COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Bulgaria Accompanying the document 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

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.5.2022  SWD(2022) 603 final  COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Bulgaria Accompanying the document 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 {COM(2022) 603 final} - {SWD(2022) 640 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

Economy to suffer from high 
inflation 

of 

governance 
enterprises, 
insolvency,  the  non-banking  financial  sector 
and anti-money laundering. 

state-owned 

crisis, 

relative 

At  the  start  of  the  COVID-19  pandemic, 
economic  conditions  in  Bulgaria  were 
favourable.  The  positive  trend  of  robust 
economic  growth  over  the  period  2015-2019 
(3.2%  on  average)  has  been  underpinned  by 
growing  private  consumption  and  positive 
labour  market  developments.  Still,  Bulgaria 
has been slow to catch up with the rest of the 
EU, in terms of income per capita. Through the 
COVID-19 
income 
the 
convergence  continued,  as  real  GDP  declined 
by  less  than  in  the  EU  average.  Though 
Bulgaria  has  rebounded  from  the  immediate 
economic  shock  caused  by  the  pandemic, 
structural  vulnerabilities  are  expected 
to 
hamper its path towards convergence. Bulgaria 
still  has  one  of  the  highest  levels  of  poverty 
and  income  inequality,  a  poorly  performing 
healthcare system and issues with the quality 
and inclusiveness of education. Strong regional 
disparities, a shrinking working-age population 
and  persistently  high  labour  shortages  weigh 
on  productivity  growth  and  upward  social 
convergence.  The  business  environment  is 
generally not supportive of investment; this is 
also  due  to  many  institutional  shortcomings. 
Finally,  Bulgaria  remains  by  far  the  most 
gas-intensive 
greenhouse 
energy- 
economy in the EU.   

and 

The  Next  Generation  EU  funds  and  the 
path  towards  euro  adoption  provide  a 
unique  opportunity  to  modernise  the 
economy.  Investments  in  the  recovery  and 
transformation  of  the  economy,  as  well  as 
Bulgaria’s  commitments  to  key  structural 
reforms,  are  expected  to  boost  potential 
growth.  They  also  present  an  opportunity  to 
Bulgaria’s 
decarbonise 
commitment  to  adopting  the  euro  provides 
further  impetus  for  reforms,  notably  in  the 

economy. 

the 

retention 

remained 

consumption 

The  Bulgarian  economy  has  almost  fully 
recovered  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  exports. 
relatively 
Private 
unaffected  in  2020  compared  to  the  EU 
average, given that the sectors most hit by the 
supply  restrictions,  such  as  accommodation 
and  catering  services,  account  for  a  much 
smaller  share  of  consumer  spending 
in 
Bulgaria than in other Member States. Bulgaria 
also had generally less stringent restrictions in 
the  second  half  of  the  year.  In  2021,  private 
consumption  expanded  robustly,  supported  by 
job 
positive  wage 
schemes, 
dynamics,  higher  pension  expenditures,  low 
household  debt,  and 
in 
consumer  sentiment.  Conversely,  investment 
growth 
in  2020,  but 
dropped  significantly  in  2021.  Exports  of 
goods reached their pre-pandemic level in Q2-
2021,  after  a  sharp  drop  at  the  start  of  the 
pandemic. In contrast, in 2021 real exports of 
services  were  still  18%  below  their  2019 
levels,  as  nominal  revenues  from  foreign 
tourism  stood  at  only  55%  of  the  pre-
pandemic  levels (1).  Price  pressures  are  set  to 
weigh on household consumption in 2022. The 
increased uncertainty is forecast to negatively 
affect  private 
investment,  while  public 
investment,  supported  by  the  RRF  funds,  is 
forecast to fully compensate this decline. 

remained  subdued 

improvements 

Disparities  between  and  within  regions 
remain  high  in  Bulgaria.  In  2019,  GDP  per 
capita  was  largely  below  50%  of  the  EU 
average  across  all  regions,  except  in  the 
southwest region that includes the capital city. 

(1)  The Bulgarian tourism value chain (direct and spill-over 

effects) was responsible for about 6% of total 
employment in 2018 (JRC121262) 

2 

 
                                                 
 
Closing  the  gap  in  regional  disparities  by 
boosting  the  economic  potential  of  Bulgaria’s 
less developed regions would contribute to the 
country’s  long-term  sustainable  and  inclusive 
growth.  

The Bulgarian economy’s energy intensity 
is  exacerbating  the  effects  of  energy 
price hikes. The price of electricity in the free 
market  has  increased  four-fold  and  become 
more volatile since mid-2021, while regulated 
prices  have  been  kept  fixed.  Electricity  prices 
on  the  unregulated  domestic  market  followed 
the  regional  and  global  price  increase  in  the 
fourth quarter of 2021. In 2021 the domestic 
‘day ahead’ market became more tightly linked 
it  was 
to  the  EU  electricity  market,  as 
integrated  with  the  markets  in  Greece  and 
Romania.  The 
retail  electricity 
regulated 
market has only been supplying to households 
as of October 2020. Prices are determined by 
the energy and water regulator, largely based 
on  the  baseload  price:  the  price  at  which  the 
retail  end  suppliers  buy  power  from  the 
national electricity company, NEK. The National 
Assembly  has 
imposed  a  moratorium  on 
future  increases  in  the  prices  of  electricity, 
central  heating  and  water  supply  between 
December  2021  and  March  2022.  In  parallel, 
the 
support 
programmes for firms, public utilities suppliers 
and  household  gas  consumers  that  mitigated 
the impact of sharp increases in energy prices. 
Despite  these  measures,  higher  energy  and 
other intermediate  input  costs,  combined  with 
higher prices of imported goods, led to higher 
inflation  in the  other  components  of  the  HICP 
index. As the economy is still over three times 
more  energy-intensive  than  the  EU  average, 
the indirect effect on the producer and on final 
consumer  prices  is  more  pronounced  than  in 
most of the other EU Member States.  

government 

introduced 

All  consumer  price  inflation  components 
are  forecast 
to  exhibit  high  price 
increases in 2022. HICP inflation is expected 
to  reach  11.9%  in  2022  before  decreasing  to 
5.0% 
is 
expected to peak mid-2022 and turn negative 
in  2023.  Food  inflation  has  picked  up  in  the 
first  three  months  of  2022  due  to  rising 
international  food,  commodity  and  energy 
prices and is expected to stay high.  

in  2023.  Energy  price 

inflation 

Unemployment  is  stabilising  after  an 
increase at the start of the pandemic. The 
unemployment  rate  decreased  from  a  6.6% 
peak  in  Q2-2020  to  4.6%  in  Q4-2021  (see 
Graph 1.1). As expected, most job losses were 
recorded  in  the  accommodation  and  food 
services  sectors.  More  adverse  labour  market 
developments  have  been  avoided  largely  by 
the  swift  introduction  of  short-time  work 
schemes  with  the  support  of  the  Support  to 
mitigate Unemployment Risks in an Emergency 
(SURE)  instrument  and  REACT-EU  (see  Annex 
3).  

Adverse  demographic  developments  and 
high 
inactivity  rates  pose  significant 
risks. Bulgaria is having to deal with a double 
trend  of  an  ageing  and  a  rapidly  shrinking 
population  (by  around  10%  over  a  decade). 
Combined  with  high  inactivity  rates  for  some 
groups,  including  Roma  and  those  living  in 
rural  and  underserved  areas,  this  remains  a 
key  challenge  for  making  a  fair  and  inclusive 
economic  recovery  in  line  with  the  European 
Pillar of Social Rights (see Annex 12). 

Wage  growth  continues  to  be  strong, 
outpacing  productivity  developments. 
Nominal  compensation  per  employee  grew 
strongly in 2019 and 2020 by about 7% each 
year,  albeit  with  significant  regional  and 
sectorial disparities. Wage growth in 2020 was 
primarily driven by an increase in public sector 
wages, a large share of which went to the very 
low-paid health workers. Wage growth further 
increased in 2021 to 9.5% and is expected to 
continue  growing  at  a  similar  pace  in  2022 
and then decelerate to around 8% in 2023. In 
April  2022,  the  minimum  wage  increased  by 
9.2%  (up  to  BGN  710  or  EUR  363).  Wage 
growth 
sector 
outside  manufacturing 
remained much higher than labour productivity 
growth.  The  increased  energy  and  other  input 
costs  present  a  challenge  for  the  production 
sector.  To  improve  competitiveness  and  avoid 
job losses going forward, Bulgaria will have to 
boost its labour productivity by addressing the 
widespread  skills  mismatches  and  improve 
labour market efficiency.    

