Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Bulgaria and delivering a Council opinion on the 2022 Convergence Programme of Bulgaria
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Bulgaria, carbon neutrality, digital transformation, economic policy, economic recovery, economic reform, energy policy, fiscal policy, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 23.5.2022  COM(2022) 603 final  Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Bulgaria and delivering a Council opinion on the 2022 Convergence Programme of Bulgaria {SWD(2022) 603 final} - {SWD(2022) 640 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2022 National Reform Programme of Bulgaria and delivering a Council opinion 
on the 2022 Convergence Programme of Bulgaria 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular: Article 9(2) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

(2) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council2,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021.  The  Recovery  and  Resilience  Facility  provides  financial  support  for  the 
implementation of reforms and investment, entailing a fiscal impulse financed by the 
Union.  It  contributes  to  the  economic  recovery  and  to  the  implementation  of 
sustainable and growth-enhancing reforms and investment, in particular to promote the 
green and digital transition, while strengthening the resilience and potential growth of 
the Member States’ economies. It also helps strengthen sustainable public finances and 
boost growth and job creation in the medium and long term. The maximum financial 
contribution  per  Member  State  under  the  Recovery  and  Resilience  Facility  [was] 
updated on [30 June] 2022, in line with Article 11(2) of Regulation (EU) 2021/241.  

On  24  November  2021,  the  Commission  adopted  the  Annual  Sustainable  Growth 
Survey,  marking  the  start  of  the  2022  European  Semester  for  economic  policy 
coordination.  It  took  due  account  of  the  reaffirmed  joint  commitment  of  the  Porto 
Social Summit of May 2021 to further implement the European Pillar of Social Rights, 
proclaimed  by  the  European  Parliament,  the  Council  and  the  Commission  on  17 
November  2017.  The  European  Council  endorsed  the  priorities  of  the  2022  Annual 

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2 

OJ L 209, 2.8.1997, p. 1. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). 

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Sustainable Growth Survey on 25 March 2022. On 24 November 2021, on the basis of 
Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted  the  Alert  Mechanism 
Report, in which it did not identify Bulgaria as one of the Member States for which an 
in-depth  review3  would  be  needed.  On  the  same  date,  the  Commission  also  adopted 
the proposal  for the 2022 Joint Employment Report analysing the implementation  of 
the Employment Guidelines and the principles of the European Pillar of Social Rights, 
which was adopted by the Council on 14 March 2022. 

Russia´s  invasion  of  Ukraine,  in  the  wake  of  the  global  pandemic,  has  significantly 
altered the geopolitical and economic context. The impact of the invasion on Member 
States’ economies has been felt for example through higher energy and food prices and 
weaker  growth  prospects.  The  higher  energy  prices  weigh  particularly  on  the  most 
vulnerable households experiencing or at risk of energy poverty. The EU is also seeing 
an unprecedented inflow of people fleeing Ukraine. In this context, on 4 March 2022, 
the  Temporary  Protection  Directive  was  triggered4  for  the  first  time,  granting 
displaced persons from Ukraine the right to legally stay in the EU, as well as access to 
education  and  training,  labour  market,  healthcare,  housing  and  social  welfare. 
Exceptional  support  is  made  available  to  Bulgaria  under  the  Cohesion’s  Action  for 
Refugees in Europe (CARE) initiative and through additional pre-financing under the 
Recovery  Assistance  for  Cohesion  and  the  Territories  of  Europe  (REACT-EU) 
programme  to  urgently  address  reception  and  integration  needs  for  those  fleeing 
Ukraine. 

Taking  account  of  the  rapidly  changing  economic  and  geopolitical  situation,  the 
European Semester resumes its broad economic and employment policy coordination 
in 2022, while evolving in line with the implementation requirements of the Recovery 
and  Resilience  Facility  as  outlined  in  the  2022  Annual  Sustainable  Growth  Survey. 
The  implementation  of  the  adopted  recovery  and  resilience  plans  is  essential  for  the 
delivery of the policy priorities under the European Semester, as the plans address all 
or a significant subset of the relevant country-specific recommendations issued in the 
2019  and  2020  Semester  cycles.  The  2019  and  2020  country-specific 
recommendations  remain  equally  relevant  also  for  recovery  and  resilience  plans 
revised, updated or amended in accordance with Articles 14, 18 and 21 of Regulation 
(EU) 2021/241, in addition to any country-specific recommendations issued up to the 
date of submission of the modified plan.  
The General Escape Clause has been active since March 20205. In its Communication 
of  3  March  20216,  the  Commission  set  out  its  view  that  the  decision  on  the 
deactivation or continued application of the general escape clause should be taken as 
an overall assessment of the state of the economy, with the level of economic activity 
in the EU or euro area compared to pre-crisis levels (end-2019) as a key quantitative 
criterion. Heightened uncertainty and strong downside risks to  the economic outlook 

