EUROPEAN COMMISSION Brussels, 7.4.2022 SWD(2022) 106 final COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Bulgaria Accompanying the document Proposal for a COUNCIL IMPLEMENTING DECISION on the approval of the assessment of the recovery and resilience plan for Bulgaria {COM(2022) 172 final}



1. Executive summary 2. Recovery and resilience challenges: scene-setter 2.1. Macroeconomic outlook and developments since the 2020 country report 2.2. Challenges related to sustainable growth, cohesion, resilience and policies for the next generation Smart, sustainable and inclusive growth 2.3. Challenges related to the green and digital transition Green dimension Digital dimension 3. Objectives, structure and governance of the plan 3.1. Overall strategy of the plan 3.2. Implementation aspects of the plan 4. Summary of the assessment of the plan 4.1. Comprehensive and adequately balanced response to the economic and social situation 4.2. Link with country-specific recommendations and the European Semester 4.3. Growth potential, job creation, economic, institutional and social resilience, European Pillar of Social Rights, mitigating the impact of the crisis, and social territorial cohesion and convergence 4.4. The principle of ‘do no significant harm’ 4.5. Green transition 4.6. Digital transition 4.7. Lasting impact of the plan

4.8. Milestones, targets, monitoring and implementation 4.9. Costing 4.10. Controls and audit 4.11. Coherence ANNEX: Climate tracking and digital tagging 1.Executive summary The COVID-19 pandemic has interrupted several years of solid economic growth. This robust growth (3.6% on average over the five preceding years) was underpinned by growing private consumption and positive labour market developments. Still, Bulgaria has been slow to catch-up with the rest of the EU and it has the lowest level of income per capita (55 % of the EU average in PPP). After a fall by 4.4% in 2020, real GDP rebounded by 4.2% in 2021, driven by household consumption and goods export. This economic expansion is projected to continue with GDP set to grow by 3.7% in 2022 and 3.9% in 2023 according to the European Commission Winter Forecast, which however did not include the impact from the war in Ukraine. More adverse labour market developments have been avoided largely by the swift introduction of short-time work schemes, partly supported through the related European instrument for temporary support (SURE), as well as the EU’s recovery assistance for cohesion and the territories (REACT-EU). As a result of the contraction in economic activity and the support measures, the government balance recorded a deficit of 4% of GDP in 2020. According to the latest European Commission forecast, this was followed by a slightly improved deficit of 3.6% in 2021, thanks to the rebound of the economic activity. Large inflows of RRF and other EU funds are expected to support the activity in the coming years. The general government debt is estimated to have increased to around 27% of GDP in 2021. Although Bulgaria’s economy has rebounded from the immediate COVID-19 shock, structural vulnerabilities continue to weigh on its convergence prospects. Bulgaria has one of the highest levels of poverty and income inequality and a weak performing health system characterised by a limited access to healthcare services. Strong regional disparities, a shrinking working-age population and rising labour shortages, particularly in sectors demanding specific skills, weigh on productivity growth and upward social convergence in the country. Despite reform efforts, the quality and inclusiveness of education remain a concern, with persistently high rates of early school leaving, low levels of basic and digital skills, and a strong impact of the socioeconomic status on students’ performance. The business environment is generally not supportive of investment, also due to many institutional shortcomings. Bulgaria has been unable to create a solid track record so far in fighting corruption, which would help to build up the currently very low levels of public trust in institutions. The uptake of digital technologies is slow in both public and private sectors and Bulgaria ranks last among EU Member States in digital skills. The country is also underperforming in the area of research and innovation. Finally, Bulgaria remains the most energy- and greenhouse gas-intensive economy in the EU by a wide margin. For many years, there has been a strong reluctance to commit to or even plan a coal phase out. This has become urgent to ensure that the high societal and economic costs of the transition are minimised. To sum up, broad-based structural reforms are needed to boost productivity and to achieve a sustainable and inclusive growth. Bulgaria’s Recovery and Resilience Plan (“Plan”) has an estimated total cost of EUR 6.9 billion. It is structured around twelve components grouped in four policy pillars: i) Innovative Bulgaria; ii) Green Bulgaria; iii) Connected Bulgaria; and iv) Fair Bulgaria. It consists of 103 individual measures (47 reforms and 56 investments). The estimated total cost of the plan is above the non-repayable financial support available to Bulgaria under the RRF Regulation of EUR 6.27 billion. Bulgaria has not requested any loans under the RRF Regulation. Bulgaria’s Plan represents to a large extent a comprehensive and adequately balanced response to the economic and social situation in the country. Therefore, it contributes appropriately to the six policy pillars referred to in Article 3 of the Regulation. The Plan strongly supports the green transition and aims to address the major societal and environmental challenge of decarbonisation of the economy. The Plan is expected to greatly accelerate the deployment of the renewable energy sources and to cut by 40% the greenhouse gas emissions from power production. It includes measures for the decarbonisation and the digitalisation of the transport sector, promoting low-emission mobility and use of less polluting modes of trasnport, and for the improvement of road safety. Moreover, the Plan includes a host of measures supporting the digital transition that are spread over many components, including the large-scale roll-out of very high capacity networks across the country, digitalisation of the public administration, education and training systems, and judiciary. Additionally, a number of measures will contribute to a smart, inclusive and sustainable growth, including through reforms and investments for improving business environment, fostering innovation and R&D and supporting SMEs and the cultural and creative sectors. Social cohesion is strengthened through the reform of the minimum income scheme and the modernisation of the Employment and Social Assistance agencies, as well as by providing support to the social and solidarity economy. The Plan also contains measures for improving education and skills, lifelong learning and vocational training, and reforming the system of social services, including the long-term care. As one of the critical sectors for crisis preparedness and resilience, the health sector is specifically supported by a dedicated component. The Plan also includes measures for the next generation, such as the mandatory inclusion of four-year olds in pre-school education, and investments in the educational infrastructure, including school laboratories and youth centres. The Plan constitutes a comprehensive package of reforms and investments addressing all or a significant subset of the challenges and recommendations identified in the European Semester. The Plan addresses the country-specific recommendations in the social field with measures to foster social inclusion, which are expected to improve the adequacy and coverage of the minimum income scheme, and with measures to move forward the integration of employment and social services. Other measures addressing the country-specific recommendations focus on skills acquisition - in particular digital skills, on improving the labour market relevance of the education and lifelong-learning systems and on widening the offer of healthcare services across Bulgaria. These actions can contribute to reach the objectives and progress further on the European Pillar of Social Rights and its Action Plan by 2030. Furthermore, through advancing the decarbonisation of the energy sector, increasing the overall energy efficiency, and implementing actions on sustainable transport and digital infrastructure and services, the Plan addresses country-specific recommendations in those areas. Finally, the Plan contains far-reaching measures to improve the efficiency of the public administration and justice system, to prevent, detect and correct corruption, to improve the business environment and to improve the research and innovation system. The Plan contributes to climate objectives for 58.9% (close to EUR 3.7 billion), thus over-achieving the climate target of 37% by a large margin. Reforms and investments in the Plan aim to accelerate the decarbonisation of the energy sector by setting out a clear commitment to approve by 2023 a calendar to phase out coal and lignite power generation as soon as possible and at the latest by 2038, as well as by facilitating the deployment of renewables and alternative energy sources, such as green hydrogen and biogas. The Plan also includes reforms aiming to establish competitive wholesale and retail markets through a gradual deregulation of electricity prices by 2025 and to strengthen the governance of energy SOEs. The biodiversity component of the Plan contains measures aiming at protecting and restoring ecosystems and natural habitats and species of European and national importance. The Plan is expected to enhance the sustainability of the transport sector by reforming the road and railways sectors, promoting zero-emission vehicles, enhancing road safety, and investing in railways, intermodal transport and sustainable urban mobility. This includes investments in the modernisation and digitalisation of railways, new zero-emission rolling stock, deployment of the European Rail Traffic Management System, a new intermodal terminal in Ruse and clean public transport (Sofia metro and a pilot programme for sustainable urban mobility). The recovery and resilience plan contributes to the digital objective for 25.8% ( EUR 1.6 billion), thus achieving the digital target of 20%. Investments in digital connectivity include the roll-out of very high capacity networks in rural and sparsely populated areas, which are lagging behind in terms of digital inclusion. The reforms included in the Plan aim to contribute to the development and implementation of an effective policy and regulatory framework, the efficient use of the radio frequency spectrum for the development of 5G networks and services and the creation of a favourable investment environment. The Plan also includes a comprehensive package of reforms and investments to support the digitalisation of the public administration, including the judiciary, unlocking the potential in areas such as justice, health, agriculture, environment, culture, employment and social protection. The Plan includes measures to increase the level of digital skills of the population. The Plan 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 the business processes and increased cybersecurity capabilities should contribute to improvements in 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. The implementation of the investments and reforms in the Plan is expected to have a lasting impact, primarily by strengthening the public institutions and by structural reforms in key policy areas. Ambitious reforms in the judiciary and anti-corruption bodies combined with administrative reforms in key areas such as research and innovation, green transition and digital transformation, aim to improve the quality of public services. In addition, policy changes to reduce existing barriers to business activity and reforms to address long-standing problems in education, healthcare and social protection complement investments in these areas. Overall, the Plan addresses many of the country's core problems in the areas of environmental sustainability, business environment, education and skills, healthcare, social and labour market. As a result, the implementation of the Plan is expected to lead to a faster, more sustainable and more inclusive economic growth. The National Fund Directorate of the Ministry of Finance is designated as the coordinating unit for the implementation and control of the Plan. The Directorate will act as a focal point at the national level for the preparation of common rules and procedures and for carrying out checks and controls on the implementation of milestones and targets. The Economic and Financial Policy Directorate at the Ministry of Finance will assist the National Fund Directorate by reviewing and confirming the implementation of reforms included in the Plan.. The proposed qualitative and quantitative indicators used for the milestones and targets are sufficiently clear, realistic and comprehensive to ensure that their completion can be traced and verified. Where compliance with the Do No Significant Harm principle cannot be ascertained in advance, the milestones and targets lay out adequate safeguards for compliance. The large number of milestones and targets appears commensurate to the size of the reform and investment package. To support a successful implementation of the Plan, the administrative and implementation capacity of the implementing bodies will be reinforced and closely monitored.