Increasing  house  prices  point  to  growing 
vulnerabilities  in  the  housing  market. 
House  prices  accelerated  to  a  growth  rate  of 

3 

 
is 

indebtedness 

low 
context,  mortgage 

8.7%  in  2021.  The  risk  of  overvaluation  has 
increased,  even  if  it  remains  contained.  While 
in  an 
household 
international 
growth 
increased  rapidly  to  nearly  18%  in  2021, 
according  to  ECB’s  notional  stocks  data.  Rises 
in  interest  rates  might  create  difficulties  for 
some  borrowers.  From  that  perspective,  the 
(ESRB) 
European  Systemic  Risk  Board 
considers  macroprudential  polices 
to  be 
partially  appropriate  and  partially  sufficient, 
while  acknowledging  several  measures 
in 
place  in  Bulgaria  that  mitigate  the  current 
residential 
vulnerabilities. 
Therefore,  the  ESRB  issued  a  warning  to 
Bulgaria  in  February  2022  to  address  these 
risks. 

estate 

real 

Graph 1.1: Key labour market indicators 

Source: Eurostat 

Although  profitable  and  well  capitalised, 
the 
financial  sector  operates  amid 
heightened  uncertainty.  Risks  stem  mainly 
from  the  high  share  of  non-performing  loans 
(NPLs),  corporate  indebtedness  and  banks’ 
exposures  to  highly  affected  sectors  by  the 
COVID-19  pandemic.  The  NPL  ratio  remains 
among the highest in the EU. The ratio was on 
a declining path, but the number of NPLs may 
rise  in  response  to  adverse  developments  in 
economic conditions and possible interest rate 
increases.  The  return  on  equity  declined  from 
around 11.2% in 2019 to around 9.1% in the 
first 9 months of 2021, due to lower profit for 
2020  and  increasing  equity  over  the  year. 
Behind the profit decrease were the decline in 
all major income components and the increase 
in impairment charges of financial assets. The 

4 

the 

the  Bulgarian 
measures  announced  by 
National  Bank  at  the  beginning  of  the  crisis, 
including 
retention  of  profits,  were 
instrumental in preserving the banking sector’s 
stability  and  further  strengthening  banks’ 
capital  and  liquidity.  Following  the  decline  in 
2020,  banks’  profitability  strongly  rebounded 
in 2021.  

Sound public finances helped to 
weather the crisis 

Bulgaria  entered  the  pandemic  with  a 
strong  fiscal  position.  Thanks  to,  inter  alia, 
its  commitment  to  fiscal  stability  and  the 
currency board in place, its sovereign debt and 
exchange  rates  have  not  experienced  severe 
tensions  since  the  onset  of  the  COVID-19 
crisis.  Bulgaria  usually  outperforms 
its 
budgetary targets. This outperformance stems 
from  the  authorities’  prudent  approach  to 
revenue  estimates  but  it  also  reveals  specific 
weaknesses 
in  expenditure  planning  and 
execution  for  public  procurements,  capital 
expenditures or the programming period cycle 
for  EU  funds.  This  along  with  legislative 
restrictions 
the 
underestimation of the budget balance in both 
cash  and  ESA  (accrual)  terms.  Also,  the 
Ministry  of  Finance  does  not  always  seem  to 
have  enough  information  on  the  detailed 
content  of  major  public  expenditure  and 
revenue  items  at  the  general  government 
level.  As  a  consequence,  if  total  planned 
investment is not executed as planned, part of 
it can be  redirected to other items like wages 
in 
or  subsidies.  Coupled  with  difficulties 
producing projections in ESA terms, this points 
to  a  need  to  strengthen  the  information  base 
for public finances. 

usually 

leads 

to 

Emergency budgetary measures helped to 
contain  the  negative  effects  of  the 
pandemic.  The  Bulgarian  Government  has 
its  healthcare 
increased  the  capacity  of 
system,  provided  relief  to  those  individuals 
and  sectors 
that  have  been  particularly 
affected,  and  has  introduced  measures  to 
protect 
the 
government’s  response  and  the  impact  of the 
the 
economic 
pandemic 

into  account 

jobs.  Taking 

activity, 

on 

66%68%70%72%74%76%78%80%0%5%10%15%20%25%30%35%Activity rate 20-64 (rhs)Unemployment rate 15-74 (lhs)Long-term unemployment rate 15-74 (lhs)Youth unemployment rate 15-24 (lhs)NEET rate 15-29 (lhs) 
     
government  balance  recorded  a  deficit  of  4% 
of GDP in 2020 (in ESA terms). The temporary 
pandemic-related  measures  increased  from 
2.9% of GDP in 2020 to 4.3% of GDP in 2021. 
As a result, the deficit slightly rose to 4.1% of 
GDP,  somewhat  cushioned  by  the  stronger 
economic growth but also further exacerbated 
by  the  introduction  of  the  above-mentioned 
energy price measures (0.6% of GDP in 2021). 
The 
remain 
expansionary  in  2022  (-3.4%  of  GDP),  owing 
to  the  large  contribution  of  EU  funds  and 
Recovery  and  Resilience  Facility  (RRF)  grants. 
Finally, 
is 
estimated to have further increased to  25.1% 
of  GDP  in  2021  and  to  slightly  rise  to  25.6% 
of GDP in 2023. The impact of the deficits on 
the  debt  ratio  is  partially  moderated  by  the 
positive economic growth.  

the  general  government  debt 

fiscal  stance (2) 

is  set 

to 

The economic impact of Russia’s 
invasion of Ukraine 

intensity  and 

The  Bulgarian  economy 
is  relatively 
exposed  to  the  repercussions  from  the 
Russian  invasion  of  Ukraine.  The  main 
reasons  for  this  are  the  economy’s  very  high 
energy 
its  dependence  on 
Russian  energy  imports.  In  particular,  63%  of 
total  crude  oil  imports  and  75%  of  total  gas 
imports have  come  from Russia (3).  The  share 
of  natural  gas  in  Bulgaria’s  energy  mix  is 
relatively  low,  fluctuating  around  14%  in 
recent  years.  Bulgaria  receives  natural  gas 
through  gas 
predominantly 
from  Russia 
pipelines. 
limited 
alternative supply routes exist.  

Nevertheless, 

some 

(2)  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. 

(3)  Eurostat, 2020, share of Russian imports over total 
imports of natural gas, crude oil, including intra-EU 
trade. For crude oil, the Russian share can be 
underrepresented due to unclear ultimate country of 
origin. 2019 data has been used. 2020 import data is 
not informative, as large qualities of crude oil imports 
had been categorised as from 'not specified' trade 
partners. 

The  exposure  of  Bulgarian  exports  of 
goods  to  the  Russian  and  Ukrainian 
markets  is  limited.  Exports  of  goods  to 
Russia  and  Ukraine  each  constituted  around 
1.2% of total goods exports each in 2021. The 
share of value added that depends on Russian 
imports,  driven  by  domestic  and  export 
demand, 
is  somewhat  higher  than  trade 
shares,  but  at  2.4%,  it  is  still  limited.  The 
unilateral  stop  of  Russian  natural  gas  supply 
by Gazprom on 27 April is expected to cause a 
significant  one-off  increase  in  gas  prices  in 
2022,  since  the  available  alternative  supplies 
are likely to be contracted at higher prices.  

three  months 

People  fleeing  from  the  war  in  Ukraine 
are  also  taking  refuge  in  Bulgaria.  As  of 
28  April  more  than  200  thousand  have 
entered Bulgaria, with 96 thousand, or 1.5% of 
the  Bulgaria’s  total  population,  remaining  in 
the country. Currently, the aid to the incoming 
displaced people consists of providing BGN 40 
subsidy  per  day  per  person  for  a  maximum 
that 
period  of 
accommodate  them.  The  budgetary  costs 
related  to  people  fleeing  from  Ukraine  is 
assumed 
to  0.1%  of  GDP. 
Exceptional  support  is  made  available  to 
Bulgaria  under  the  Cohesion’s  Action  for 
Refugees 
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. 

in  Europe  (CARE) 

to  amount 

to  hotels 

Some progress towards 
Sustainable Development Goals  

Bulgaria needs to step up efforts towards 
achieving  the  Sustainable  Development 
Goals  (SDGs).  In  terms  of  the  environment 
and  climate,  more  needs  to  be  done  to 
improve energy efficiency given that both final 
and  primary  energy  consumption  have  been 
moving  away  from  their  SDG  objectives.  The 
‘responsible  consumption  and  production’ 
indicators  (SDG  12)  are  far  below  the  EU 
average.  The  circular  material  use  rate  is 
about  four  times  lower  than  the  EU  average 

5 

 
                                                 
 
and the amount of generated waste (excluding 
major mineral waste) is almost double the EU 
average. ‘Average CO2 emissions per km from 
new passenger cars’ exceed the EU average.  