Regulation (EU) No 1176/2011 of the European Parliament and of  the Council of 16 November 2011 
on the prevention and correction of macroeconomic imbalances, OJ L 306, 23.11.2011, p. 25. 
Council Implementing Decision (EU) 2022/382 of 4 March 2022 establishing the existence of a mass 
influx of displaced persons from Ukraine within the meaning of Article 5 of Directive 2001/55/EC, and 
having the effect of introducing temporary protection, OJ L 71, 4.3.2022, p. 1. 
Communication from the Commission to the Council on the activation of the general escape clause of 
the Stability and Growth Pact, Brussels, 20.3.2020, COM(2020) 123 final. 

Communication  from  the  Commission  to  the  Council  on  one  year  since  the  outbreak  of  COVID-19: 
fiscal policy response, Brussels, 3.3.2021, COM(2021) 105 final. 

(3) 

(4) 

(5) 

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(6) 

(7) 

in  the  context  of  war  in  Europe,  unprecedented  energy  price  hikes  and  continued 
supply  chain  disturbances  warrant  the  extension  of  the  general  escape  clause  of  the 
Stability and Growth Pact through 2023.  

Following  the  approach  in  the  Council  opinion  of  18  June  2021  on  the  2021 
Convergence Programme, the fiscal stance is currently best measured as the change in 
primary  expenditure  (net  of  discretionary  revenue  measures),  excluding  COVID-19 
crisis-related  temporary  emergency  measures  but  including  expenditure  financed  by 
non-repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other 
EU funds, relative to medium-term potential growth7. Going beyond the overall fiscal 
stance, in order to assess whether national fiscal policy is prudent and its composition 
is conducive to a sustainable recovery consistent with the green and digital transitions, 
attention  is  also  paid  to  the  evolution  of  nationally-financed8  primary  current 
expenditure  (net  of  discretionary  revenue  measures  and  excluding  COVID-19  crisis-
related temporary emergency measures) and investment. 

On  2  March  2022,  the  Commission  adopted  a  Communication  providing  broad 
guidance  for  fiscal  policy  in  2023,  aiming  at  supporting  the  preparation  of  Member 
States’  Stability  and  Convergence  Programmes  and  thereby  strengthening  policy 
coordination9.  The  Commission  noted  that,  based  on  the  macroeconomic  outlook  of 
the  2022  winter  forecast,  transitioning  from  an  aggregate  supportive  fiscal  stance  in 
2020-2022  to  a  broadly  neutral  aggregate  fiscal  stance  would  appear  appropriate  in 
2023,  while  standing  ready  to  react  to  the  evolving  economic  situation.  The 
Commission announced that the fiscal recommendations for 2023 should continue to 
differentiate  across  Member  States  and  take  into  account  possible  cross-country 
spillovers. The Commission invited the Member States to reflect the guidance in their 
Stability  and  Convergence  Programmes.  The  Commission  committed  to  closely 
monitor  the  economic  developments  and  adjust  its  policy  guidance  as  needed  and  at 
the latest in its Semester spring package of late May 2022. 

(8)  With  respect  to  the  fiscal  guidance  provided  on  2  March  2022,  the  fiscal 
recommendations  for  2023  take  into  account  the  worsened  economic  outlook,  the 
heightened uncertainty and further downside risks, and the higher inflation compared 
to the winter forecast. Against these considerations, the fiscal response has to expand 
public investment for the green and digital transition and energy security, and sustain 
the purchasing power of the most vulnerable households so as to cushion the impact of 
the energy price hike and help limit inflationary pressures from second round effects 
via targeted and temporary measures; fiscal policy has to remain agile so as to adjust 
to the rapidly evolving circumstances, and be differentiated across countries depending 
on their fiscal and economic situation, including as regards the exposure to the crisis 
and the inflow of displaced persons from Ukraine. 