Overall, the costing information and supporting documents provided appear to be reasonable and plausible. The Plan provides adequate explanations on the methodology used for establishing the cost estimates for the majority of measures. The justification provided by Bulgaria on the amount of the estimated total costs of the Plan is to a medium extent reasonable, plausible, and in line with the principle of cost-efficiency. The total cost is commensurate to the expected national economic and social impacts. For all measures, calculations behind the cost estimates are provided, and these are generally clear and understandable, though in certain cases, more details could have been provided to explain how the final budget was computed. The estimated cost of reforms and investments included in the Plan is in line with – and consistent with – existing information for similar reforms and investments, including those funded by other Union programmes, if available. The cost estimates of the Plan have been reviewed by the Bulgarian Executive Agency for ‘Audit of European Union Funds’, which provides further assurance of their reliability. Bulgaria provided sufficient information and evidence that the amount of the estimated cost of the reforms and investments of the Plan is not covered by existing or planned Union financing. The Plan adequately describes the system for the implementation of the audits and controls. The internal control system described in the Plan 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 for the collection and publication of data on final recipients are expected to prevent, detect and correct corruption, fraud, 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 Plan is to be put in place and operational by the time of the first payment request. The proposed measures give assurance that there is an adequate level of control to prevent, detect, and correct irregularities identified when using RRF funds, provided that the pending points on the repository system and administrative capacity are addressed before the first payment request, as required by the dedicated milestones. The Plan’s twelve components represent a package of coherent reforms and investments. The Plan 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 which include overall consistent packages of mutually reinforcing and complementary reforms and investments. The measures in each of the individual components are mutually reinforcing, as investments are accompanied by reforms that aim to resolve structural underlying challenges. (1)

Balanced Response (2)

CSRs (3)

Growth, jobs… (4)

DNSH (5)

Green target (6)

Digital target (7)

Lasting impact (8)

M&T (9)

Costing (10)

Control Systems (11)

Coherence A A A A A A A A B A A 2.Recovery and resilience challenges: scene-setter 2.1.Macroeconomic outlook and developments since the 2020 country report At the onset of the COVID-19 pandemic, economic conditions in Bulgaria were favourable. The positive trend of robust economic growth in the last five years (3.6% on average) was underpinned by growing private consumption and positive labour market developments. Still, Bulgaria has been slow to catch-up with the rest of the EU and the modest positive trend has been interrupted by the COVID-19 outbreak. Bulgaria has also had three rounds of parliamentary elections in 2021, ushering in a period of political instability. After the ordinary parliamentary elections in May and a snap election in July, a new round of combined presidential and parliamentary elections on 14 November has finally led to the formation of a government. The government backed by a four-party coalition was approved by the Parliament on 13 December. The Bulgarian economy is gradually rebounding from the pandemic-induced shock. After falling by 4.4% in 2020, real GDP rebounded by 4.2% in 2021, driven by household consumption and goods export. This economic expansion is projected to continue. Private consumption remained relatively unfazed in 2020 given that the industries most hit by the supply restrictions, e.g. accommodation and catering services, account for a much smaller share of consumer spending in Bulgaria than in other EU Member States. In addition, Bulgaria has had generally less stringent restrictions in the second half of the year. In 2021, private consumption grew robustly, supported by the job retention schemes, positive wage dynamics, low household debt, and improvements in consumer sentiment. Investment growth remained subdued in 2020 and turned negative in 2021. The contraction in capital formation was driven by high uncertainty, combined with reduced business activity in the sectors most affected by the pandemic. The exports of goods have fully recovered. They reached their pre-pandemic level already at the beginning of 2021, following a sharp drop at the onset of the pandemic in Q2-2020. In contrast, in 2021 the exports of services, which are normally dominated by revenue from foreign tourism, were still 50% below their 2019 levels. The volatility in energy and food prices has been driving the overall inflation in 2020 and 2021. This is expected to remain in the next two years. Effects of hikes in energy prices are exacerbated by the energy intensity of the economy. The price for electricity on the free market has increased four-fold and has become more volatile since mid-2021, while the regulated prices have been kept fixed. As the economy is still around three times more energy intensive than the EU average, the indirect effect on the producer and final consumer prices is more pronounced than in most of the other EU Member States. According to the Commission’s Winter 2022 Economic Forecast, Annual HICP inflation is expected to reach 6.3% in 2022 and to fall to 3.9% in 2023. The economic expansion is projected to continue. According to the Commission’s Winter 2022 Economic Forecast, which was finalised before the start of the war in Ukraine, GDP is forecasted to grow at 3.7% in 2022 and 3.9% and 2023. Investment rates are projected to increase with an important contribution from investment projects financed by the Plan. Exports are also set to contribute to the economic growth, following the evolution of external demand. Private consumption is expected to grow steadily, albeit at a more moderate pace compared to the high 2021 rates, amid expected consumer price increases. The dynamic growth in nominal disposable income, supported by the favourable labour market situation and increased social transfers, is forecast to offset the negative effect of higher consumer prices on private consumption both in 2022 and 2023. Unemployment is stabilising after a surge at the onset of the pandemic. Prior to the pandemic, unemployment had reached historical lows, before jumping to 6.6% in Q2-2020 as the Covid-19 crisis took hold. Since Q3-2021 it has levelled off and in January 2022 it stood at 4.7%, (seasonally adjusted). As expected, the largest share of job losses was recorded in the accommodation and food services sectors. In parallel, the labour market participation rate has dropped on average by around 1 pp since the beginning of the COVID-19 crisis, as some dismissed workers may have moved at least temporarily into inactivity. More adverse labour market developments have been avoided largely by the swift introduction of short-time work schemes and the support received through SURE, the EU’s temporary support scheme for national short-term work schemes, and REACT-EU, the EU’s recovery assistance for cohesion and the territories. The quick rebound in manufacturing production and the relaxation of containment measures already in the second half of 2020 also supported the labour market demand. According to the Commission’s Autumn 2021 Economic Forecast, the favourable economic outlook is set to further tighten the labour market, with unemployment rates gradually declining to 4.6% in 2022 and 4.4% in 2023. At the same time, the transition back to the full-time work and a projected increase in activity rates are forecast to partially alleviate the pressure on the labour market and on wages. Nevertheless, growth of wages is expected to remain strong at 9% in 2022 and 7.9% in 2023. Emergency budgetary measures helped to contain the negative effects of the pandemic, making use of the fiscal space created before the pandemic. The Bulgarian government has raised health care related funding for providers of medical care and introduced measures including the provision of vaccines and PCR tests, as well as additional remuneration payments for medical staff. It has also provided relief to those individuals and sectors that have been particularly affected and launched measures to protect jobs. The estimated direct budgetary impact of these measures in 2020 is close to BGN 3.8 billion (EUR 1.94 billion), or around 3.2% of GDP. Taking into account these measures and the impact of the pandemic on economic activity, the Bulgarian government amended its budgetary target to a deficit of 3.1% of GDP in 2021. In light of the rising energy prices, the government has introduced compensations for firms in certain sectors. The indicative amount of these measures hover around BGN 1.8 billion (EUR 920 million) or 1.2% of GDP. The general government debt is estimated to have further increased to around 27% of GDP in 2021. Overall, national as well as EU-wise measures to address the exceptional economic situation have helped to lessen the shock on household income and prevented further rise in income inequality and poverty risk. Although profitable and well-capitalised, the financial sector operates amid heightened uncertainty. The system-wide CET1 ratio remained high at 22.1% at the end of Q2 2021. Following the pronounced decline in 2020, profitability of banks has improved somewhat in 2021, with return on equity at 8.1% in Q2 2021. The measures announced by the Bulgarian National Bank at the beginning of the crisis, including the retention of profits and limit on commercial banks’ foreign exposures, were instrumental for preserving the banking sector stability. Risks stem mainly from the relatively high share of non-performing loans, corporate indebtedness and banks’ exposures to highly affected sectors. The NPL ratio has been on a downward trend across individual banks and segments, declining to 5.6% at the end of Q2 2021 (from 6.7% a year earlier). Nevertheless, certain credit risk linked to the expiration of the loan payment moratorium, imposed in April 2020, exists. Notwithstanding the gradual rebound from the immediate economic shock, structural weaknesses hamper Bulgaria’s path towards convergence. GDP per capita in PPP in Bulgaria has converged from 45% of the EU average in 2010 to 55% in 2020. The gap in consumer price level to EU average has remained relatively unchanged in the last ten years, with overall prices at 55% of EU average in 2020. Bulgaria has one of the highest levels of poverty and income inequality and a weak performing health system characterized by limited and unequal access to healthcare services. Broad-based structural reforms are needed to boost productivity and to achieve sustainable and inclusive growth. In the longer term, adverse demographic developments and high inactivity rates pose significant risks. Bulgaria is facing a double-trend of an ageing and rapidly shrinking population, which decreased by around 10% over the past decade, according to the preliminary results of the 2021 population census. Combined with the high inactivity rates for some groups, notably those living in rural and underserved areas, this remains a key challenge for achieving a fair and inclusive recovery. Bulgaria entered the COVID-19 crisis with a strong fiscal position. The general government budget was in surplus since 2016. Rising revenues from taxes and social security contributions counterbalanced increases in expenditure that were mainly due to higher public wages and a partial recovery in public investment. In 2020, the COVID-19 pandemic pushed the general government balance down. Revenues fell due to the economic downturn and expenditure increased to address the social and economic consequences of the crisis, while increases in public wages continued. Mainly as a result of these developments, the general government budget registered a deficit of 4% of GDP in 2020 against a surplus of 2.1% of GDP in the previous year. The Commission 2021 autumn economic forecast estimated the general government deficit at 3.6% of GDP in 2021, which is an improvement but still above the 3% of GDP, mainly due to the continued COVID-19 emergency support measures and new permanent social measures. The general government debt, which increased by almost 5 pp, to 24.7% of GDP in 2020, is estimated to have further increased to around 27% of GDP in 2021. The authorities’ macroeconomic scenario in the Medium-term fiscal framework (MFF) is more favourable than the Commission’s projections. The difference in growth rates for 2022 stems from the more favourable assumptions on private consumption and investment activity. In the Ministry of Finance forecast, GDP is set to grow more rapidly, at 4.8% in 2022. The difference in expected GDP growth comes from both the higher private consumption and higher investment. The MFF forecast projects lower consumer price inflation at 5.6% in 2022 and 2.7% in 2023, which may partially account for the more buoyant private consumption. The high investment rate in the MMF forecast stems from the assumed full additionality of privately co-financed investment under the Plan. The expected labour market developments in the MFF are more favourable than the Commission expectations. According to the forecast by the Ministry of Finance, the number of employed is set to increase on average by around 1% in the period 2022-2024 and unemployment rate to decline from 5% in 2022 to 4.6% in 2023. The expected employment growth is above the Commission forecast, while the reduction in unemployment is broadly in line with that of the Commission. This suggests more favourable labour supply developments in the MFF forecast. The Commission projection acknowledges that the employment growth is limited in the medium term by the negative demographic trends. Another factor that constrains higher employment rates according to the Commission is the shortage of skilled labour, skill mismatches and comparatively low participation rates, combined with stark regional disparities. The MFF macroeconomic scenario envisages a continued wage growth at 8.1% in 2022, 7.4% in 2023 and 7% in 2024, somewhat below the Commission projections.

