activities and assets where the long-term disposal of waste may cause harm to the environment; and -require that only activities and assets that comply with relevant EU and national environmental legislation may be selected. The implementation of this investment shall be completed by 30 June 2026. B.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support Seq N° Related Measure (Reform or Investment) Milestone / Target Name Qualitative indicators

(for milestones) Quantitative indicators

(for targets) Indicative timeline for completion Description of each milestone and target Unit of measure Baseline Goal Quarter Year 24 C2.R1: Common policy for the development of research and innovation Milestone Provisions in the law indicating the entry into force of new Research and Innovation Act and screening of amendments to other legislative acts required Provisions in the law indicating the entry into force of the Research and Innovation Act finalised report on the need for amendments to other legislative acts required Q2 2023 The Research and Innovation Act (the ‘Act’) shall enter into force. The Act shall set out the legislative framework of the new policy for the development of research and innovation.



The Act shall:

• define the legislative parameters of the national policy for the development and financing of research and innovation; • regulate the role and responsibilities of each of the institutions involved in the process of policy design, implementation, monitoring and evaluation in the field of research and innovation ; • define the instruments and mechanisms for policy implementation in the field of research and innovation policy.

With regard to technology transfer policy, the Act shall define: • the principles and rules governing the development and funding of technology and knowledge transfer policy;

• the role and functions of each of the institutions involved in the preparation, implementation, monitoring and evaluation of the policy for technology transfer. The Act shall replace the Research Promotion Act.

The Act shall also amend intellectual property rights legislation to enhance the coherence of the national framework for intellectual property rights and technology transfer taking into account the recommendations of the World Bank ‘Enhancing the Contribution of Bulgaria’s Public Research to Innovation: A Survey-based Diagnostic BULGARIA COUNTRY NOTE’, the World Bank, 2020 and on the recommendations of the Joint Research Centre ’Strategic Evaluation of the Bulgarian Centres of Competence and Centres of Excellence and Recommendations for their Further Development’, European Commission Joint Research Centre, 2021. The preparation of the Act shall be carried out with the involvement of the relevant ministries, agencies, and stakeholders, including higher education institutions and representatives of the private sector. The report on the amendments to other legislative acts shall summarise the findings of an exhaustive screening of all relevant primary and secondary legislation, including the Bulgarian Academy of Sciences Act, the Higher Education Act, and the Academic Staff Development Act, that require amendments for the entry into force of the Research and Innovation Act. The report shall list the legislative acts to be amended, the required changes and a timetable for the amendments. 25 C2.R1: Common policy for the development of research and innovation Milestone Establishment of the Innovation Board Operational Innovation Board and first meeting has taken place. Internal regulation of the Board published Q3 2023 The Innovation Board shall be an advisory body to the Ministry of Education and Science and the Ministry of Innovation and Growth, and co-chaired by the two ministers. It shall advise on and propose policies for the development of research and innovation. The members of the Innovation Board shall be selected among Bulgarian and international scientists and business representatives. Representatives of the business sector shall amount to at least 1/3 of the total members of the Innovation Board. All members shall be selected on the basis of a transparent procedure, and shall be appointed for a period of at least five years. The Innovation Board shall be permanent and its internal regulation shall specify that it meets at least six times a year. The Innovation Board shall be tasked to support consistency of the policy in the field of research and innovation with other national policies and strategies, including the Integrated Energy and Climate Plan, the Higher Education Strategy, the National Roadmap for Improving the Potential for the Development of Hydrogen Technologies, Industry 4.0 Strategy. The mandate, composition, function and internal rules of the Innovation Board shall be laid out in its internal regulation, which shall be made public. 26 C2.R1: Common policy for the development of research and innovation Milestone Legislative acts identified in the report on the amendments to other legislative acts amended and entered into force/ secondary legislative acts entered into force Q4 2024 All the relevant legislative acts identified in the report on the amendments to other legislative acts under milestone 24 shall be amended as required and enter into force. All the necessary secondary legislative acts related to the Research and Innovation Act shall enter into force. 27 C2.I1: Programme to accelerate economic recovery and transformation through research and innovation Milestone Notifications awarding projects by innovative SMEs and higher education institutions and research organisations Notification of the award Q2 2023 Notifications of award shall be sent to the projects proposals by the innovative small and medium-sized enterprises awarded the Seal of Excellence quality label and project proposals by higher education institutions for Horizon Europe. Notifications of award shall be sent to innovative project proposals by Bulgarian higher education institutions and research organisations which did not receive European funding under the widening of participation and dissemination of the excellence component of Horizon Europe European Framework Programme for Research and Innovation, namely Twinning and European Research Area (ERA).