(9) 

On  15  October  2021,  Bulgaria  submitted  its  national  recovery  and  resilience  plan  to 
the  Commission,  in  accordance  with  Article  18(1)  of  Regulation  (EU)  2021/241. 
Pursuant  to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the 

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The  estimates  on  the  fiscal  stance  and  its  components  in  this  recommendation  are  Commission 
estimates  based  on  the  assumptions  underlying  the  Commission  2022  spring  forecast.  The 
Commission’s estimates of medium-term potential growth do not include the positive impact of reforms 
that are part of the Recovery and Resilience Plan and that can boost potential growth.  
Not financed by grants from the Recovery and Resilience Facility and other EU funds. 
Communication  from  the  Commission  to  the  Council:  Fiscal  policy  guidance  for  2023,  Brussels, 
2.3.2022, COM(2022) 85 final. 

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relevance, effectiveness, efficiency and coherence of the recovery and resilience plan, 
in  accordance  with  the  assessment  guidelines  of  Annex  V  to  that  Regulation.  On  4 
May 2022, the Council adopted its Decision on the approval of the assessment of the 
recovery  and  resilience  plan  for  Bulgaria10.  The  release  of  instalments  is  conditional 
on  a  decision  by  the  Commission,  taken  in  accordance  with  Article  24(5)  of 
Regulation  (EU)  2021/241,  that  Bulgaria  has  satisfactorily  fulfilled  the  relevant 
milestones  and  targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory 
fulfilment  presupposes  that  the  achievement  of  preceding  milestones  and  targets  has 
not been reversed. 

(10)  On 29 April 2022, Bulgaria submitted its 2022 National Reform Programme and, on 
the same day, its 2022 Convergence Programme, in line with the deadline established 
in Article 4 of Regulation (EC) No 1466/97. To take account of their interlinkages, the 
two programmes have been assessed together.  

the 

(11)  The Commission published the 2022 country report for Bulgaria11 on 23 May 2022. It 
assessed  Bulgaria’s  progress 
relevant  country-specific 
in  addressing 
recommendations adopted by the Council in 2019, 2020 and 2021, and took stock of 
its recovery and resilience plan, building on the Recovery and Resilience Scoreboard. 
Based  on  this  analysis,  the  country  report  identified  gaps  with  respect  to  those 
challenges  that  are  not  addressed  or  only  partially  addressed  by  the  recovery  and 
resilience  plan,  as  well  as  new  and  emerging  challenges,  including  those  emerging 
from  Russia’s  invasion  of  Ukraine.  It  also  assessed  Bulgaria’s  progress  on 
implementing the European Pillar of Social Rights and on achieving the EU headline 
targets on employment, skills and poverty reduction, as well as progress in achieving 
the UN’s Sustainable Development Goals.  

(12)  On  23  May  2022,  the  Commission  issued  a  report  under  Article  126(3)  TFEU.  This 
report discussed the budgetary situation of Bulgaria, as its general government deficit 
in  2021  exceeded  the  3%  of  GDP  Treaty  reference  value.  The  report  concluded  that 
the  deficit  criterion  was  not  fulfilled.  In  line  with  the  Communication  of  2  March 
2022,  the  Commission  did  not  propose  to  open  new  excessive  deficit  procedures  in 
spring 2022 and it will reassess the relevance of  proposing to  open excessive deficit 
procedures in autumn 2022. 

the economy  and  support 

(13)  On  20  July  2020,  the  Council  recommended  Bulgaria  to  take  in  2020  and  2021  all 
necessary measures, in  line with  the general  escape clause, to  effectively  address  the 
pandemic,  sustain 
the  ensuing  recovery.  It  also  
recommended  Bulgaria  to  pursue,  when  economic  conditions  allow,  fiscal  policies 
aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  debt 
sustainability,  while  enhancing  investment.  In  2021,  based  on  data  validated  by 
Eurostat, Bulgaria’s general government deficit increased from 4.0% of GDP in 2020 
to  4.1%  in  2021.  The  fiscal  policy  response  by  Bulgaria  supported  the  economic 
recovery in 2021, while temporary emergency support measures increased from 2.9% 
of GDP in 2020 to 4.3% in 2021. The measures taken by Bulgaria in 2021 have been 
in  line  with  the  Council  Recommendation  of  20  July  2020.  The  discretionary 
budgetary  measures  adopted  by  the  government  in  2020  and  2021  were  mostly 