There  is  still  no  significant  progress  on 
the  SDGs  in  the  social  area.  Bulgaria  has 
fared well on labour market indicators in SDG 
8  ‘Decent  work  and  economic  growth‘,  with 
employment  rates  on  the  rise  and  even 
surpassing the EU average, and the shares of 
long-term  unemployed  and  young  people  not 
in  employment  education  or  training    falling, 
although  the  latter  is  still  significantly  above 
the  EU  average.  Bulgaria  is  one  of  the  worst 
performers  in  the  EU  on  SDG  1  ‘No  poverty’, 
with  Roma  communities  bearing  the  brunt  of 
this.  This  is  further  exacerbated  by  adverse 
developments  in the  area  covered by  SDG  10 
‘Reduced  inequalities’,  and  by  relatively  weak 
performance  in  the  area  covered  by  SDG  4 
‘Quality education’. 

6 

 
 
 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

The  Bulgarian  recovery  and  resilience 
plan (RRP) is ambitious. With a total of EUR 
6.3 billion in grants, it represents about 10.2% 
of 
includes 
important  measures  to  accelerate  the  twin 
transition  and  boost  economic  and  social 
resilience.  

in  2019.  The  plan 

its  GDP 

from 

capacities, 

Significant  efforts  are  being  made  to 
accelerate  the  decarbonisation  of  the 
energy sector. These include the adoption of 
a clear framework for the phasing out of coal 
and  binding  commitments  to  cut  greenhouse 
gas emissions from power production by 40%. 
The  plan  also  envisages 
tripling  power 
generation 
renewables,  accelerated 
deployment  of  alternative  energy  sources, 
such  as  renewable  hydrogen,  geothermal  and 
sustainable biogas, building up large electricity 
electricity 
storage 
the 
capacities, 
interconnection 
energy  efficiency  of  buildings,  and  liberalising 
the  wholesale  and  retail  electricity  markets. 
investments  are 
Transport 
road 
targeting 
transport, 
electric 
mobility;  increasing  the  quality,  coverage  and 
use  of  rail  passenger  services,  including  by 
modernising  and  digitalising  rolling  stock,  and 
promoting  sustainable  urban  mobility.  Of  the 
plan’s 
reforms,  58.9% 
contribute  to  Bulgaria’s  achievement  of  its 
climate objective.  

reforms  and 
the  decarbonisation  of 
including 

investments  and 

encouraging 

increasing 

improving 

The  plan  promotes  the  achievement  of 
its 
digital  objectives  with  25.8%  of 
overall  investments  and  reforms.  Efforts 
will  focus  on  enhancing  connectivity  and 
broadband deployment in remote and sparsely 
populated  areas,  promoting  the  acquisition  of 
digital  skills  across  Bulgaria’s  population,  as 
well  as  the  digitalisation  of  businesses  and 
public administration. Investments in areas like 
electricity storage capacities, the digitalisation 
transport,  make  a 
and  sustainability  of 

significant  contribution  to  both  Bulgaria’s 
green and digital objectives. 

to 

of 

the 

the 

linked 

liability  of 

implementation 
to 

RRP 
The 
contributes 
improving  Bulgaria’s 
institutional  framework  and  addressing 
numerous  challenges 
the 
business environment. RRP reforms support 
a  stronger  institutional  framework,  including 
through  improvements  in  the  capacity  and 
functioning  of  the  anti-corruption  framework, 
judicial reforms to ensure the effectiveness of 
criminal  proceedings  and  the  accountability 
and  criminal 
the  Prosecutor-
General, as well as to improve implementation 
of  the  anti-money  laundering  framework.  The 
plan  also  aims  to  increase  the  quality  and 
predictability  of 
legislative  process, 
regulate 
lobbying  activities  and  protect 
whistleblowers.  Furthermore,  it  includes  a  set 
of  measures  to  reduce  the  administrative 
burden by reinforcing e-government, including 
through the digitalisation of the justice system 
and  the  increased  provision  of  digital  public 
insolvency 
reform  of 
services.  The 
framework is expected to contribute to a more 
effective  and 
the 
restructuring  of  businesses,  while  stronger 
governance  of  state-owned  enterprises  and 
the  reform  of  public  procurement  procedures 
should  contribute  to  a  more  transparent  and 
efficient  allocation  of  public 
resources. 
Businesses, including small and medium-sized 
enterprises  (SMEs),  are  also  being  bolstered 
through  grants  and  financial  instruments  to 
support their green and digital transitions and 
innovation.  

flexible 

system 

the 

for 

The RRP is expected to improve access to 
education,  adult  learning  and  healthcare, 
and  to  promote  social  inclusion,  thereby 
contributing to the implementation of the 
European  Pillar  of  Social  Rights.  Relevant 
measures in education and training include the 
mandatory  inclusion  of  4-year-olds  in  pre-
school education, enhancing the relevance of  

7 

 
 
 
for 

The RRP also includes measures to reform 
the  research  and  innovation  ecosystem. 
This  pertains  to  a  new  governance  structure 
including  the  creation  of  a  new  consultative 
Innovation  Board,  and  a  new 
body,  the 
legislative 
research  and 
framework 
innovation  (R&I)  development  and  research 
universities.  New  instruments  for  the  funding 
of  research  will  complement  the  reform. 
Overall,  this  is  expected  to  foster  efficient 
policy  coordination  at  all  stages  of  research 
and  innovation,  enhance  technology  transfer 
and stimulate public and private investment in 
research  and  innovation  with  the  goal  of 
spurring the country’s medium- and long-term 
economic 
successful 
implementation of the RRP R&I measures and 
cohesion  policy  measures  will  be  crucial  for 
boosting productivity and competitiveness.  

growth. 

The 

higher  education  with  the  aim  of  addressing 
labour  market  shortages  and  promoting 
research,  as  well  as  digital  skills  courses  for 
adults  and  a  platform  for  adult  learning. 
Strengthening  skills  by  improving  the  labour 
market  relevance  of  Bulgaria’s  education  and 
lifelong-learning systems can help to alleviate 
some  of  the  labour  market  bottlenecks  and 
narrow  the  productivity  gap  towards  the  EU 
averages.  The  healthcare  system  will  be 
improved  through  a  new  national  strategy  on 
health,  the  implementation  of  the  National 
Health  Information  System,  as  well  as  a 
network  of  outpatient  units  in  underserved 
areas,  supported  by  a  reform  targeting  the 
shortages  and  unbalanced  distribution  of 
social 
medical  professionals.  To 
inclusion,  the  plan  includes  a  reform  of  the 
minimum 
its 
adequacy  and  coverage,  as  well  as  measures 
to  improve  employment  and  social  services, 
including long-term care.  

income  scheme  to 

improve 

foster 

8 

 
 
Box 1: 

Key deliverables under the RRP in 2022-2023 

  Pass  legislation  adopting  the  coal  and  lignite  phase-out  calendar  and  introducing  a  CO2 
emissions  cap  for  lignite  and  coal-fired  power  plants  and  adopt  the  Roadmap  to  Climate 
Neutrality 

  Liberalise the wholesale electricity market 

  Launch a national support scheme for the energy efficiency of residential and non-residential 

buildings and implement reform to tackle barriers to energy efficiency investments 

  Define energy poverty 

 

Increase the accountability and criminal liability of the Prosecutor-General 

  Reform the Anti-corruption Commission 

  Reform the insolvency framework 

  Launch  the  Economic  Transformation  Programme  to  support  the  innovation  and  growth  of 

Bulgarian businesses, in particular by supporting their green and digital transitions 

  Put the National Health Strategy and related action plan in place 

  Ordinance on the quality of social services to define the quality standards for the provision of 

social services 

  Publish a report making evidence-based recommendations to expand effective coverage and 

better target the minimum income scheme 

  Action  plans  for  the  Higher  Education  Strategy  and  the  Strategic  Framework  for  the 

Development of Education, Training and Learning 2021-2030 

  Adopt the Research and Innovation Act 

  Establish the National Fund for Decarbonisation 

  Adopt the Social Support Code, addressing the fragmentation of the legislation in the area of 

social benefits and services 

9 

 
 