2.2.Challenges related to sustainable growth, cohesion, resilience and policies for the next generation Smart, sustainable and inclusive growth Despite significant increase in recent years, labour productivity remains below half of the EU average. In 2020, labour productivity per hour worked increased by 0.3% and reached 48.8% of the EU average. Total factor productivity is also picking up, outperforming the EU average growth. Broad-based structural reforms and additional investments are needed to boost productivity and achieve sustainable and inclusive growth, especially in the context of adverse demographics, considerable skill shortages and rising regional disparities. The Next Generation EU funds and Bulgaria’s path towards euro adoption provide unique opportunities for modernisation of the economy. Investments in the recovery and transformation and commitments to key reforms are expected to boost potential growth. The business environment is not supportive of investment and institutional quality is low. Bulgaria ranks low in the World Bank’s Worldwide Governance Indicators and the European Quality of Government Index. In addition, institutions remain among the least performing areas in the Global Competitiveness Index. Despite the progress in past years, Bulgaria still has to address issues related to effective criminal investigation and independence of the judiciary, and there are some weaknesses in public procurement. In the Single Market Scoreboard, Bulgaria keeps ranking low compared to other Member States on the account of underperformance in transparency, competition and efficiency dimensions of public procurement. The country’s performance with regards to the transposition deficit of the Single Market directives and on infringements is worsening. Furthermore, restrictiveness of some regulated professions is higher than the EU average. There are longstanding challenges in the fight against corruption. In 2017 and 2018, Bulgaria carried out a comprehensive reform of its legal and institutional anti-corruption frameworks. The reforms are starting to bear fruit and have led to improved cooperation between the relevant authorities. Nonetheless, corruption remains a problem, and the protests that had erupted in summer 2020 revealed a widespread discontent in the society. The corruption perception surveys also show a very low level of public trust in the anti-corruption institutions, which should establish a solid reputation of impartiality, objectivity and independence in the exercise of their responsibilities. A solid track-record of final convictions in high-level corruption cases remains to be established, and sufficient resources should be provided to fight corruption effectively. Finally, the country does not yet have legislation on lobbying and protection of whistle blowers. The areas of efficiency and quality of justice also need further improvement. The persisting data gaps, which can be solved through better electronic tools, prevent from assessing the efficiency of the justice system in a comprehensive manner. The COVID-19 pandemic has further highlighted the need for effective justice systems that can continue to function amidst a crisis. The resilience of the national justice system could be strengthened by deploying secure electronic communication channels, by enabling proceedings to take place via videoconferencing, and ensuring uninterrupted access to services provided by the judiciary via electronic means. The Bulgarian research and innovation performance is among the weakest in the EU. This represents a significant barrier for the country’s transition towards a knowledge-based economy. The weak performance of the public science base is a major bottleneck. The public research system continues to be characterized by a high level of institutional fragmentation, whilst public R&D funding remains critically low. The outdated research infrastructure and a dwindling number of researchers, alongside unattractive research careers and an ineffective R&I policy governance constitute major challenges. The weak links between academia and business hamper knowledge and technology transfer. Moreover, insufficient incentives to commercialize research results and a misalignment of research policy with industry needs create barriers for public-private linkages. Finally, the uptake of digital technologies is slow in both public and private sectors. The uptake of digital technologies is slow in both public and private sectors. The stock and quality of physical infrastructure remains inadequate. This pertains to both the energy and water infrastructure, as well as to the weak transport connections (especially in the north of the country and some cross-border connections). Robust transport and energy networks would help companies to connect with global markets and suppliers, also boosting their productivity. A well-developed and sustainable infrastructure would also help to attract more foreign direct investment, which can support the economy’s shift to a production of higher value-added goods. Small and medium-sized enterprises (SMEs) continue to face many difficulties. Bulgaria underperforms with regards to the SME environment, particularly in the areas of entrepreneurship, skills, innovation and digitalisation, where it has one of the weakest scores in the EU. So far, measures in support of SME policies have had only a limited effect. On the positive side, access to finance has been relatively good, although it has worsened during the pandemic. Access to equity financing has been improving in recent years as well, but further improvements could foster the creation and development of innovative and high-growth companies. With the COVID-19 crisis, liquidity support was provided by the government in the form of grants, loans and guarantees. The performance of state-owned enterprises (SOEs) remains a source of concern. There are around 221 SOEs in Bulgaria, spread across many important sectors such as energy, transport, water and health. The financial and operational performance of SOEs is a source of risk for the national budget, while their inefficient and non-transparent operation can lead to distortions in the market and act as an obstacle to private investment. Improving the transparency and governance of SOEs would free up resources and increase the investment potential. Putting in place reforms of the overall regulatory framework and market environment in which these SOEs operate is crucial for improving their performance, particularly in the energy and transport sectors. Bulgaria is currently implementing a major reform of the corporate governance framework of SOEs. This initiative was part of the government’s action plan to prepare for applying to the Exchange Rate Mechanism II (ERM II) and it is also included in the Plan. Bulgaria has been introducing measures to digitalise the tax administration and to improve the tax collection. In 2021, Bulgaria was amongst the countries with the most significant decreases in the VAT gap and there has been some progress with the collection of labour and fuel taxes as well. However, the tax compliance burden remains high. The tax rate on energy is the second lowest in the EU and there are no specific environmental targets related to tax policy. The green taxation in transport is underdeveloped and progress could be made in line with the ‘polluter pays’ principle to stimulate the demand for clean vehicles and gradually phase out polluting vehicles. Social resilience, healthcare and territorial cohesion In the longer term, adverse demographic developments and high inactivity rates pose significant risks. Bulgaria is facing a double-trend of an ageing and a rapidly shrinking population (decrease of around 10% over the last decade). Combined with high inactivity rates for some groups, notably those living in rural and underserved areas, this remains a key challenge for potential growth and for achieving a fair and an inclusive recovery. In the context of labour shortages, it is key to focus on activation measures, reskilling and upskilling. Bulgaria’s spending on overall active labour market policies is among the lowest in the EU and skill mismatches relative to labour market needs are higher compared to the other Central and Eastern European Member States as well as to the EU average. Even the high-growth enterprises in Bulgaria exhibit shortages in human capital relative to the EU average. The already very low rates of adult participation in learning and the lowest level of digital skills in the EU have worsened due to the pandemic. Participation in adult learning is particularly important considering that the low skilled account for 17.5% of the working-age population. Only 29% of the adult population has basic digital skills (close to half of the EU average). The population’s participation in vocational education and training (VET) is also low. The digital and green transitions will bring new challenges but also potential opportunities for the development of the labour force. Access to quality education and low educational outcomes are major issues. Low participation in early childhood education and care also remains a major challenge. The rate of early school leaving is still high, particularly among disadvantaged groups, including Roma, and in rural areas, and influences the employability and labour markets outcomes. Although Bulgaria’s investment in education continued to increase in 2019 but was still one of the lowest in the EU. In 2020, Bulgaria’s general government expenditure on education increased by 5%, reaching the equivalent of 4.0% of GDP and this was largely due to the increases in teachers’ salaries. At the same time, insufficient investments in pre-primary and primary education further widen inequalities among students from an early stage. Educational outcomes are low, with almost half of Bulgaria’s teenagers lacking basic skills (against one out of five in the EU). Key reforms on pre-school, school education, adult learning and higher education, complemented by the corresponding investments, including in the IT infrastructure, would help to overcome gaps in the education area. Bulgaria is facing high income inequality accompanied by fragmented and relatively ineffective social benefits. The situation is particularly dire in terms of the risk of poverty and social exclusion, the poverty reduction impact of social benefits and inequality. The labour market impact of the COVID-19 crisis is expected to further worsen the situation, with direct long term knock-on effects for educational outcomes of children from disadvantaged families. The limited capacity of the social services and public employment services and the lack of an integrated approach affects their ability to improve the employability and social inclusion of the vulnerable groups. The pandemic has put under spotlight the structural challenges related to the sustainability, accessibility and capacity of the healthcare system. Total life expectancy in Bulgaria, at 73.6 years, is 7 years below the EU average. Limited access to health care, which is mainly a consequence of high out-of-pocket payments, gaps in health insurance coverage, as well as unequal regional distribution and low number of health professionals (primarily nurses), has been characteristic of the Bulgarian health system for many years. The system is hospital-centred to the detriment of ambulatory care. This is a result of low public expenditure on healthcare and public health (5.9 % of GDP in 2020, 2.1 percentage points below the EU average), covering only around 60.6 % of total healthcare costs, against 79.5 % on average in the EU. The share of ‘out-of-pocket’ payments (formal and informal) is therefore the highest in the EU, bringing the burden of healthcare costs above the EU average. The effectiveness of the health care system in Bulgaria remains low in comparison to other Member States. Deaths from both preventable and treatable causes are well above the rates for the EU as a whole. There remain significant inter and intra-regional disparities in Bulgaria. Regional disparities have been increasing considerably since 2000, reaching a peak in 2010 and stabilising afterwards. The main driver is the concentration of economic activity in the capital region of Sofia and its rapid development in 2000-2010. The capital region of Sofia (South-West) also attracts more than half of the foreign direct investment in the non-financial sector, which is mostly concentrated in the capital itself. The poorest performers are the North-Central and in particular the North-West region. Demographic developments also influence regional trends in GDP per capita. The NUTS2 regions that were most affected by demographic changes over the last decade are the North-West (-28.8%) and North-Central (-23.1%). A balanced distribution of investments to the private sector, infrastructure and research and development may lead to a mitigation of regional disparities.