10 

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Council Implementing Decision of 04 May 2022 on the approval of the assessment of the recovery and 
resilience plan for Bulgaria (ST 8091/2022+ ADD1)  
COM(2022) 603 SWD(2022)603 

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temporary  or  matched  by  offsetting  measures.    Based  on  data  validated  by  Eurostat, 
general government debt stood at 25.1% of GDP in 2021. 

(14)  The  macroeconomic  scenario  underpinning  the  budgetary  projections  in  the  2022 
Convergence  Programme  is  favourable  in  2022  and  realistic  thereafter.  The 
government  projects  real  GDP  to  grow  by  2.6%  in  2022  and  2.8%  in  2023.  By 
comparison, the Commission’s 2022 spring forecast projects a lower real GDP growth 
of 2.1% in 2022 and higher real GDP growth of 3.1% in 2023, mainly due to different 
employment and investment growth projections. In its 2022 Convergence Programme, 
the government expects that the headline deficit will increase to 5.3% of GDP in 2022 
while falling to 2.9 % in 2023. The deficit increase in 2022, which is cushioned by the 
phase-out of COVID emergency measures, mainly reflects a steep rise in intermediate 
consumption,  business  support  and  energy  measures,  as  well  as  pension  system 
amendments. According to the Programme, the general government debt-to-GDP ratio 
is  expected  to  increase  to  25.5%  in  2022  and  to  27.7%  in  2023.  Based  on  policy 
measures  known  at  the  cut-off  date  of  the  forecast,  the  Commission  2022  spring 
forecast  projects  a  government deficit for 2022 and 2023 of 3.7% of GDP and 2.4% 
respectively.  This  is  considerably  lower  than  the  2022  deficit  projected  in  the  2022 
Convergence  Programme,  mainly  due  to  different  macroeconomic  projections,  lower 
intermediate  consumption  growth,  and  higher  taxes  on  production  and  imports  in 
2022.  The  Commission  2022  spring  forecast  projects  a  lower  general  government 
debt-to-GDP ratio, of 25.3% in 2022 and 25.6% in 2023. The difference is due to the 
lower deficits in both years and higher projected economic growth in 2023.  

(15) 

Based  on  the  Commission  spring  2022  forecast,  the  medium-term  (10-year  average) 
potential output growth is estimated at 1.8%. However, this estimate does not include 
the  impact  of  the  reforms  that  are  part  of  the  Recovery  and  Resilience  Plan  and  can 
boost Bulgaria’s potential growth. 

In 2022, the government phased out the majority of measures taken in response to the 
COVID-19 crisis, such that the temporary emergency support measures are projected 
to  decline  from  4.3%  of  GDP  in  2021  to  1.8%  in  2022.  The  government  deficit  is 
impacted  by  the  measures  adopted  to  counter  the  economic  and  social  impact  of  the 
increase in energy prices, which in the Commission spring 2022 forecast are estimated 
at 0.9% of GDP in 2022 and 0.0% of GDP in 2023.12 These measures mainly consist 
of  support  programmes  for  public  utilities  and  household  gas  consumers.  These 
measures have been announced as mostly temporary. However, in case energy prices 
remain  elevated  also  in  2023,  some  of  these  measures  could  be  continued.  Some  of 
these  measures  are  not  targeted,  notably  the  moratorium  on  energy  prices  for 
households. The  government deficit is  also  impacted by the costs to  offer temporary 
protection to displaced persons from Ukraine, which in the Commission 2022 spring 
forecast are projected at 0.1% of GDP in 2022 and 0.2% of GDP in 2023.13  

12 

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The figures represent the  level of annual budgetary costs of those  measures taken since autumn 2021, 
including current revenue and expenditure as well as – where relevant – capital expenditure measures. 
The total number of displaced persons from Ukraine to the EU is assumed to gradually reach 6 million 
by  the  end  of  2022,  and  their  geographical  distribution  is  estimated  based  on  the  size  of  the  existing 
diaspora, the relative population of the receiving Member State, and the actual distribution of displaced 
persons from Ukraine across the EU as of March 2022. For budgetary costs per person, estimates are 
based on the Euromod microsimulation model of the Commission’s Joint Research Centre, taking into 
account both cash transfers people may be eligible for as well as in-kind benefits such as education and 
healthcare. 