FURTHER PRIORITIES AHEAD 
FURTHER PRIORITIES AHEAD 

the 

challenges 

RRP 
Besides 
the 
in  Section  2, 
addresses,  as  outlined 
Bulgaria  faces  additional  key  challenges 
the  plan  does  not  fully  address.  The  RRP 
does not address high out-of-pocket payments 
for  healthcare  services.  Employment  and 
social services could also be integrated further 
and  more  attention  could  be  given  to  the 
provision  of  employment  services  better 
targeted  to  individual  needs.  Further  steps  to 
move to a more resource-efficient and circular 
economy can also put Bulgaria more firmly on 
the path towards environmental sustainability. 
Finally,  in  the  context  of  the  energy-related 
challenges the invasion of Ukraine has brought 
with  it,  Bulgaria  could  consider  speeding  up 
with 
investment 
neighbouring  Member  States,  to  reduce  its 
dependency  on  fossil  fuels  and  increase  the 
share  of  renewables  in  energy  consumption. 
Addressing  these  challenges  would  also  help 
Bulgaria  to  make  further  progress  on  the 
relevant  SDG  indicators  for  the  respective 
underlying areas.  

interconnection 

in 

Labour market and social 
challenges 

the  wake  of 

labour  market  seems 

Social  challenges  are  significant  and  the 
crisis  has  exacerbated  some  of  them. 
to  be 
While 
the 
recovering  quickly 
the 
in 
pandemic,  the  share  of  the  population  at  risk 
of  poverty  or  social  exclusion  remains  high 
(33.6%  in  2020).  Vulnerable  groups,  such  as 
older  people,  Roma  and  people  with 
disabilities,  are  disproportionately  at  risk  of 
poverty.  The  RRP  includes  measures  for  adult 
learning, encompassing the provision of digital 
skills  courses  for  adults.  However,  additional 
efforts  to  provide  effective  active  labour 
market  policies  tailored  to  the  challenges  of 
vulnerable  groups  would  help  Bulgaria  deal 

10 

with labour shortages, given the likely regional 
developments  and  adverse  demographic 
trends.  Albeit  increasing,  Bulgaria’s  spending 
on  overall  active  labour  market  policies  is 
among  the  lowest  in  the  EU  and  mismatches 
between  skills  and  labour  market  needs  are 
higher  than  both  those  of  other  Member 
States 
in  similar  situations  and  the  EU 
average.  

employment  and 

Certain  RRP  measures  pave  the  way  for 
integrating 
social 
services  further.  They  relate  to  upgrading 
the Employment Agency’s IT systems, thereby 
laying  the  technical  foundations  for  further 
integrating  services,  including  employment, 
social  and  administrative  services.  Further 
enhancing  this  integrated  approach  to  service 
provision  would  help  to  better  meet  labour 
market  needs,  stimulating  upskilling  and 
reskilling  and  the  move  to  a  higher  value-
added  economy.  The  still  limited  access  to 
quality education in Bulgaria and the high rate 
of  early  school  leaving,  particularly  among 
disadvantaged  groups,  including  Roma,  and  in 
rural  areas,  also  affects  employability  and 
labour market outcomes. 

Unequal access to healthcare 
persists 

to 

related 

challenges 

The  pandemic  has  highlighted 
the 
shortcomings  of  Bulgaria’s  healthcare 
system.  It  has  brought  to  the  fore  the 
structural 
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  healthcare, 
mainly  a  consequence  of  high  out-of-pocket 
regional 
payments,  as  well  as  unequal 
distribution  and  the  low  number  of  health 
professionals  (primarily  nurses),  has  been  a 

 
 
 
feature of the Bulgarian healthcare 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 the highest in the EU, 
bringing the burden of healthcare costs above 
the  EU  average.  The  effectiveness  of  the 
healthcare  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.   

The  RRP  does  not  address  high  out-of-
pocket payments. There are measures in the 
RRP  addressing  significant  challenges  in  the 
healthcare  system,  such  as  improving  access 
to  healthcare  across  the  country,  including  to 
screening  and  preventive  healthcare  services, 
but  high  out-of-pocket  payments  and  gaps  in 
health 
remain 
insurance 
unaddressed.  There 
is  therefore  room  to 
improve  the  effectiveness  of  and  access  to 
Bulgaria’s healthcare system.  

coverage 

Green transition and resource 
efficiency 

are 

also 

There 

The circular use of material in Bulgaria is 
among  the  lowest  in  the  EU.  Bulgaria  still 
circular  economy 
lacks  an  overarching 
programme. 
waste 
management  challenges.  At  2.6%,  Bulgaria’s 
circular  material  use  rate  is  far  below  the  EU 
average  of  12.8%.  At  32%,  the  recycling  rate 
of  municipal  waste  is  still  considerably  below 
the 2025 target of 55% and well below the EU 
average  of  46%.  Waste  management  and 
compliance  with  urban  wastewater  collection 
and  treatment  obligations  continue  to  be  a 
challenge.  Despite  having  one  of  the  lowest 
levels  of  generation  of  municipal  waste, 
Bulgaria  remains  one  of  the  Member  States 
with the highest landfilling rate (61% in 2018 
compared  to  the  EU  average  of  24%).  The 
recovery  rate  of  construction  and  demolition 
waste  is  below  30%,  when  it  should  be  at 

11 

to 

the 

in  accordance  with  EU 

law. 
least  70% 
According 
latest  available  data, 
Bulgaria’s  overall  compliance  rate  with  the 
Urban  Waste  Water  Treatment  Directive  is 
30%,  the  EU’s  fourth  lowest  and  well  below 
the EU average of 76% in 2018. According to 
the 
the  overall 
compliance  rate  in  Bulgaria  is  30%,  which  is 
the  fourth  lowest  and  well  below  the  EU 
average of 76% in 2018.  

last  available  data (4), 

Energy-related challenges from 
the invasion of Ukraine on the 
security of supply 

limited 

Bulgaria  relies  on  natural  gas  from 
Russia,  mostly  for  district  heating  and 
industrial  use.  In  2020,  it  imported  most  of 
its  gas  from  Russia.  However,  the  share  of 
natural  gas  in  the  energy  mix  in  2020  was 
impact  on 
only  14%,  with  very 
electricity  generation.  Bulgaria  also  imports 
very  little  hard  coal  from  Russia  (0.56  million 
tonnes,  85%  of  total  coal  imports),  primarily 
industrial  use  as  coal-fired  power 
for 
generation  is  fully  covered  by  the  domestic 
production  of  lignite.  Rather,  the  increase  in 
natural gas prices indirectly affected electricity 
prices  because  of  market  coupling  and  the 
general  increase  in  the  EU.  In  the  electricity 
sector,  household  consumers  are  covered  by 
regulated  prices,  which  will  be  gradually 
phased out by 2025 as stipulated in the RRP.  

Swift 
implementation  of  the  energy 
reforms  and  investments  in  the  RRP  will 
be  crucial  for  increasing  energy  security. 
With  over  37%  of  RRP  investments  aimed  at 
the energy sector and very ambitious reforms 
the 
to  accelerate  decarbonisation  and 
deployment of renewable energy, the RRP will 
make  a  tangible  contribution  to  decreasing 
Bulgaria’s dependence on Russian gas. 

Besides the measures in its RRP, Bulgaria 
could  accelerate  the  diversification  of 
gas routes by swiftly completing existing 

(4)  WISE – – Country profiles on urban waste water 

treatment - Bulgaria. 

 
                                                 
includes 

investments at an advanced stage and by 
expanding  storage.  This 
the 
finalisation  of  planned  interconnector  projects 
with  neighbouring  countries,  as  well  as 
planned  gas  storage  projects.  Bulgaria  has 
also expressed strong support for common gas 
procurement  at  EU  level.  Investments  in  new 
infrastructure  should  be  future-proof  where 
possible and avoid lock-in effects. 