2.3.Challenges related to the green and digital transition Green dimension At least 37% of the financial allocation in the recovery and resilience plans needs to contribute to the green transition. The measures in the Plan are expected to contribute to achieving the 2050 climate neutrality objective, and the 2030 energy and climate targets, taking into account Member States’ national energy and climate plans. They should also contribute to meeting the environmental targets for waste, water, pollution control, sustainable mobility, biodiversity protection and restoration, marine and water resources, and support the transition to sustainable food systems as well as to a circular economy, while ensuring that nobody is left behind. It will be essential that local and regional stakeholders from the coal regions are closely involved in the implementation of the measures in the RRP and in the co-designing of further measures for the transition to climate neutrality. Renewable energy Bulgaria’s 2020 target on renewable energy of 16% is already achieved. In 2019 the share of consumption was 20.5%. The main source of renewable electricity is hydro, which accounted for more than half of renewable electricity production in 2018. In the heating sector, the source of renewable energy is heavily concentrated (96%) in solid biomass and biogas only accounts for 4%. This puts a challenge on Bulgaria to further decarbonize the sector, while maintaining the environmental requirements for biomass and air quality. Another challenge for a stronger penetration of renewables is the need for a more flexible and smarter electricity network. Bulgaria aims to contribute to the EU’s 2030 target for renewable energy by reaching 27.09% of renewable energy. This contribution is just above the 27% share calculated using the formula in Annex II to Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action (the ‘Governance Regulation’) setting out the national contributions for the share of energy from renewable sources. Additional policies and measures will be needed to achieve Bulgaria’s 2030 target. Energy efficiency Bulgaria has the most energy-intensive economy in the EU. Energy efficiency will become more important in the process of decarbonisation. Energy efficiency measures complement renewable energy deployment in reducing the carbon emissions and in increasing Bulgarian competitiveness. Bulgaria’s aims to contribute to the EU 2030 energy efficiency target by reducing primary energy consumption by 27.9% and final energy consumption by 31.7% compared to the 2007 reference scenario projections for 2030. Based on the underlying assumptions of the NECP, this translates into a contribution of 17.5 million tonnes of oil equivalent (Mtoe) for primary energy consumption and 10.3 Mtoe for final energy consumption. These energy efficiency contributions are considered to represent low ambition in terms of the primary and very low ambition in terms of the final energy consumption. Energy efficiency of the building stock remains a challenge. The NECP lists a number of key actions for building renovation with a quantitative objective of renovating a total of 22.2 million m2 by 2030, 49.6 million m2 by 2040 and 55.8 million m2 by 2050. According to Bulgaria’s Long-Term Renovation Strategy (LTRS), energy efficiency funding provided through Operational Programmes until 2020 covers 8% of total financing necessary for the non-domestic sector, and 9% in the residential sector. The estimated investment needed in the period 2021-2025 is €162m per year, rising to €314m per year in the period 2026-2030 – resulting in a total of €1.1 bn until 2026. Energy poverty Energy poverty continues to be a widespread issue in Bulgaria. In 2020, 27.5% of the Bulgarian people reported they were unable to keep their homes adequately warm and 22.2% of the population was unable to pay their utility bills on time due to financial difficulties. In particular people living in rural areas, which account for 32% of the population, have the lowest performance for the ability to keep the house adequately warm and having arrears on utility bills. Socio-economic impact of coal phase-out The socio-economic impacts of coal phase out are expected to be high for affected local communities. With about 43.1% of electricity produced by indigenous lignite and brown coal-fired power plants, a significant number of workers will be affected by the necessary gradual coal phase out, giving rise to needs for reskilling and the creation of jobs. These socio-economic effects are especially expected to affect people living in coal regions, such Maritza, Pernik and Kyustendil. This calls for measures and programmes that aim to reskill the affected workforce, provide sectoral and geographic mobility support, and repurpose coal mining areas and coal-fired power plants in a way that creates new economic and employment opportunities. When defining the vision and steps for the transition to climate-neutrality in particular, it will be essential that local and regional stakeholders from the coal regions are closely involved in co-design and implementation. Air quality Air quality in Bulgaria is still a cause for severe concern. Bulgaria continues bearing significant health burden due to poor air quality. The Commission has referred the country to the Court of Justice of the EU (CJEU) for a second time because of its continued failure to comply with the PM10 limit values and to keep the period of exceedance as short as possible. The zones with systematic and continuous PM10 exceedances since 2007 at least until 2019 cover a territory where approximately 95% of the population of Bulgaria lives. The main sources of pollution with particular matter (PM, dust) remain domestic heating sector using solid fuels and transport. The lignite-fired power plants are the cause of excessive sulphur dioxide pollution, which is subject to a litigation before the CJEU. The heavy reliance on biomass for renewable energy production in Bulgaria does not provide a suitable alternative to fossil fuels in this respect. Circular economy Bulgaria has not yet adopted a strategic circular economy view. With 2.4% circular (secondary) use of material, Bulgaria scores significantly lower level than the EU average of 11.9%. Bulgaria also has the EU’s lowest rate of resource productivity. Waste management, including separate collection, remains a challenge. While there was some progress in closure and rehabilitation of non-compliant landfills, the process is still not completed and illegal landfilling remains an issue. The recycling rate of municipal waste is considerably lower than the EU average and Bulgaria remains at risk of not meeting the EU recycling targets. The ‘pay-as-you-throw’ principle will only be enforced as of 1 January of the second year following the publication of the results of the 2021 census, and the unfair practice of not calculating waste collection fees on the basis of waste generation will continue beyond 2023. There is no national waste management registry in Bulgaria at present. Such a registry would increase the waste management standards and transparency in waste management – a sector prone to fraud and corruption. Water Little progress has been observed in achieving compliance with the drinking water and urban wastewater treatment directives. Following the start of a reform of the sector by Bulgaria, significant investments have been made through the Cohesion Policy. These have led to positive results such as the conclusion of 16 regional feasibility studies for water/wastewater investments, which are now forming the basis for infrastructure investments across the country. However, implementation is slow and needs are huge with large investments still required to achieve compliance with the EU Directives, and to reduce the high level of water leakage due to old and poorly managed infrastructure. The water management reform is still to be completed in six of the 28 NUTS3 regions. The consolidation aims to build the resilience of the sector, however, operators are in weak financial position and no reform has been put in place yet to ensure their viability and long-term sustainability and that of the network. The quality of ground water in Bulgaria is also deteriorating. Significant delays in updating Bulgaria’s marine strategy due in 2018 have led to Bulgaria being referred to the Court of Justice of the EU. Biodiversity