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(16)  On  18  June  2021,  the  Council  recommended  that  in  2022  Bulgaria14  pursues  a 
supportive  fiscal  stance,  including  from  the  impulse  provided  by  the  Recovery  and 
Resilience  Facility,  and  preserves  nationally-financed  investment.  The  Council  also 
recommended Bulgaria to keep the growth of nationally-financed current expenditure 
under  control.  It  also  recommended  Bulgaria  to  pursue,  when  economic  conditions 
allow,  a  fiscal  policy  aimed  at  achieving  prudent  medium-term  fiscal  positions  and 
ensuring  fiscal  sustainability  in  the  medium  term,  and  at  the  same  time,  to  enhance 
investment to boost growth potential. 

(17) 

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the 
information  incorporated  in  Bulgaria’s  2022  Convergence  Programme,  the  fiscal 
stance  is  projected  to  be  supportive  at -3.4%  of  GDP,  as  recommended  by  the 
Council.15 Bulgaria plans to provide continued support to the recovery by making use 
of  the  Recovery  and  Resilience  Facility  to  finance  additional  investment  as 
recommended  by  the  Council.  The  positive  contribution  to  economic  activity  of 
expenditure financed by Recovery and Resilience Facility grants and other EU funds is 
projected to increase by 1.1 percentage points of GDP compared to 2021. Nationally-
financed investment is projected to provide an expansionary contribution to the fiscal 
stance  of  1.1  percentage  points  of  GDP  in  2022.16  Therefore,  Bulgaria  plans  to 
preserve nationally financed investment, as recommended by the Council. At the same 
time,  the  growth  in  nationally-financed  primary  current  expenditure  (net  of  new 
revenue measures) in 2022 is projected to provide an expansionary contribution of 1.4 
percentage  points  to  the  overall  fiscal  stance.  This  significant  expansionary 
contribution  includes  the  additional  impact  of  the  measures  to  address  the  economic 
and social impact of the increase in energy prices (0.2 percentage points of GDP) as 
well as the costs to offer temporary protection to displaced persons from Ukraine (0.1 
percentage  point  of  GDP),  while  pension  system  amendments  (0.6%)  and  wage 
increases (0.3% of GDP) are also projected to contribute to the growth in net current 
expenditure. Therefore,  on the basis of current  Commission  estimates,  Bulgaria does 
not  sufficiently  keep  under  control  the  growth  of  nationally-financed  current 
expenditure in 2022. 

(18) 

In 2023, the fiscal stance is projected in the Commission 2022 spring forecast at -1.3% 
of GDP on a no-policy  change  assumption.17 Bulgaria is  projected to  continue using 
the  grants  from  the  Recovery  and  Resilience  Facility  in  2023  to  finance  additional 
investment in support of the recovery. The positive contribution  to economic activity 
of  expenditure  financed  by  Recovery  and  Resilience  Facility  grants  and  other  EU 
funds  is  projected  to  increase  by  0.7  percentage  points  of  GDP  compared  to  2022. 
Nationally-financed  investment  is  projected  to  provide  an  expansionary  contribution 

14 

15 

16 

17 

Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Stability 
Programme of Bulgaria, OJ C 304, 29.7.2021, p. 6. 
A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
Other  nationally-financed  capital  expenditure  is  projected  to  provide  a  contractionary  contribution  of 
0.1 percentage points of GDP. 

A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 

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(19) 

(20) 

of 0.2 percentage points in 2023.18 At the same time, the growth in nationally-financed 
primary  current  expenditure  (net  of  new  revenue  measures)  in  2023  is  projected  to 
provide  an  expansionary  contribution  of  0.5  percentage  points  to  the  overall  fiscal 
stance. This includes the impact from the phasing out of the measures addressing the 
increased  energy  prices  (0.9  %  of  GDP),  while  increased  social  transfers  and  wage 
increases are projected to contribute to the growth in net current expenditure. 