Energy  efficiency  should  also  remain  a 
priority  for  rapidly 
lowering  energy 
demand.  The  Bulgarian  RRP  has  ambitious 
targets  for  the  renovation  of  public  and 
residential  buildings.  However,  the  needs  of 
the  country’s  current  building  stock  are 
significantly more pressing. Acceleration of the 
deep  energy 
renovation  of  public  and 
residential  buildings  and  support  for  the 
installation of solar heating systems and heat 
pumps for own use can lead to further energy 
consumption  savings,  benefiting  both  citizens 
and companies alike. In addition, efforts could 
be  made  to  increase  the  energy  efficiency  in 
industry,  as  it  remains  a  large  gas  consumer 
with  a  share  of  40%  in  2019.  Expanding 
renewable  energy  and  other 
low-carbon 
sources  such  as  geothermal  will  also  reduce 
to 
import 
decarbonisation. 
the 
reforms  in  the  RRP  will  greatly  contribute  to 
this. 

and 
Implementation 

dependency 

contribute 

of 

12 

 
 
 
KEY FINDINGS 
KEY FINDINGS 

Bulgaria’s  RRP 
address  a  series  of 
challenges 

includes  measures  to 
its  structural 

  Measures  for  accelerating  and  facilitating 
renewable  energy 
the  deployment  of 
generation  and  storage;  cutting  the  power 
sector’s greenhouse gas emissions by 40%, 
with  a  view  to  fully  phasing  out  coal  by 
the 
latest; 
2038  at 
electricity markets; boosting renovations of 
building stock to improve energy efficiency.  

liberalising 

the 

  A set of measures focusing intently on the 
digital  transformation,  with  measures  to 
support  the  acquisition  of  digital  skills 
the 
across 
digitalisation  of  businesses  and  public 
administration  and  the  improvement  of 
connectivity  and  broadband  deployment  in 
remote and sparsely populated areas.  

the  whole 

population, 

protection 
the 

  A  comprehensive  set  of  measures  to 
strengthen 
institutional 
Bulgaria’s 
framework  by:  reforming  anti-corruption 
legislation  on 
institutions;  passing  new 
of 
the 
lobbying 
and 
whistleblowers; 
judicial 
reforming 
system  to  ensure  the  accountability  and 
criminal  liability  of  the  Prosecutor-General; 
reforming the legislative process; reforming 
public procurement to increase the share of 
the 
competitive  procedures; 
governance  framework  of  state-owned 
reform 
enterprises; 
to 
implementing 
improve 
restructuring 
insolvency  and 
proceedings.  

reforming 

  Improving  access 

to  healthcare  and 
the  deinstitutionalisation  of 

supporting 
care. 

  Increasing  the  adequacy  and  coverage  of 
and 
income 
the  minimum 
improving social and employment services. 

scheme 

  Providing significant  support to businesses, 
especially  small  and  medium-sized  ones, 
through  grants  and  financial  instruments 
aimed  at  promoting  digitalisation, 
the 
circular  economy,  and 
the  use  of 
renewables for own consumption.  

  Sustainable  transport  reforms  in  the  areas 
of road decarbonisation, road safety, public 
transport,  a  modal  shift  to  railways,  and 
investments 
the  metro, 
in 
digitalisation and road safety. 

railways, 

Besides  the  reforms  and  investments  in 
the  RRP,  Bulgaria  would  benefit  from 
addressing the following challenges 

  Speeding  up  investment  in  interconnection 
with  neighbouring  Member  states 
to 
strengthen  the  diversification  of  energy 
supply. 

  Further  increasing  resource  and  energy 
efficiency,  by  moving  towards  a  more 
sustainable and circular economic model. 

  Further  improving  access  to  healthcare 
services,  in  particular  by  addressing  the 
high share of out-of-pocket payments.   

  Modernising  the  educational  system  and 
infrastructure.  Improving  access  to  quality 
education for vulnerable groups and people 
from  disadvantaged  communities,  such  as 
Roma. 

  Further  strengthening  the  integration  of 
employment  and  social  services  and  the 
provision  of  active  labour  market  policies, 
in  particular  to  tackle  the  challenges  of 
vulnerable groups, including Roma. 

13 

 
 
 
ANNEXES 

 
 
 
LIST OF ANNEXES 

Cross-cutting progress indicators 

Annex 1: Sustainable Development Goals 

Annex 2: Recovery and Resilience Plan – implementation 

Annex 3: Other EU instruments for recovery and growth 

Annex 4: Progress in the implementation of country-specific recommendations 

Environmental sustainability 

Annex 5: Green Deal 

Annex 6: Employment and social impact of the green transition 

Productivity 

Annex 7: Resource efficiency and productivity 

Annex 8: Digital transition 

Annex 9: Innovation 

Annex 10: Industry and single market 

Annex 11: Public administration 

Fairness 

Annex 12: Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

Annex 13: Education and skills 

Annex 14: Health and health systems 

Annex 15: Economic and social performance at regional level 

Macroeconomic stability 

Annex 16: Key financial sector developments 

Annex 17: Taxation 

Annex 18: Key economic and financial indicators 

Annex 19: Debt sustainability analysis 

LIST OF TABLES 

Table A2.1: 
Table A4.1: 
Table A5.1: 
Table A7.1: 
Table A8.1: 
Table A9.1: 
Table A10.1: 

Key elements of the Bulgarian RRP 
Summary table on 2019, 2020 and 2021 CSRs 
Indicators underpinning  progress on the European Green Deal from a macroeconomic perspective 
Selected resource efficiency indicators 
Key Digital Economy and Society Index indicators 
Key research, development and innovation indicators 
Key Single Market and Industry indicators 

17 

19 

19 

22 

23 

26 

29 

29 

33 

35 

35 

36 

38 

40 

42 

44 

44 

46 

48 

50 

53 

53 

55 

57 

58 

22 
27 
32 
35 
37 
39 
41 

 
 
 
Table A11.1: 
Table A13.1: 
Table A14.1: 
Table A15.1: 
Table A16.1: 
Table A17.1: 
Table A18.1: 
Table A19.1: 
Table A19.2: 

Public administration indicators – Bulgaria 
EU-level targets and other contextual indicators under the European Education Area strategic framework 
Key health indicators 
Selected indicators at regional level – Bulgaria 
Financial soundness indicators 
Taxation indicators 
Key economic and financial indicators 
Debt sustainability analysis for Bulgaria 
Heat map of fiscal sustainability risks for Bulgaria 

LIST OF GRAPHS 

Graph A1.1: 

Progress towards SDGs in Bulgaria in the last five years 

Graph A3.1: 

2014-2020 European Structural and Investment Funds – total budget by fund 

Graph A3.2: 

Cohesion policy contribution to the SDGs 

Graph A4.1: 

Bulgaria’s progress on the 2019-2020 CSRs (2022 European Semester cycle) 

Graph A5.1: 

Fiscal aspects of the green transition – taxation and government expenditure on environmental protection 

Graph A5.2: 

Thematic – Energy Share in energy mix (solids, oil, gas, nuclear, renewables) 

Graph A5.3: 

Thematic – Biodiversity Terrestrial protected areas and organic farming 

Graph A5.4: 

Thematic – Mobility Share of zero-emission vehicles 

Graph A6.1: 

Fair green transition challenges 

Graph A6.2: 

Energy poverty by income decile 

Graph A7.1: 

Economic importance and expansion of the circular economy – Employment and value added in circular economy 

sectors 

Graph A11.1: 

E-government benchmark scores and (lhs) and e-government users (rhs) 

Graph A11.2: 

Performance on the single market public procurement indicator 

Graph A13.1: 

Low achievement in reading by socio-economic status, PISA 2018 

Graph A14.1: 

Life expectancy at birth, years 

Graph A14.2: 

Projected increase in public expenditure on health care over 2019-2070 (reference scenario) 

Graph A15.1: 

Average GDP per head growth vs GDP per head in 2010 

Graph A15.2: 

Labour productivity, EU-27, Bulgaria NUTS 2 regions, 2000-2019 

Graph A15.3: 

Territories most affected  by the climate transition in Bulgaria 

Graph A15.4: 

Innovation performance in Bulgaria 

Graph A15.5: 

Unemployment rate 

Graph A17.1: 

Tax wedge indicators 

43 
47 
49 
52 
54 
56 
57 
58 
59 

19 

23 

24 

26 

29 

29 

30 

31 

34 

34 

35 

42 

42 

46 

48 

48 

50 

50 

51 

51 

51 

56 

18 

 
 
 
 
CROSS-CUTTING PROGRESS INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

This  Annex  assesses  Bulgaria’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  four  dimensions  of  competitive 
sustainability.  The  17  SDGs  and  their  related 
indicators  provide  a  policy  framework  under  the 
UN’s  2030  Agenda  for  Sustainable  Development. 
The  aim  is  to  end  all  forms  of  poverty,  fight 
inequalities  and  tackle  climate  change,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
The graph below is based on the EU SDG indicator 
set  developed  to  monitor  progress  on  SDGs  in  an 
EU context. 