Threats to nature and biodiversity remain. While Bulgaria has a vast and diverse natural protected areas (including over 34% of the territory covered by Natura 2000) and a high potential for a green economy, it has not shown much commitment to exploiting this potential in a sustainable way. Bulgaria has not yet implemented its obligation to establish site-specific conservation objectives and measures for a majority of its sites. In addition, the appropriate assessment of the impacts of projects and plans on the Natura 2000 sites is not made according to standards. Cumulative impacts are systematically not taken into account, nor is the impact on the integrity of the sites. Many developments representing a major threat to Natura 2000 sites, protected habitats and species have still been authorised, while at the same time Bulgaria reported that in the period 2013-2018, only 12.23% of its habitat types and 38.06% of its species of Community interest were in favourable conservation status. These factors continue to present an untapped potential for economic growth based on the development of sustainable and niche tourism and the recreational sector. A higher use of green infrastructure and ecosystem-based solutions would also bring significant benefits to the country in support of biodiversity while also addressing some impacts of climate change and contributing to improvements to air quality. Bulgaria was the worst performing Member State in the 2019 Eco-innovation index by a large margin. Certifying a number of companies with environmental management systems has not led to a significant uptake in terms of green products offered nor eco-innovation. Despite certain success with some waste streams (plastics and waste from electric and electronic equipment), the potential of a new circular business models is still to be explored. No progress has been made in terms of water savings and water reuse. Sustainable transport The limited development of the transport infrastructure and the slow progress on the Trans-European Transport Network (TEN-T) affects the economic and social development of Bulgaria. This contributes to significant disparities between the different regions and a North-South divide. The TEN-T investments are crucial for a balanced socio-economic development and for connectivity with neighbouring countries. An important regional asset for transport, the Danube River and the Black Sea, would both benefit from improved navigability and safety. The progress in completion of the TEN-T core network is very limited so far (12% completion at the end of 2021) and Bulgaria risks not meeting the target to complete the TEN-T core network by 2030. Decisive action is needed to step up the capacity and resources to adequately prepare and implement TEN-T projects in line with related EU standards. Greenhouse gas emissions from road transport have increased over the last five years, raising concerns on the sustainability of transport. The GHG emissions from transport in Bulgaria have increased by 52% from 1990 to 2019. The European rail traffic management systems (ERTMS) and intelligent transport systems (ITS) remain underdeveloped. The railways rolling stock is relatively old, and its modernisation would increase railway usage and speed and promote modal shift from roads. Sustainable mobility measures (e.g. electrification of public transport, promotion of electric and hybrid cars, deployment of charging infrastructure, low-emissions zones in large cities, clean public transport) would bring economic, health, and environmental benefits. Bulgaria is among the 10 Member States with the lowest number of newly-registered electric vehicles in the EU, and more effort is needed to develop the alternative fuels infrastructure and stimulate the demand for zero-emission vehicles, while reducing the number of most polluting vehicles in circulation. Road safety is a major issue. Bulgaria has one of the worst track records in the EU. In 2019, there were 90 deaths per million inhabitants in Bulgaria, vs an EU average of 51. Reforms improving the enforcement of rules, increasing vehicles’ inspections, promoting awareness and investments in infrastructure/vehicles safety and in the removal of blackspots are crucial to improve road safety, to reach the target of 50% reduction of victims by 2030 in line with the EU Road Safety framework. There is an urgent need to invest in safety upgrades of road tunnels, 4 of which are currently not compliant with the EU Tunnel Safety Directive and are subject to infringement proceedings. There are significant needs for sustainable urban transport projects, also outside the capital. The integration of different modes of transport, including sustainable public transport, would be beneficial. It is crucial to reflect the needs of population to travel for education and work in the local and regional road infrastructure and in the network of public transports, which would benefit from the development of a single ticket system to increase interoperability and ease of access. In less developed regions outside the capital, the promotion of sustainable public transport is important to enhance mobility and transport sustainability. Current taxes and charges linked to transport do not cover the generated costs. Costs of negative externalities in transport (accidents, congestion, air pollution, climate change, noise and habitat damage) are estimated to about EUR 7 billion annually for road, rail and inland waterways , while the total revenue from all land transport modes amounts to about EUR 4 billion (respectively 66% and 46% of the costs for passengers and freight). An electronic tolling system for vehicles over 3.5t is in place in Bulgaria since March 2020. Every further effort on the implementation of the Directive 2019/520 (Electric Tolling System) would be beneficial in generating revenues. The table below gives an overview of Bulgaria objectives, targets and contributions under Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action.



National targets and contributions Latest available data 2020 2030 Assessment of 2030 ambition level Binding target for greenhouse gas emissions compared to 2005 under the Effort Sharing Regulation (%) 21% 20% 0 As in ESR National target/contribution for renewable energy: Share of energy from renewable sources in gross final consumption of energy (%) 20.5 21.4 27.09 Sufficiently ambitious (Above RES formula of 27%) National contribution for energy efficiency: Primary energy consumption (Mtoe) 18.34 16.9 17.5 Low ambition Final energy consumption (Mtoe) 9.9 8.67 10.3 Very low ambition Level of electricity interconnectivity (%) 7.1 11.3 15 N/A Source: Assessment of the final national energy and climate plan of Bulgaria Digital dimension The Plan should contribute to the digital transition and at least 20% of the financial allocation needs to contribute to digital objectives. The measures in the Plan should, inter alia, contribute to the digital transformation of the economic and social sectors (including public administration, public services, and the justice and health systems). The objective of the measures in the Plan should be to improve not only the competitiveness, but also the resilience, agility and security of companies and public actors, all while ensuring inclusiveness. Bulgaria ranks 26th among the 27 EU Member States in the Digital Economy and Society Index (DESI) 2021 . Bulgaria lags significantly behind in all digital areas compared with the EU average. Although its performance in absolute values has increased since 2019, it ranks lower than before due to the better performance of its peers. This situation reflects the need for a step change in digital policies. On connectivity, Bulgaria scores particularly poorly. The country ranks 26th among EU countries with a score of 38 against the EU average of 50. Bulgaria scores only 59% in overall broadband take-up of households subscribing, which is below the EU average of 77% and is significantly below the EU average as regards the take-up of high-speed fixed broadband of at least 100 Mbps (15%, against an EU average of 34%). While there has been some increase in the very high capacity network (VHCN) coverage in recent years, Bulgaria (43%) still has a significant gap to overcome to reach the EU average (59%), while VHCN coverage in rural areas is only 1%. 5G coverage it is at 0% compared to 14% EU average. Take-up of mobile broadband is still low at 63%, compared to an EU average of 71%. As regards 5G readiness, Bulgaria has made significant progress with the completion of 5G auctions in some bands (20.55% compared to the EU average of 39%), although there is still a lack of sufficient spectrum in certain bands. Other 5G pioneer bands should be assigned on a timely basis, under conditions conducive to investment. Bulgaria ranks 21st in the EU in digital public services. Concerning digital public administration, the outdated legal framework remains a major obstacle. E-government users represent only 36% of internet users, well below the EU average of 64%. This is consistent with the score of 57 on the provision of digital public services for citizens, for which the EU average is 75. In contrast, digital public services for businesses have a score of 87, slightly above the EU average of 84. Bulgaria performs at the EU average level on open data. However, digital public services for enterprises and the use of open data by public administrations are slightly above the EU average. A national strategy in this domain and the activity of the national state e-government agency have delivered promising improvements. Several actions have been taken to engage with people to encourage take-up of e-government services (supported by EU funds). Electronic identification and electronic signatures are still facing delays, although there are other means of identification in place. Systems to support e health solutions were prioritised to support health administration processes and the COVID-19 vaccination campaign. On digital skills, Bulgaria ranks last in the 27 EU countries. The overall level of basic digital skills in Bulgaria is the lowest in the EU; people with at least basic digital skills account for 29% of the total Bulgarian population aged 16 to 74, against an EU average of 56%. Only 11% of people have above basic skills, slightly less than a third of the EU average. Furthermore, most businesses report difficulties filling vacancies for ICT specialists. ICT specialists account for 3.3% of total employment. This marks an increase compared to 2019, bringing it back to the levels of 2018, albeit a small one in proportion to the workforce given the labour market shortages and the faster increase of the EU average (which now stands at 4.3%). In contrast, women account for 28% of all ICT specialists, making Bulgaria a leader for this indicator within the EU. Overall, basic digital skills remain a significant challenge among the population. Enterprises still have difficulties in matching the skills they need to the available competences and skills of the workforce. Increasing the number of Bulgarian ICT specialists and reskilling the labour force are both of great importance for Bulgaria if it is to fully take advantage of the digital transition.