The selection criteria shall ensure that priority is given to green and digital projects as well as that the selected projects comply with the Technical Guidelines “Do not cause significant harm” (2021/C58/01) through the use of the exclusion list specified in the description of the measure and the requirement to comply with relevant EU and national environmental legislation. 28 C2.I1: Programme to accelerate economic recovery and transformation through research and innovation Target Completed projects by innovative SMEs and higher education institutions and research organisations Number 0 50 Q2 2026 Completed projects in compliance with the requirements under milestone 27. These shall include 38 projects by innovative SMEs, 10 Twinning projects, and two ERA Chairs. 29 C2.I1: Programme to accelerate economic recovery and transformation through research and innovation Target Signature of contracts with research higher education institutions Number 0 9 Q2 2022 Signature of contracts with 9 research higher education institutions based on a decision of the Council of Ministers. The procedure for the selection and subsequent monitoring of the innovation programmes, based on peer-review, shall be carried out by a monitoring and evaluation committee established within the Ministry of Education and Science. Each contract shall lay down the conditions for the activities to be carried out with the funds, based on the innovation programs submitted by the higher education institutions. These shall determine a concrete plan for research development and technology transfer, and shall specify the participation in a network among the nine research higher education institutions, taking into account gender equality and the importance of green innovations. 30 C2.I1: Programme to accelerate economic recovery and transformation through research and innovation Target Reports on the implementation of the Innovation Programmes Number 0 9 Q4 2024 The reports shall present the results achieved by each of the research higher education institutions. The reports shall include information on the activities implemented and the indicators achieved for each sub-programme included in the strategic innovation agendas of each higher education institution. The reports shall be approved by a Monitoring and Evaluation Committee. The members of the Committee shall prepare a report on the progress of each of the research higher education institutions with implementing their innovation programmes and provide recommendations for their future development. The reports shall be published. 31 C2.I2: Enhancing the innovation capacity of the Bulgarian Academy of Sciences Milestone Upgraded Joint Innovation Centre within the Bulgarian Academy of Sciences Upgraded Joint Innovation Centre operational Q1 2023 The upgrade of the Centre shall be based on the Joint Research Centre recommendations Strategic Assessment of Bulgarian Competence Centres and Centres of Excellence and recommendations for their further development, 2021]. The Centre shall serve as a focal point for Institutes of the Bulgarian Academy of Sciences to liaise with business representatives.

The main elements of the upgrade shall include: - increasing the number and qualification of staff: four professionals, one for each of the following areas of expertise: intellectual property rights, commercialization of innovation, one for technology transfer with a focus on green and digital technologies, one for information technology, relations with business and with scientific collectives and Centres of Excellence and Competence; - establishing three Science and Innovation councils, each with a different specialisation and composed by seven members, to coordinate the activities of the Centre. They shall be responsible for the selection of innovation projects and shall oversee their implementation; - setting up an operational electronic portal for communication with businesses and stakeholders. 32 C2.I2: Enhancing the innovation capacity of the Bulgarian Academy of Sciences Milestone Deployment of Quantum Communication Infrastructure network Quantum network and optical route operational Q2 2023 The deployment of the Euro Quantum Communication Infrastructure (QCI) network shall cover the completion of works and the operationalisation of the optical route of the first phase of Euro QCI. The implementation of the Quantum Network shall be based on the European QCI Action Plan and the National QCI Plan. 33 C2.I2: Enhancing the innovation capacity of the Bulgarian Academy of Sciences Milestone Refurbishment of the research infrastructure of the Bulgarian Academy of Sciences Completed construction works and operating and commissioning license issued Q3 2025 The refurbishment shall cover the following works: reconstruction and upgrading of an applied research building (Block 12 in campus at BAN 4km); the refurbishment of a demonstration centre building (b. 29a in campus at BAN 4km); the purchase of research equipment, the rehabilitation of approximately 4 000 m² of research area covering 14 research institutes; and the improvement of the capacity, speed and security of internet connections (high speed fibre network) and the installation of a DDoS security platform to ensure the fast and secure transfer of large data within and between Institutes of the Bulgarian Academy of Sciences. 34 C2.I2: Enhancing the innovation capacity of the Bulgarian Academy of Sciences Target Completed research projects in the field of green and digital transition Completed research projects in the field of green and digital transition Number 0 38 Q2 2026 Research projects completed in the field of green and digital transition to Technology Readiness Level 7. The selection of projects shall be open and competitive and will be carried out by the Scientific and Innovation Councils created and with the help of peer reviewers.

The selection criteria shall ensure that the selected projects comply with the Technical Guidelines “Do not cause significant harm” (2021/C58/01) through the use of the exclusion list specified in the description of the measure and the requirement to comply with relevant EU and national environmental legislation.

The total amount of funding shall be 9.14 million, with 80% (EUR 7.31 million) for green transition projects and 20 % (EUR 1.82 million) for digital transformation projects. C. COMPONENT 3: Smart industry The Smart Industry co