In  the  2022  Convergence  Programme,  the  general  government  deficit  is  expected  to 
gradually  decline  to  2.8%  of  GDP  in  2024  and  to  2.4%  by  2025.  The  general 
government deficit is thus planned to remain below 3% of GDP over the programme 
horizon.  These  projections  assume  revenue  increases  from  direct  taxes  and  social 
contributions thanks to higher household income and higher capital transfers thanks to 
the RRF. According to the Programme, the general  government debt-to-GDP ratio is 
expected  to  increase  by  2025,  specifically  with  an  increase  to  29.1%  in  2024,  and  a 
rise to  30.4% in  2025.  Based on the Commission’s analysis, debt  sustainability risks 
appear medium over the medium term. 

in  addition 

in  2019  and  2020; 

In accordance with Article 19(3), point (b), and Annex V, criterion 2.2, to Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. These help address 
all  or  a  significant  subset  of  the  economic  and  social  challenges  outlined  in  the 
country-specific  recommendations  addressed  to  Bulgaria  by  the  Council  in  the 
European  Semester 
to  any  country-specific 
recommendations  issued  up  to  the  date  of  adoption  of  a  plan.  In  particular,  the 
recovery  and  resilience  plan  addresses  the  country-specific  recommendations  in  the 
social field with measures to improve 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 measures  can help  achieve the objectives  and make further progress 
on the European Pillar of Social Rights and its action plan by 2030. Furthermore, the 
recovery  and  resilience  plan  addresses  country-specific  recommendations  by 
advancing  decarbonisation  of  the  energy  sector,  increasing  overall  energy  efficiency 
digital 
and 
infrastructure/services. In addition, the plan contains far-reaching measures to improve 
the  efficiency  of  the  public  administration  and  justice  system,  prevent,  detect  and 
correct corruption, improve the business environment, foster investment, and improve 
the  research  and  innovation  system.  This  will  also  contribute  to  support  Bulgaria  in 
achieving  its  remaining  commitments  under  the  Cooperation  and  Verification 
Mechanism and its objectives under the Rule of Law Mechanism.   

implementing  measures 

sustainable 

transport 

and 

on 

(21)  The  implementation  of  the  recovery  and  resilience  plan  of  Bulgaria  is  expected  to 
contribute  to  making  further  progress  on  the  green  and  digital  transition.  Measures 
supporting  the  climate  objectives  in  Bulgaria  account  for  58.9%  of  the  plan’s  total 
allocation,  while  measures  supporting  digital  objectives  account  for  25.8%  of  the 
plan’s total allocation. The fully-fledged implementation of the recovery and resilience 
plan,  in  line  with  the  relevant  milestones  and  targets,  will  help  Bulgaria  swiftly 

18 

Other  nationally-financed  capital  expenditure  is  projected  to  provide  a  neutral  contribution  of  0.0 
percentage points of GDP. 

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recover from the fallout of the COVID-19 crisis, while strengthening its resilience. At 
the same time, further efforts to make full use of public employment services and to 
provide integrated employment and social support will help  to mitigate the impact of 
the projected demographic change and support a fair green and digital transition. The 
systematic  involvement  of  social  partners  and  other  relevant  stakeholders  remains 
important  for  the  successful  implementation  of  the  recovery  and  resilience  plan,  as 
well  as  other  economic  and  employment  policies  going  beyond  the  plan,  to  ensure 
broad ownership of the overall policy agenda. 

(22)  Bulgaria submitted  the  Partnership  Agreement  on  11  May  2022,  while  the  other 
cohesion policy programming documents19 have not  yet been submitted. In line with 
Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 
2021, Bulgaria shall take into account the relevant country-specific recommendations 
in the programming of the 2021-2027 cohesion policy funds. This is a prerequisite for 
improving the effectiveness  and maximising the added value of the financial support 
to  be  received  from  cohesion  policy  funds,  while  promoting  the  coordination, 
complementarity and coherence between these funds and other Union instruments and 
funds.  The  successful  implementation  of  the  Recovery  and  Resilience  Facility  and 
cohesion policy programmes also depends on the removal of bottlenecks to investment 
to support the green and digital transition and balanced territorial development.  