Bulgaria’s performance regarding the integration of digital technology in enterprises is mixed and it ranks last among EU countries. There is a relatively high uptake of artificial intelligence, used by 31% of enterprises, which is well above the 25% EU average. At the same time, only 33% of SMEs have at least a basic level of digital intensity (while 60% do so in the EU on average). Only 8% of Bulgarian SMEs sell online (below the EU average of 17 %), only 3% of SMEs are selling across borders (versus 8% in the EU) and only 3% of turnover comes from the online segment (against 12% in the EU). 6% of enterprises use big data compared to 14% on average in the EU. Bulgaria launched several successful initiatives in several pioneering technologies, e.g. high-performance computing, quantum communication research and development. However, the integration of digital technologies is uneven across regions, and small enterprises show a significant delay in this respect. Policies for the digitalisation of enterprises that support regional balance and all SMEs are crucial and should be further pursued. Chart 2: DESI 2021 ranking Box 1: Progress towards the Sustainable Development Goals Sustainable Development Goals and the four dimensions underpinning the Annual Sustainable Growth Strategy The objectives of the Sustainable Development Goals (SDGs) are integrated in the European Semester since the 2020 cycle. This provides a strong commitment towards sustainability in coordination of economic and employment policies in the EU. In that respect, this section outlines Bulgaria’s performance with respect to SDGs with particular relevance for the four dimensions underpinning the 2021 Annual Sustainable Growth Strategy and of relevance to the recovery and resilience plans (green transition, fairness, digital transition and productivity, and macroeconomic stability), indicating possible areas where investments and reforms in line with the objectives of the Facility could further accelerate the progress on the SDGs. The SDGs are represented under a specific Commission guiding principle for competitive sustainability from the 2021 Annual Sustainable Growth Strategy, to which they are strongly associated. It should be noted that most Sustainable Development Goals contribute, to varying degrees, to several guiding principles. Bulgaria is improving on most SDG indicators related to green transition. Even though there is improvement (SDG 2, 6, 7, 9, 11, 13), challenges remain in some areas (especially in SDG 12). On the other hand, the country performs well on SDGs 15 and 17. The ‘responsible consumption and production’ indicators (SDG 12) rate way below the EU average with the ‘circular material use rate’ shrinking from 3.1% of the material input for domestic use in 2015 to 2.6% in 2020 (compared to 12.8% in the EU) or the ‘generation of waste excluding major mineral waste’ of 3097 kg per capita (1820 being the EU average). Also the ‘average CO2 emissions per km from new passenger cars’ exceeds the EU average of 108.2 g CO2 per km by 24.8 g. In addition, the ‘sanitation’ indicator (SDG 6), in spite of some improvement, remains below the EU average with 7% of population (in 2020) ‘having neither a bath, nor a shower, nor indoor flushing toilet in the household’ (compared to 11.1% in 2015 and 1.6% of the EU average in 2019) and 64.5% of population (in 2020) ‘connected to at least secondary wastewater treatment’ (while the EU average was 80.9% in the same year). On ‘affordable and clean energy’ (SDG 7), Bulgaria has achieved some progress in regards to the share of renewable energy in total energy consumption (increase from 18.3% in 2015 to 23.3% in 2020) and is in line with the EU average in this indicator (22.09 % in 2020). While Bulgaria outruns the EU average on the ‘energy import dependency’ (BG 37.9% of imports in gross available energy compared to 57.5% in the EU), it shows challenges when it comes to ‘access to affordable energy’ with 27.5% (2020) of the population ‘unable to keep home adequately warm’ (EU average: 8.2% in 2020). Bulgaria underperforms in all indicators related to no poverty (SDG 1). Although Bulgaria is improving on some SDG indicators related to fairness (SDG 1, 2, 3, 8), this is often from a low level and it needs to catch up on others (SDG 4, 5, 10). Despite progress made on the percentage of ‘people at risk of poverty or social exclusion’ (33.6% of population in 2020 compared to 43.4% in 2015; the EU average in 2020: 21.9%) as well as on the percentage of ‘severely materially or socially deprived people’ (22.5% in 2020 compared to 36.8% in 2015 and the EU average in 2020: 6.8%), there is still room for improvement to catch up with the performance in the EU. It is equally the case for the ‘in-work at-risk-of-poverty rate’, where a deterioration is observed (9.6% of population aged 16 or over in 2020 compared to 7.7% in 2015). While Bulgarians enjoy a longer ‘healthy life years at birth’ (SDG 3) (66.3 years in 2020 compared to EU 64.6), they are more often victims of ‘standardised avoidable mortality’ (2018: 414.5 per 100 000 persons compared to EU 252.1 in 2017) as well as ‘fatal accidents at work’ (2019: 3.37 per 100 000 persons compared to EU 1.74) or ‘road traffic deaths’ (rate of 9 in 2019 compared to 5.1 in EU). On ‘quality education’ (SDG 4), Bulgaria shows rather ‘low achievements in reading’ (47.1% of 15-year-old students with low achievements in 2018 compared to EU average of 22.5% in the same year) and an above-average amount of ‘early leavers from education and training’ (in 2020: 12.8% of population aged 18 to 24). There is room for improvement also when it comes to ‘gender equality’ (SDG 5), as only 12.9% of board members (senior management) are female compared to 29.5% in the EU (2020). Concerning the productivity related SDGs, Bulgaria does not perform well. On ‘Industry, innovation, and infrastructure’ (SDG 9), Bulgaria performs below the EU average on the gross domestic expenditures on R&D ranking, with 0.86% in 2020 compared to the EU average of 2.32%. The expenditure share has been increasing between 2016 and 2020, albeit at a very slow rate. The share of research personnel in Bulgaria is almost twice lower than in the EU in general. The country is seriously lagging behind in patent applications, with only 7.5 per million inhabitants sent to the European Patent Office in 2020, compared to an average of 147 at EU level. The performance on SDG 8 ‘Decent work and economic growth’ is also weak. In particular, ‘real GDP per capita’ is the lowest in the EU and ‘resource productivity’ is the second lowest in 2020. On digital skills (SDG 4), Bulgaria had the lowest share of adults having at least basic digital skills in the EU in 2019. Bulgaria is improving on SDG indicators related to macroeconomic stability (8, 16) and performs well on SDG 17. While Bulgaria is moving towards the EU average on indicators related to ‘decent work and economic growth’ (SDG 8), several challenges remain in this field. The real GDP per capita of EUR 6380 remains well below the EU average (EUR 26380). Also not only does the ‘investment share of GDP’ (last value given: 18 .5% of GDP in 2017) rank below the EU average of 22.3% but it has even shrank compared to 2012 (21,3%). On the other side, Bulgaria is much less indebted other EU countries (average: 90.1 % of GDP). In addition, Bulgaria has shown some improvements on the ‘peace, justice and strong institutions’ indicators (SDG 16). While still below the EU average, the country has made some progress when it comes to the ‘peace and personal security’ with a decrease in the ‘population reporting crime, violence or vandalism in their area’ (from 26.3% in 2015 to 19.1% in 2020 (EU average: 13.2% in 2015 and 11% in 2019). On the other hand, there has been no change when it comes to the ‘standardized death rate due to homicide’ (1.2 per 100 000 persons both in 2013 and 2018 (EU average: 0.9 in 2013 and 0.7 in 2017).



3.Objectives, structure and governance of the plan 3.1.Overall strategy of the plan The Plan of Bulgaria is a wide-ranging response to the economic repercussions from the COVID-19 pandemic. It targets the main challenges and systemic weaknesses of the economy. It builds on the country’s global vision “National Development Programme BULGARIA 2030”, which proposes solutions for growth and development by setting out strategic objectives such as an accelerated economic development, a demographic upswing and a reduction of inequalities. Even though the government had adopted BULGARIA 2030 before the outbreak of the pandemic, the strategic choice of objectives remains valid, as the identified socio-economic vulnerabilities either persist or have worsened in the last two years. At the same time, the Plan aims to extend the scope of the set of reforms and investments to other dimensions, while ensuring coherence with measures planned in parallel under the EU Cohesion Policy.