Bulgaria is improving on most SDG indicators 
related  to  environmental  sustainability  (SDG 
2, 6, 7, 9 and 11). Challenges remain in some 
areas  however  (especially  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.  The 
‘circular  material  use  rate’ 
dropped  from  3.1%  of  the  material  input  for 
domestic use in 2015 to 2.6% in 2020 (compared 

indicator 

to  12.8%  in  the  EU).  The  ‘generation  of  waste 
excluding  major  mineral  waste’  rate  of  3097  kg 
per  capita  is  also  way  above  the  EU  average  of 
1820  kg  per  capita.  The  ‘average  CO2  emissions 
per km from new passenger cars’ also exceeds the 
EU average of 108.2g of CO2 per km by 24.8g. The 
‘sanitation’ 
(SDG  6),  despite  some 
improvement, remains below the EU average, with 
7%  of  the  population  (in  2020)  ‘having  neither  a 
bath, nor a shower, nor indoor flushing toilet in the 
household’  (compared  to  11.1%  in  2015  and  the 
EU  2019  average  of  1.6%)  and  64.5%  of  the 
population  (in  2020) 
least 
secondary wastewater treatment’ (the EU average 
for the same year was 80.9%). 

‘connected  to  at 

On  ‘affordable  and  clean  energy’  (SDG  7), 
Bulgaria has made some progress.  Namely, in 
the  share  of  renewable  energy  in  total  energy 
consumption (an increase from 18.3% in 2015 to 
23.3% in 2020) and is in line with the EU average 
for  this  indicator  (22.09  %  in  2020).  Bulgaria 
import 
betters 
dependency’  (37.9%  of  imports  in  gross  available 
energy  compared  to  57.5%  in  the  EU),  but 
struggles  when  it  comes  to  ‘access  to  affordable 

the  EU  average  on 

‘energy 

Graph A1.1: Progress towards SDGs in Bulgaria in the last five years 

(1) For detailed datasets on the various SDGs see the annual ESTAT report ‘Sustainable development in the European Union’, 
https://ec.europa.eu/eurostat/product?code=KS-09-22-019; Extensive country specific data on the short-term progress of Member 
States can be found here: Key findings - Sustainable development indicators - Eurostat (europa.eu)  
Source: Eurostat, latest update of 28 April 2022. Data mainly refer to 2015-2020 and 2016-2021 

19 

 
 
 
 
   
energy’,  with  27.5%  (2020)  of  the  population 
‘unable to keep  their home adequately warm’ (EU 
2020 average: 7.4%).  

Bulgaria  generally  underperforms  on  SDG 
indicators  related  to  fairness.  However,  the 
picture  is  mixed.  Some  SDG  indicators  have 
improved (SDG 1, 2, 3, 5, 8) others have worsened 
in  all 
(SDG  4,  10).  Bulgaria  underperforms 
indicators  related  to  ‘no  poverty’ (SDG  1). Despite 
progress made on the percentage of ‘people at risk 
of  poverty  or  social  exclusion’  (33.6%  of  the 
population  in  2020  compared  to  43.4%  in  2015; 
the  2020  EU  average:  21.6%),  as  well  as  the 
percentage  of  ‘severely  materially  or  socially 
deprived  people’  (22.1%  in  2020  compared  to 
36.8%  in  2015  and  the  2020  EU  average  of 
6.8%), a disparity remains between Bulgaria’s and 
the  EU’s  results.  The  ‘in-work  at-risk-of-poverty 
rate’ is also deteriorating (9.6% of the population 
aged  16  or  over  in  2020  compared  to  7.7%  in 
2015).  

There  are  still  challenges  related  to  health 
and  education.  While  Bulgarians  enjoy  longer 
‘healthy life years at birth’ (SDG 3) (66.3 years in 
2020  compared  to  the  EU  average  of  64.6),  they 
are more often victims of ‘standardised avoidable 
mortality’  (2018:  414.5  per  100  000  people 
compared  to  EU  252.1  in  2017)  as  well  as  ‘fatal 
accidents at work’ (2019: 3.37 per 100 000 people 
compared to EU 1.74) or ‘road traffic deaths’ (rate 
of  9  in  2019  compared  to  5.1  in  the  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 the EU average of 22.5% in the same 
year) and a higher-than-average amount of ‘early 
leavers  from  education  and  training’  (in  2020: 
12.2% of the population aged 18 to 24).  There is 
also  room  for  improvement  in  ‘gender  equality’ 
(SDG 5), as only 12.9% of board members (senior 
management)  are  female  compared  to  29.5%  in 
the EU (2020). 

Bulgaria is improving on some SDG indicators 
related  to  productivity  (SDG  8,  9),  but  still 
needs  to  catch  up  on  the  SDG  4.  Namely,  the 
‘share  of  (Bulgarian)  households  with  high-speed 
internet  connections’  is  below  the  EU  average. 
According  to  the  data  from  the  Digital  Economy 
and  Society  Index  (DESI  2021),  Bulgaria  scores 
only  59%  in  the  overall  broadband  take-up  of 
households (EU average: 77%) and is also lagging 
take-up  of  high-speed  fixed 
behind 

the 

in 

broadband of at least 100 Mbps (15%, against an 
EU  average  of  34%).  In  addition,  digital  skills 
remain  a  problem  for  the  adult  population  with 
31%  of  individuals  aged  16  to  74  enjoying  ‘at 
least basic digital skills’ (2021; EU average: 54%).  

All  ‘R&D  and  innovation’  indicators’  (SDG  9) 
also show results below the EU average. This 
is  particularly  visible  when  it  comes  to  ‘gross 
domestic  expenditure  on  R&D’  (2020:  0.86%  of 
GDP  compared  to  the  EU  average  of  2.32%)  or 
‘R&D  personnel’  (2020:  0.82%  of  the  active 
population  compared  to  EU  average  of  1.43%). 
Bulgarian  ‘patent  applications  to  the  European 
Patent  Office’  amount  to  7  per  million  inhabitant 
(2020),  while  the  EU  average  is  147  per  million 
inhabitant.  R&I  shortages  are  addressed  by  the 
Bulgarian RRP (Component 2) through a number of 
programmes,  but  also  through  the  forthcoming 
Research  and  Innovation  Act and  through  the 
mandate  of  the  newly  created  Ministry  for 
Innovation  and  Growth  advised  by  the  Innovation 
Board. 

Bulgaria  is  improving  on  SDG  indicators 
related  to  macroeconomic  stability  (8,  16) 
and  performs  well  on  SDG  17.  It  is  improving 
on the EU average on indicators related to ‘decent 
work  and  economic  growth’  (SDG  8),  but  several 
challenges  remain.  Real  GDP  per  capita  of  EUR 
6380  remains  well  below  the  EU  average  of  EUR 
26  380.  The  ‘investment  share  of GDP’ (16.6% in 
2021,  well  below  the  EU  average  of  22%  for  the 
same  period)  has  averaged  18.3%  for  the  last  6 
years  and  was  below  the  average  investment 
share for the EU. On the other hand, Bulgaria is far 
less  indebted  than  the  EU  average,  with  ‘general 
government gross debt’ of 24.7 % of GDP in 2020 
compared to 90.1 % of GDP in the EU.   

Bulgaria has also shown some improvements 
on the ‘peace, justice and strong institutions’ 
indicators  (SDG  16).  While  still  below  the  EU 
average,  the  country  has  made  some  positive 
change  when  it  comes  to  ‘peace  and  personal 
security’,  lowering  by  7%  the  percentage  of 
‘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 ‘standardised death rate 
due to homicide’ (1.2 per 100 000 people both in 
2013 and 2018 (EU average: 0.9 in 2013 and 0.7 
in  2017).  The  Bulgarian  RRP  addresses  these 
issues  in  its  ‘Business  environment’  component, 

20 

 
administrative 

with  several  reforms  aimed  at  making  the  justice 
systems  more 
and 
accessible,  effective  and  predictable,  and  at 
fighting corruption  

justice 

21 

 
 
 
ANNEX 2: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 
ANNEX 2: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the  centrepiece  of  the  EU’s  efforts  to 
support  its  recovery  from  the  COVID-19 
pandemic  and  strengthen  resilience  against 
future  shocks.  Bulgaria  submitted  its  recovery 
and resilience plan (RRP) on 15 October 2021. The 
Commission’s positive assessment on 7 April 2022 
and  the  Council’s  approval  on  4  May  2022  paved 
the  way  for  disbursing  EUR  6.3  billion  in  grants 
under the RRF over the period 2022-2026. The key 
elements of the Bulgarian RRP are set out in Table 
A2.1. 