(23) 

In response to the mandate by the EU Heads of State or Government, as set out in the 
Versailles Declaration, the REPowerEU plan aims to phase out the European Union’s 
dependence on fossil fuel imports from Russia as soon as possible. For this purpose, 
the most suitable projects, investments and reforms, at national, regional and EU level 
are being identified in dialogue with the Member States. These measures aim to reduce 
overall reliance on fossil fuels and shift fossil fuel imports away from Russia.  

(24)  Bulgaria  has  the  most  carbon-intensive  economy  in  the  EU,  with  greenhouse  gas 
intensity more than four times higher than the EU average. The current share of fossil 
fuels in Bulgaria’s energy mix is 61.5%, with nuclear representing a share of 24% and 
renewables  14.5%  (lower  than  the  EU  renewables  average  of  19%).  The  country  is 
highly dependent on Russia for natural gas.  In 2020, 75% of natural gas was imported 
from  Russia,  above  the  EU  average  of  43.2%.  However,  its  share  in  the  energy  mix 
was only 13.9%, lower than the EU average of 24.4%. Industry remains the largest gas 
consumer,  with  a  share  of  40%,  including  non-energy  uses,  while  the  share  of  the 
power  sector  has  decreased  since  2010,  from  30%  to  25%  in  2019.  District  heating 
relies on natural gas with little margin for improvement as the district heating systems 
cannot  be  replaced  by  alternative  sources.  While  the  recovery  and  resilience  plan 
explores the potential of geothermal energy for heating, additional investment could be 
envisaged  to  support  the  installation  of  large-scale  heat  pumps.  Coal-fired  power 
generation is fully covered by the domestic production of lignite, and Bulgaria imports 
limited  quantities  of  coal  from  Russia  for  industrial  use  (0.56  million  tons, 
representing  85%  of  total  coal  imports).  On  the  other  hand,  Bulgaria  is  reliant  on 

19 

Regulation  (EU)  2021/1060  of  the  European  Parliament  and  of  the  Council  of  24  June  2021  laying 
down  common  provisions  on  the  European  Regional  Development  Fund,  the  European  Social  Fund 
Plus,  the  Cohesion  Fund,  the  Just  Transition  Fund  and  the  European  Maritime,  Fisheries  and 
Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the 
Internal  Security  Fund  and  the  Instrument  for  Financial  Support  for  Border  Management  and  Visa 
Policy. OJ L 231, 30.6.2021, p. 159. 

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Russia  for  crude  oil  (63%  of  its  crude  oil  comes  from  Russia20,  significantly  higher 
than the EU average of 26%) and imports 22% of its refined oil products from Russia, 
below the EU average of 35%. Overall, the share of oil in the energy mix was 23.9% 
in 2020, below the EU average of 32.7%. The Bulgarian recovery and resilience plan 
includes  the  adoption  of  a  Roadmap  to  climate  neutrality.  It  includes  steps  for 
completing  the  phase-out  of  coal/lignite  at  the  latest  by  2038  and  significant 
investments  and  reforms  to  accelerate  the  deployment  of  renewables,  while  further 
efforts  will  be  needed  to  achieve  the  climate  and  energy  transition  objectives.  On 
renewables,  Bulgaria  has  committed  to  add  at  least  3500  MW  of  new  capacity  from 
renewable  energy  sources  (wind  and  solar)  and  create  the  technical  conditions  to 
integrate an additional 4500 MW into the electricity system by 2026. In addition, the 
plan includes  a reform to remove key impediments to the development of renewable 
hydrogen  technologies  and  value  chains,  as  well  as  investments  to  support  the 
development of pilot projects to produce renewable hydrogen and sustainable biogas. 
Measures are  also  envisaged to  help  households install solar water heating  and solar 
PV systems. The plan will also define energy poverty. It should be noted that further 
increase in ambition for reducing greenhouse gas emissions and increasing renewables 
and  energy  efficiency  will  be  needed  for  Bulgaria  to  be  in  line  with  the  ‘Fit  for  55’ 
objectives. 