The Bulgarian Plan is composed of twelve components grouped in four policy pillars: i) Innovative Bulgaria; ii) Green Bulgaria; iii) Connected Bulgaria; and iv) Fair Bulgaria. Innovative Bulgaria includes reforms and investments aimed at contributing to a shift towards a knowledge-based economy grounded on smart growth, in order to increase competitiveness. It includes measures in the fields of education, digital skills, science, innovation, technology and their interconnections. This pillar is divided in 3 components: ·Component 1: Education and skills (total financial envelope of EUR 733.5 million). The policy objective is to increase the quality and coverage of education and training, improving the skill set of the workforce to adapt to technological transformation in the labour market. It includes investments in the modernisation of educational institutions and youth centres, a comprehensive education reform, covering pre-school, school and higher education, the creation of a national STEM environment for skills of tomorrow and the establishment of a national online platform for adult learning, covering upskilling and reskilling of the population. The component contributes to addressing country-specific recommendations related to employability by enhancing skills, including digital skills and improving the quality and equal access to education and training (country-specific recommendation 4 from 2019 and 2 from 2020). ·Component 2: Research and innovation (EUR 211.3 million). The policy objective is to provide a favourable environment for the development of innovative enterprises, creating conditions for businesses to pursue new products, processes and services, improving the innovation output of Bulgaria and, consequently, economic growth in the medium and long term. The component contains a reform of the Bulgarian research and innovation ecosystem, through the adoption of the Research and Innovation Act, aimed at defining the legal parameters of innovation policy funding, and the establishment of the Innovation Board, an advisory body to the relevant ministries on research and innovation policy. The component further includes investments in science and innovation in a programme for accelerating economic recovery and transformation and in projects to enhance the innovation capacity of the Bulgarian Academy of Sciences (BAS). The measures address country-specific recommendations focusing on investment-related economic policy on research and innovation (CSR 3, 2019) and streamlining and accelerate the procedures to provide effective support to small and medium-sized enterprises and self-employed (CSR 3 of 2020). ·Component 3: Smart industry (EUR 800.7 million). The reforms and investments included in this component aim to create favourable conditions for private investment in Bulgaria. In particular, the component aims to attract industrial investments and develop industrial ecosystems and support small and medium-sized enterprises and mid-capitalisation companies in modernising their technology and in their transition to green, circular and digital-oriented business practices. The investments include the setup of an economic transformation programme (with a budget of EUR 690 million, almost 10% of the entire Bulgarian Plan, a far-reaching support programme for businesses composed of grants and financial instruments), and a support program for the infrastructural development of industrial parks and zones. The measures address country-specific recommendations focusing on investment-related economic policy on research and innovation (CSR 3, 2019) and streamlining and accelerate the procedures to provide effective support to small and medium-sized enterprises and self-employed, also ensuring their continued access to finance and flexible payment arrangements (CSR 3, 2020). Green Bulgaria includes reforms and investments focusing on the sustainable management of natural resources, biodiversity, sustainable agriculture and a transition to a low carbon economy. This pillar is divided in 3 components: ·Component 4: Low-carbon economy (EUR 2 612.5 million). The objective of the component is to address the main challenges of the Bulgarian energy sector in terms of decarbonisation, renewables share, energy efficiency and internal energy market. In particular, it aims to accelerate the decarbonisation of the energy sector by setting-out a date for the coal phase-out, while facilitating the deployment of renewables and alternative energy sources, such as green hydrogen and biogas, setting ambitious targets for expanded storage capacity for solar and geothermal electricity and a series of market liberalization reforms on wholesale and retail markets to allow for greater competition and easier market access for renewables. The component also supports measures related to the renovation of the stock of residential and non-residential buildings (the biggest measure of the Plan at EUR 924 million). The component addresses the recommendations related to the energy infrastructure and energy efficiency (CSR 3, 2019) and the progressive decarbonisation of the economy, including in the coal regions (CSR 3, 2020). ·Component 5: Biodiversity (EUR 47.5 million). The objective is to reform the strategic framework in the field of biodiversity and ensure effective management of the National Ecological Network in order to protect and restore ecosystems, natural habitats and species of European and national importance. The component contributes to addressing the country-specific recommendations on focusing investment on environmental infrastructure (CSR 3 of 2020). ·Component 6: Sustainable agriculture (EUR 233.8 million). The reforms and investments aim at enhancing the sustainable management and competitiveness of the Bulgarian agricultural sector in the context of the green transition. It includes updating the strategic framework of the agricultural sector and investments to support farmers in the implementation of activities ensuring the protection of the environment and climate change mitigation, introducing innovative production and digital technologies, agricultural production and organisation technologies, the automation of work processes, the shortening of supply chains and the conservation of genetic resources. The component contributes to the steering of investments and investment-related policies to the green transition (CSR 3 of 2019 and CSR 3 of 2020). Connected Bulgaria includes reforms and investments focusing on enhancing the competitiveness and sustainable development by improving transport and digital connectivity, as well as promoting regional development through the endogenous and specific local potential. This pillar is divided in 3 components: ·Component 7: Digital connectivity (EUR 385.2 million). Reforms in this component are related to the development and implementation of an effective policy and regulatory framework, the efficient use of the radio frequency spectrum and the creation of a favourable investment environment. The investments foreseen involve the large-scale deployment of digital infrastructure, the digital transformation of the Bulgarian post and the development of the digital TETRA system and radio relay network. The component directly or indirectly contributes to addressing country- specific recommendations related to the reinforcement of digital skills (CSR 4, 2019); the promotion of digital skills and equal access to education (CSR 2, 2020); the need to focus investments on the green and digital transition (CSR 3, 2020); and the effectiveness of public administration and reinforcement of digital government (CSR 4, 2020). ·Component 8: Sustainable transport (EUR 665.8 million). The main objective of the component is to enhance the sustainability of the transport sector by reforming the road and railways sectors, promoting zero-emission vehicles, enhancing road safety, and investing in railways, intermodal transport and sustainable urban mobility. This includes investments in the modernisation and digitalisation of railways, new zero-emission rolling stock, European Rail Traffic Management System deployment, a new intermodal terminal in Ruse and clean public transport (Sofia metro and pilot programme for sustainable urban mobility). The component is expected to contribute to the green and digital transition, as well as to a more balanced territorial growth. The reforms and investments address the country-specific recommendations conveyed to Bulgaria in 2019 and 2020 on the need to focus investments on sustainable transport. ·Component 9: Local development (EUR 211.1 million). This component aims at setting the framework for improving the competitiveness and sustainable development of the regions of the country and promoting local development. It also targets water management, which is an important aspect of the green transition. It includes reform introducing a new regional approach with direct involvement of local communities in the management of European funds and instruments, as well as investments in water supply and sewage systems, digitalisation of the management, control and use of water. Reforms and investments address the country-specific recommendations related to the regional disparities and investment-related policies on water and on environmental infrastructure (CSR 3 of 2019 and CSR 3 of 2020). Fair Bulgaria includes reforms and investments focusing on the inclusiveness and shared prosperity, particularly for disadvantaged groups. It also focuses on building effective and accountable public institutions oriented towards the needs of citizens and businesses. This pillar is divided in 3 components: ·Component 10: Business environment (EUR 188.1 million). This component aims to strengthen the potential for sustainable growth and increase the overall resilience of the Bulgarian economy by addressing challenges in the overall business environment and improving the institutional framework. It includes reforms and investments in areas such as justice, the fight against corruption, the digitalisation of the public administration, strengthening the governance of state-owned enterprises, the anti-money laundering and insolvency frameworks, the quality of legislative process, public procurement, and audit and control mechanisms. There are also legislative measures for protecting whistleblowers and regulating lobbying. The measures included in the component contribute to improving business environment (CSR 3 of 2019) and the effectiveness of public administration and reinforcement of digital government (CSR 4 of 2020). ·Component 11: Social inclusion (EUR 440.4 million). This component of the Plan aims to foster social inclusion by improving social protection and service provision, encompassing a reform of the minimum income scheme to improve its coverage and adequacy and the development of new tools for the Social Assistance Agency and for the Employment Agency, which are expected to move forward the integration of employment and social services. It also contains measures to reform long-term care provision in Bulgaria, support the provision of assisting devices to people with disabilities and promote the social economy and cultural and creative sectors. The component contributes to addressing the country-specific recommendation to address the shortcomings of the minimum income scheme (CSR 2 2020 and 4 2019), as well as to improve access to integrated employment and social services (CSR 4 2019). ·Component 12: Healthcare (EUR 367.9 million). This component aims to improve the provision and availability of health services across Bulgaria. It includes investments in the health sector across the territory, the construction of outpatient care units, the establishment of an air ambulance system, as well as reforms and investments addressing shortages of healthcare professionals, including their unbalanced geographical distribution. The enhancement of e-health and digital innovation in healthcare is expected to be supported by the implementation of the full National Health Information System and the development of digital platforms, including for the diagnostics of diseases. The component contributes to addressing the country-specific recommendations to mobilize adequate financial resources to strengthen the resilience, accessibility and capacity of the health system, and ensure a balanced geographical distribution of health workers (CSR 1 2020), as well as to improve access to health services and addressing shortages of health professionals (CSR 4 2019). Component Costs (EUR million) Innovative Bulgaria 1: Education and skills 733.5 2: Research and innovation 211.3 3: Smart industry 800.7 Green Bulgaria 4: Low-carbon economy 2 612.5 5: Biodiversity 47.5 6: Sustainable agriculture 233.8 Connected Bulgaria 7: Digital connectivity 385.2 8: Sustainable Transport 665.8 9: Local development 211.1 Fair Bulgaria 10: Business environment 188.1 11: Social inclusion 440.4 12: Healthcare 367.9 Total 6 897.9