Table A2.1:  Key elements of the Bulgarian RRP 

(1)  See Pfeiffer P., Varga, J. and in ’t Veld, J. (2021), 
‘Quantifying Spillovers of NGEU investment’, European 
Economy Discussion Papers, No. 144 and Afman et al. (2021), 
‘An overview of the economics of the Recovery and Resilience 
Facility’, Quarterly Report on the Euro Area (QREA), Vol. 20, No. 
3 pp. 7-16.   
Source: European Commission 

22 

Total allocation EUR 6.3 billion in grants (10.2% of 2019 GDP)Investments and Reforms 57 investments and 47 reforms Total number of Milestones and Targets346 (206 milestones and 140 targets)Estimated macroeconomic impact (1) Raise GDP by 1.9%-3% by 2026 (0.6% in spillover effects)First instalment Bulgaria has not yet submitted a first payment request 
 
 
   
 
 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The EU’s budget of more than EUR 1.2 trillion 
for  2021-2027  is  the  investment  lever  to 
help  implement  EU  priorities.  Underpinned  by 
an  additional  amount  of  about  EUR  800  billion 
largest 
through  NextGenerationEU  and 
instrument, the Recovery and Resilience Facility, it 
represents  significant  firepower  to  support  the 
recovery and sustainable growth. 

its 

Graph A3.1: 2014-2020 European Structural and 
Investment Funds – total budget by fund 

support 

In  2021-2027,  EU  cohesion  policy  funds (5) 
will 
development 
long-term 
objectives  in  Bulgaria  by  investing  EUR  10.8 
billion (6). This includes EUR 1 295.0 million from 
the  Just  Transition  Fund  that  are  available  to 
Bulgaria  to  alleviate  the  socio-economic  impacts 
of  the  green  transition  in  the  most  vulnerable 
regions.  The  2021-2027  cohesion  policy  funds 
partnership  agreements  and  programmes  are 
designed  taking  into  account  the  2019-2020 
country-specific 
(CSRs)  and 
investment  guidance  provided  within  the  context 
of the European Semester, ensuring synergies and 
complementarities  with  other  EU  funding. 
In 
addition, Bulgaria will benefit from EUR 5.7 billion 
support for the 2023-27 period from the Common 
Agricultural 
social, 
environmental,  and  economic  sustainability  and 
rural  areas, 
innovation 
contributing  to  the  European  Green  Deal,  and 
ensuring long-term food security. 

in  agriculture  and 

recommendations 

Policy,  which 

supports 

(1) EUR billion in current prices, % of total 
(2) The data for the EAFRD refer to the period 2014-2022 
Source: European Commission, Cohesion Open Data 

investment, 

In  2014-2020,  the  European  Structural  and 
Investment Funds (ESIF) for Bulgaria are set 
to  invest  EUR  11.05  billion (7)  from  the  EU 
budget.  The  total 
including 
national  financing,  amounts  to  EUR  13.02 
billion (Graph A3.1), representing around 3.59% 
of GDP for the period 2014-2020 and 66.03% of 
public investment (8). By 31 December 2021, 88% 
of the total was allocated to specific projects and 
61%  was  reported  as  spent,  leaving  EUR  5.02 
billion  to  be  spent  by  the  end  of  2023 (9).  Of  the 
11  objectives,  the  most  relevant  for  cohesion 
in  Bulgaria  are  environmental 
policy  funding 
the 
resource 
protection 
competitiveness of SMEs, network infrastructure in 
transport and energy, and social inclusion (in total 
EUR  8.12  billion).  By  the  end  of  2020,  cohesion 
policy  investments  was  supporting  27  494  firms, 
had  improved  water  supply  and  waste  water 
treatment  for  300  000  people,  and  had  financed 
72km  of  new  roads  including  the  Trans-European 

efficiency, 

and 

(7)  ESIF includes cohesion policy funds (ERDF, ESF+, CF, Interreg) 
and the European Agricultural Fund for Rural Development 
(EAFRD) and European Maritime and Fisheries Fund (EMFF). 
According to the ‘N+3 rule’, the funds committed for the 
years 2014-2020 must be spent by 2023 at the latest (by 
2025 for EAFRD). Data source: Cohesion Open Data, cut-off 
date 31.12.2021 for ERDF, ESF+, CF, Interreg; cut-off date 
31.12.2020 for EAFRD and EMFF.  

(5)  European Regional Development Fund (ERDF), European 

(8)  Public investment is gross fixed capital formation plus 

Social Fund+ (ESF+), Cohesion Fund (CF), Just Transition Fund 
(JTF), Interreg. 

(6)  Current prices, source: Cohesion Open Data  

capital transfers, general government. 

(9)  Including REACT-EU. ESIF data on 

https://cohesiondata.ec.europa.eu/countries/BG 

23 

2.6020%3.8029%0.101%4.4434%2.015%0.11%CFEAFRDEMFFERDFESFYEI 
 
                                                 
     
                                                 
 
environment,  8 300 

Transport Network. The European Social Fund (ESF) 
has invested over EUR 1.5 billion in improving the 
quality  of  and  access  to  education  at  all  levels, 
supporting employment, and reducing poverty and 
social  exclusion.  It  has  supported  over  500  000 
improving  access  to  employment, 
people  by 
including upskilling and reskilling opportunities and 
better  social  inclusion.  In  the  area  of  education, 
more  than  451  000  students  have  been  included 
in  extracurricular  activities,  more  than  55  400 
have  been  involved  in  practical  training  in  a  real 
work 
students 
participated in practical training activities in a real 
work environment, over 1 800 kindergartens have 
received support for providing an environment for 
active 
in  the  system  of  preschool 
education  (including  for  the  early  prevention  of 
learning  difficulties),  and  over  102  600  children 
and  students  have been included  in measures  for 
educational 
integration  and  reintegration.  The 
Fund for European Aid to the Most Deprived (FEAD) 
programme  has  provided  warm  lunches  for  over 
50 000 people monthly, and on average each year 
520  000  people  and  members  of  their  families 
received 290 000 food packages for the duration 
of the programme. 

inclusion 

school 

Graph A3.2: Cohesion policy contribution to the 
SDGs 

(1)  EUR billion in current prices 
Source: European Commission, DG REGIO 

are 

funds 

policy 

Cohesion 
already 
contributing  in  great  measure  to  achieving 
the SDG objectives.  In Bulgaria’s case, cohesion 
policy  funds  are  supporting  11  of  the  17  SDGs 
with up to 94% of the expenditure contributing to 
the achievement of the related goals.  

REACT-EU, under NextGenerationEU, provided 
EUR  575.9  million  of  additional  funding  to 
2014-2020  cohesion  policy  allocations  for 
Bulgaria  to  ensure  a  balanced  recovery, 
create  conditions  conducive  to  convergence 
and provide vital support for regions to help 
them  deal  with  the  impact  of  COVID-19. 
REACT-EU  gives  Bulgaria  support  for  school 
education  and  healthcare  to  help  it  deal  with  the 
effects  of  the  COVID-19  pandemic,  as  well  as 
helping  SMEs  with  working  capital  and  increase 
their  energy  efficiency,  contributes  to  the  short-
time  work  schemes,  provides  food  to  the  most 
deprived  and  home  care  for  elderly  and  disabled 
people. 

to 

enabling  Bulgaria 

Investment 
The  Coronavirus  Response 
Initiative (10) provided the first EU emergency 
support  to  Bulgaria  to  help  it  deal  with  the 
COVID-19 pandemic.  It  introduced  extraordinary 
flexibility 
re-allocate 
resources  for  immediate  response  to  the  crisis. 
Overall,  around  EUR  750  million  have  been 
mobilised  together  with  national  co-financing.  For 
instance,  Bulgaria  shifted  resources  to  purchase 
protective  equipment  and  healthcare  material, 
reinforce  healthcare  staff,  provide  vital  working 
capital  for  SMEs,  support  temporary  employment 
schemes  and  give  elderly  and  vulnerable  people 
additional assistance.  

received 

support,  under 

the 
Bulgaria 
European  instrument  for  temporary  support 
to  mitigate  unemployment  risks 
in  an 
emergency  (SURE),  to  finance  short-time 
work  schemes. The  Council  granted  financial 
assistance  under  SURE  to  Bulgaria  in  September 
2020  for  a  maximum  of  EUR  511  million,  which 
was disbursed by 25 May 2021. SURE is estimated 
to  have  supported  approximately  10%  of  workers 
and  5%  of  firms  for  at  least  one  month  in  2020 
and  4%  of  workers  and  2%  of  firms  in  2021, 
primarily  in  manufacturing,  accommodation  and 
food  services,  and  wholesale  and  retail  trade. 
Bulgaria is estimated to have saved a total of EUR 
0.03  billion  on  interest  payments  as  a  result  of 
SURE’s lower interest rates.  