(25)  At  the  same  time,  the  Bulgarian  recovery  and  resilience  plan  envisages  more  than 
EUR  1  billion  of  investments  in  energy  efficiency  measures  intended  for  public  and 
private  building  stock.  This  is  bolstered  by  reforms  to  tackle  barriers  to  energy 
efficiency  investments  and  reduce  the  administrative  burden  linked  to  renovation. 
Nonetheless,  Bulgaria  should  aim  to  further  reduce  energy  consumption  and 
dependence on fossil fuels to achieve its targets in line with its long-term strategy for 
renovating the building stock. The national decarbonisation fund to be established in 
2023  could  support  this  measure.  In  parallel,  Bulgaria  needs  to  ensure  energy 
interconnections  with  sufficient  capacity,  including  with  neighbouring  countries.  By 
completing  ongoing  investments,  Bulgaria  can  capitalise  on  the  advantages  of  the 
single  market,  ensure  security  of  supply  and  accelerate  the  diversification  of  gas 
routes.  New  infrastructure  related  to  gas  is  recommended  to  be  future-proof  where 
possible,  in  order  to  facilitate  its  long-term  sustainability  through  future  repurposing 
for sustainable fuels. 

(26)  While  the  acceleration  of  the  transition  towards  climate  neutrality  and  away  from 
fossil  fuels  will  create  significant  restructuring  costs  in  several  sectors,  Bulgaria  can 
make  use  of  the  Just  Transition  Mechanism  in  the  context  of  cohesion  policy  to 
alleviate the socio-economic impact  of the transition  in  the most  affected  regions.  In 
addition,  Bulgaria  can  make  use  of  the  European  Social  Fund  Plus  to  improve 
employment opportunities and strengthen social cohesion.  

(27) 

In  the  light  of  the  Commission’s  assessment,  the  Council  has  examined  the  2022 
Convergence Programme and its opinion21 is reflected in recommendation (1) below.  

(28)  On  10  July  2020,  the  Bulgarian  lev  was  included  in  the  European  exchange  rate 
mechanism II (ERM II) as a preparatory step towards adopting the euro. To preserve 

20 

21 

Eurostat  2019  data  is  referenced  for  Bulgaria’s  import  data.  2020  import  data  is  not  informative,  as 
large  qualities  of  crude  imports  had  been  categorised  as  from  'not  specified'  trade  partners.  The  EU 
average refers to the share of imports from Russia in total extra-EU27 imports, for crude oil and refined 
oil products respectively.  
Under Article 9(2) of Council Regulation (EC) No 1466/97. 

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economic  and  financial  stability  and  achieve  a  high  degree  of  sustainable  economic 
convergence,  Bulgarian  authorities  have  committed  to  implementing  specific  policy 
measures  on  ensuring  the  sustainability  of  the  non-banking  financial  sector  and 
strengthening the governance of state-owned enterprises, as well as the insolvency and 
the anti-money laundering frameworks.  Bulgaria’s progress in fulfilling the necessary 
requirements to  adopt  the euro will be assessed in the 2022 Convergence Reports of 
the European Commission and the European Central Bank. 

HEREBY RECOMMENDS that Bulgaria take action in 2022 and 2023 to:  

1. 

2. 

3. 

In 2023, ensure that the growth of nationally-financed current expenditure is in line 
with  an  overall  neutral  policy  stance,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and 
to  people  fleeing  Ukraine.  Stand  ready  to  adjust  current  spending  to  the  evolving 
situation.  Expand  public  investment  for  the  green  and  digital  transition  and  for 
energy  security,  including  by  making  use  of  the  RRF,  RePowerEU  and  other  EU 
funds. For the period beyond 2023, pursue a fiscal policy aimed at achieving prudent 
medium-term fiscal positions. 

Proceed with the implementation of its recovery and resilience plan, in line with the 
milestones  and  targets  included  in  the  Council  Implementing  Decision  of  04  May 
2022. Submit the 2021-2027 cohesion policy programming documents with a view to 
finalising  their  negotiations with  the  Commission  and  subsequently  starting  their 
implementation. 

Reduce  overall  reliance  on  fossil  fuels  and  fossil  fuel  imports  by  accelerating  the 
development  of  renewables,  and  diversify  gas  supply  sources  and  routes  by 
increasing  interconnections  with  neighbouring  countries.  Step  up  efforts  to  reduce 
energy demand by increasing energy efficiency in industry and in private and public 
building stock. Promote new sustainable solutions in centralised district heating. 

Done at Brussels, 

For the Council 
The President 

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