3.2.Implementation aspects of the plan Complementarities with other EU funds The Plan is structured so as to complement projects funded via other EU funds. The Bulgarian Plan describes complementarities and synergies with other EU funds, including ESF+, ERDF and Cohesion Fund. This is likely to have a significant potential impact on the Bulgarian economy, as Bulgaria is one of the main beneficiaries of EU funds, measured as share of GDP, over the financing period 2021-2027. The 2021-2027 Partnership Agreement with Bulgaria and the cohesion policy programmes are at advanced stages of preparation, but not yet adopted. Therefore, some areas of support indicated in the Plan might be subject to changes. However, complementarities are particularly relevant in the field of research and innovation, business environment for small and medium enterprises, circular economy, waste and water management, energy, transport, education, labour market, social inclusion and healthcare. A number of reforms and investments are complementary to investments financed by the ESF+. ESF+ interventions are expected to focus on strengthening the quality and inclusiveness of education and training as well as access to employment, upskilling and reskilling measures and on actions to improve the capacity and effectiveness of public employment services and social services, thus complementing a significant subset of measures in the Plan. Namely, complementarities are expected in the areas of education and training, provision of employment and social services, including long-term care, and healthcare, including the provision of outpatient care across the territory of Bulgaria. In a number of components, the Plan covers measures related to the construction and/or renovation of buildings and development of IT systems, which are expected to be complemented by ESF+ support of training and/or other measures targeting the development of human capital. For instance, the education component covers the set-up of science, technology, engineering, and mathematics (STEM) laboratories in schools, while the trainings of the teachers should be covered via ESF+. A similar demarcation also applies to newly built facilities providing long-term care and the training of their staff. In the area of healthcare, the investment in outpatient units in the Plan is expected to be complemented by a relocation package covering the costs of medical professionals who will work in those units located in remote areas. Finally, both the Plan and the ESF+ are expected to fund trainings in digital skills but will target different participants on the basis of their labour market status. In addition, under ESF+, targeted and mainstream measures are envisaged for marginalised communities, including Roma, to promote better access to education, social inclusion and labour market integration. Support will be provided to improve access to services, including family or community ones, as well as healthcare and prevention. The Plan will also complement investments planned with the ERDF, cohesion fund and Just Transition Fund (JTF) notably in the areas of environment, transport, regional development, health and energy. For example, the ERDF and cohesion fund will finance water and waste water investments in larger agglomerations, while the Plan will focus on smaller agglomerations. Cohesion policy will complement the biodiversity reforms and investments in the Plan by supporting the newly established Natura 2000 management bodies and through the development of management plans once all Site-Specific Conservation Objectives (SSCOs) for the country have been developed. The Plan will focus on ecosystems while the cohesion policy will invest in conservation measures for species and habitats. As regards the circular economy, the Plan will focus on business while cohesion policy investments will prioritise investments in municipal waste management to ensure investments in the higher echelons of the waste management hierarchy and measures to incentivize behavioral change. In the area of transport, cohesion policy will further develop the core and comprehensive Trans-European Transport Network (road and rail infrastructure) while the Plan will focus on zero-emission rolling stock, electric mobility, Sofia metro and an intermodal terminal in the north of the country. The ERDF will promote a bottom-up, place-based approach to regional development through integrated territorial investments which will be supported by the reforms in the Plan, notably through the development of integrated territorial strategies and integrated municipal development plans and the involvement of the Regional Development Councils in the pre-selection of project ideas. Energy efficiency projects including replacement of fossil-fuel based heating systems will be financed by both the Plan and Cohesion policy, with either a territorial or project level demarcation. Major energy projects under the Plan will be supplemented by the Just Transition Fund. The latter will mitigate the socio-economic impact of the transition to a climate neutral economy in the coal regions. In particular, investments should focus on economic diversification, upskilling and reskilling of workers who will be impacted by the transition, as well as on investments to mitigate the environmental impacts of the transition following the cessation of some activities or decommissioning of facilities. In the areas of research & innovation and small and medium enterprises (SMEs), the different EU instruments will be complementary and synergies will be sought. In particular in the field of R&I, the measure included in the Plan will focus on developing a national research and innovation ecosystem to bolster the country’s smart economic transition at national and regional level. This will be achieved by strengthening the interaction with business, providing support to research universities, and stepping up efforts to enhance the innovation capacity of the Bulgarian Academy of Sciences (BAS) and its specialisation in key development areas such as green and digital technologies. Sectoral support for the design, implementation and evaluation of research and innovation policy reforms will also be available via the Horizon Policy Support Facility. In addition, the Plan will support five strategic industrial parks by financing their infrastructures, while cohesion policy funds will complement the effort with industrial parks of regional importance implemented as part of integrated territorial investments. For what concerns SMEs, the support schemes to investments included in the Plan will be complemented by other measures funded under ERDF. The Plan will also exploit synergies with the activities supported under the Technical Support Instrument (TSI). Namely, the TSI will provide technical support for the development of a National Skills Strategy and of a strategy for Financial Literacy, both relevant in the context of addressing the skill relevance of the Bulgarian population. These Strategies complement the effectiveness of some of the investments included in the Bulgarian Plan, namely the investments in STEM centers, in the platform for adult learning, and in the youth centres. In addition, the TSI will also cover the strengthening of a Commission in charge of Anti-Corruption and Illegal Assets Forfeiture, the further decentralization of the Public Finance Model of Bulgarian Municipalities and a better distribution of the workload in the judiciary system. These activities magnify the objectives set out in the education and business environment component of the Bulgarian Plan, thus contributing to providing a more robust institutional environment for the overall management and delivery of the resources from Union Funds, including the Recovery and Resilience facility, as well as to improving the business environment further. Implementation In line with the administrative arrangements put in place, the following horizontal structures are involved in the coordination, control and audit of the Plan: -The National Fund Directorate of the Ministry of Finance shall collect and report data on progress and act as the Authority responsible for preparing and submitting payment requests and receiving payments from the EC. The Directorate shall act as a focal point at national level with regard to the preparation of common rules and procedures for the implementation of the Facility, for carrying out 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 set in the RRP. -The Economic and Financial Policy Directorate at the Ministry of Finance shall be responsible for the reporting on the progress in the implementation of the milestones and targets of the Bulgarian RRP within the European Semester cycle. - The Central Coordination Unit Directorate shall be responsible for the development of the Plan, the programming documents, including the allocation of funds under the Facility and the drawing up of a strategic framework for information and communication activities in relation to the implementation of the Plan. The Directorate shall 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. The Directorate shall also be responsible for the setting up of the information system with all the functionalities required for the monitoring of the implementation of the Bulgarian RRP as well as for the further upgrades to the Unified Management Information System. -The Executive Agency “Audit of EU Funds”, attached to the Minister of Finance, shall carry out the audit work under the Facility in order to provide assurance on the reliability of the data on the implementation of the milestones and objectives and the way in which they are collected, as well as assurance that the implementation ensures that double funding, fraud, corruption and conflict of interest are prevented and the principle of sound financial management is respected. Bulgaria consulted a wide range of stakeholders. This included social partners, regional and local authorities, civil society organisations, business community and other relevant stakeholders at the initial stages of the Plan’s preparation. The first draft of the Plan was subject to a public consultation which gathered over 90 positions from interest parties. These have provided input to the subsequent versions of the Plan. Consultation at the later stages has been more targeted, involving mostly the social partners and specific sectoral representatives. The plan does not include cross-border or multi-country projects. The Bulgarian Plan provides 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 Plan, several components include a section that explains the adherence of the measures to the Union’s open strategic autonomy and security issues. The Plan sets out Bulgaria´s communication plans. The objectives of the country’s communication strategy are in line with the RRF Regulation and aim to raise awareness about the Plan’s contribution to the economic and social recovery and to the twin transition. More specifically, the strategy will aim at ensuring maximum visibility and transparency of the governance and implementation process, informing potential beneficiaries and final recipients about funding opportunities under the Plan, as well as ensuring the active involvement of all relevant parties in the implementation. Communication will be targeted to the general public, potential and final beneficiaries, sectoral representatives, media and multipliers.

The communication activities will be carried out via several channels. The dedicated web portal will provide summary information about the Plan, links to relevant websites and resources, as well as possibility to signal cases of corruption, fraud, conflict of interest and double funding. Social media channels will be used to disseminate information on the implementation of the Plan. Public outreach activities will be organised for the general public around key stages of the implementation; while key individual projects will be promoted through coordinated communication with the EC, including the EC Representation and the Bureau of the European Parliament in Bulgaria. Projects of high societal relevance will be communicated separately through dedicated press briefings, newsletters, presentations, dedicated internet channels to ensure that messages reach the target audience. Relevant line ministries will act as “spokespersons” on the four pillars of the Plan. All communication activities of the ESP will ensure a single visual identity, namely the use of the EU emblem and slogan: “European Union-funded — next generation EU. State aid and competition rules fully apply to the measures funded by the Recovery and Resilience Facility. Union funds channelled through the authorities of Member States, like the RRF funds, become State resources and can constitute State aid if all the other criteria of Article 107(1) TFEU are met. When this is the case and State aid is present, these measures must be notified and approved by the Commission before Member States can grant the aid, unless those measures are covered by an existing aid scheme or comply with the applicable conditions of a block exemption regulation, in particular the General Block Exemption Regulation (GBER) declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 TFEU. When State aid is present and it requires notification, it is the duty of the Member State to notify State aid measures to the Commission before granting them, in compliance with Article 108(3) TFEU. In this respect, the State aid analysis carried out by Bulgaria in the Plan cannot be deemed a State aid notification. In as far as Bulgaria considers that a specific measure contained in the Plan entails de minimis aid or aid exempted from the notification requirement, it is the responsibility of Bulgaria to ensure full compliance with the applicable rules. The Plan contains measures that are expected to help Bulgaria address the challenges in the area of gender equality and equal opportunities for all and describes existing national challenges in the area of gender equality and inclusion of vulnerable groups, including Roma. The Plan also states that equal participation of men and women and non-discrimination based on sex, race, ethnicity, religion or belief, disability, age and sexual orientation will be respected in the implementation of the measures. To monitor the implementation of the Plan, data will be disaggregated by gender, age, disability and ethnic origin for reporting purposes, where possible. Measures in the Plan that contribute to addressing some of the national challenges on gender equality and access to equal opportunities for some groups cover the personal development of young people from vulnerable groups, including Roma, the mobility and opportunities for independent living of people with disabilities and the quality of life of older people. The Plan also covers investments in kindergartens, with implications for the labour market participation of women. 4.Summary of the assessment of the plan 4.1.Comprehensive and adequately balanced response to the economic and social situation The Bulgarian recovery and resilience plan amounts to EUR 6 897.9 million o