The  European  Commission  is  engaged  in 
providing  tailormade  expertise  through  the 

(10)  Re-allocating ESIF resources in accordance with Regulation 
(EU) 2020/460 of the European Parliament and of the 
Council of 30 March 2020, and Regulation (EU) 2020/558 of 
the European Parliament and of the Council of 23 April 2020. 

24 

0.150.190.270.310.370.440.480.670.941.842.45SDG 13 Climate actionSDG 15 Life on landSDG 12 Responsible consumptionand productionSDG 1 No povertySDG 11 Sustainable cities andcommunitiesSDG 3 Good health and well beingSDG 7 Affordable and clean energySDG 4 Quality educationSDG 6 Clean water and sanitationSDG 8 Decent work and economicgrowthSDG 9 Industry, innovation,infrastructure 
   
                                                 
state-owned 

enterprises,  or 

Technical Support Instrument,  to help Bulgaria 
design  and  implement  growth-enhancing  reforms, 
including  for  implementing  its  RRP.  Since  2016, 
Bulgaria  has  received  assistance  through  51 
technical  support  projects.  Projects  delivered  in 
2021  aimed,  for  example,  at  supporting  the 
implementation  of  the  reform  of  the  governance 
effectively 
of 
terrorism 
mitigating  money 
financing  risks.  The  Commission  has  also  helped 
Bulgaria  implement  specific  RRP  reforms,  for 
instance by improving the tools for preventing and 
counteracting  corruption.  In  2022,  new  projects 
will  start  to  support,  amongst  others,  the  overall 
RRP  monitoring,  reporting,  audit  and  control 
frameworks, 
and 
coordination methods, and help Bulgaria apply the 
‘Do No Significant Harm’ principle.    

laundering  and 

management 

project 

include 

Bulgaria  also  benefits  from  other  EU 
the  Connecting 
programmes.  These 
Europe Facility, which allocated EU funding of EUR 
413.9  million 
transport 
network  projects,  and  Horizon  2020,  which 
allocated EU funding of EUR 160.8 million. 

to  specific  strategic 

25 

 
 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 
RECOMMENDATIONS 

Graph A4.1: Bulgaria’s progress on the 2019-2020 
CSRs (2022 European Semester cycle) 

The  Commission  assessed  the  2019-2021 
country-specific  recommendations  (CSRs) (11) 
addressed  to  Bulgaria  in  the  context  of  the 
European  Semester.  The  assessment  takes  into 
account  the  policy  action  taken  by  Bulgaria  to 
date (12),  as  well  as  the  commitments  in  the 
Recovery  and  Resilience  Plan  (RRP) (13).  At  this 
early  stage  of  the  RRP  implementation,  overall 
53%  of  the  CSRs  subparts  focusing  on  structural 
issues  in  2019  and  2020  have  recorded  at  least 
“some  progress”,  while  47%  recorded  “limited 
Considerable 
progress” 
additional  progress  in  addressing  structural  CSRs 
is  expected  in  the  years  to  come  with  the  further 
implementation of the RRP.  

(see  Graph  A4.1). 

Source: European Commission 

(11)  2021 CSRs: https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX%3A32021H0729%2802%29&qi
d=1627675454457  
2020 CSRs: EUR-Lex - 32020H0826(02) - EN - EUR-Lex 
(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(02) - EN - EUR-Lex 
(europa.eu) 

(12)  Incl. policy action reported in the National Reform 

Programme, as well as in the RRF reporting (bi-annual 
reporting on the progress with implementation of milestones 
and targets and resulting from the payment request 
assessment). 

(13)  Member States were asked to effectively address all or a 

significant subset of the relevant country-specific 
recommendations issued by the Council in 2019 and 2020 in 
their RRPs. The CSR assessment presented here takes into 
account the degree of implementation of the measures 
included in the RRP and of those done outside of the RRP at 
the time of assessment.  Measures foreseen in the annex of 
the adopted Council Implementing Decision on the approval 
of the assessment of the RRP, which are not yet adopted nor 
implemented but considered as credibly announced, in line 
with the CSR assessment methodology, warrant “limited 
progress”. Once implemented, these measures can lead to 
“some/substantial progress” or “full implementation”, 
depending on their relevance. 

26 

Limited Progress47%Some Progress45%Substantial Progress8% 
 
 
 
 
 
 
                                                 
   
 
Table A4.1:  Summary table on 2019, 2020 and 2021 CSRs 

(Continued on the next page) 

27 

BulgariaAssessment in May 2022*RRP coverage of CSRs until 20262019 CSR1Some ProgressImprove tax collection through targeted measures in areas such as fuel and labour taxes.Some ProgressUpgradetheState-ownedenterprisecorporategovernancebyadopting and putting into effect the forthcoming legislation.Some ProgressRelevant RRP measures planned as of 2022 and 20232019 CSR 2Some ProgressEnsure the stability of the banking sector by reinforcing supervisionSubstantial Progress, promoting adequate valuation of assets, including bank collateralSome Progress, and promoting a functioning secondary market for non-performing loans.Some progressEnsure effective supervision and the enforcement of the AML framework.Some ProgressRelevant RRP measures planned as of 2021Strengthen the non-banking financial sector by effectively enforcing risk-based supervisionSubstantial Progress, the recently adopted valuation guidelinesSome Progressand group-level supervision.Some ProgressImplement the forthcoming roadmap tackling the gaps identified in the insolvency framework. SomeProgressRelevant RRP measures planned as of 2022Foster the stability of the car insurance sector by addressing market challenges and remaining structural weaknesses.Some Progress2019 CSR 3Limited ProgressFocus investment-related economic policy on research and innovationLimited ProgressRelevant RRP measures planned as of 2022,2023,2024,2025,2026, transport, in particular on its sustainabilityLimited ProgressRelevant RRP measures planned as of 2020, 2022-2026, water, waste and energy infrastructure and energy efficiency, taking into account regional disparities, Limited ProgressRelevant RRP measures planned as of 2023-2026 and improving the business environment.Some ProgressRelevant RRP measures planned as of 2022,2023,2025,20262019 CSR4Limited ProgressStrengthen employability by reinforcing skills, including digital skills.Limited ProgressRelevant RRP measures planned as of 2020, 2022,2023,2024,2026Improvethequality,labourmarketrelevance,andinclusivenessofeducationandtraining,inparticularforRomaandotherdisadvantaged groups.Limited ProgressRelevant RRP measures planned as of 2022,2026Addresssocialinclusionthroughimprovedaccesstointegratedemployment and social servicesLimited ProgressRelevant RRP measures planned as of 2022,2023and more effective minimum income support.Limited ProgressRelevant RRP measures planned as of 2022,2023,2024,2025,2026Improveaccesstohealthservices,includingbyreducingout-of-pocket payments and addressing shortages of health professionals.Limited ProgressRelevant RRP measures planned as of 2022,2023,20262020 CSR1Some ProgressInlinewiththegeneralescapeclause,takeallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability,whileenhancinginvestment. Not relevant anymoreNot applicableMobiliseadequatefinancialresourcestostrengthentheresilience,accessibilityandcapacityofthehealthsystem,andensureabalanced geographical distribution of health workers.Limited ProgressRelevant RRP measures planned as of 2022,2023,20262020 CSR2Limited ProgressEnsure adequate social protection and essential services for all Limited ProgressRelevant RRP measures planned as of 2022,2023and strengthen active labour market policies.Limited ProgressRelevant RRP measures planned as of 2020, 2022,2023,2024,2026Improve access to distance workingLimited ProgressRelevant RRP measures planned as of 2023and promote digital skillsLimited ProgressRelevant RRP measures planned as of 2020, 2022,2023,2024,2026and equal access to education.Limited ProgressRelevant RRP measures planned as of 2020, 2022,2023,2024,2026Addresstheshortcomingsintheadequacyoftheminimumincomescheme. Limited ProgressRelevant RRP measures planned as of 2022,2023,2024,2025,20262020 CSR 3Some ProgressStreamline and accelerate the procedures to provide effective support to small and medium-sized enterprises and self-employed, Substantial Progress 
 
 
 
  
 
Table (continued) 

* See footnote 13 
Source: European Commission 

28 

alsoensuringtheircontinuedaccesstofinanceandflexiblepaymentarrangements.Some ProgressRelevant RRP measures planned as of 2022-2026Front-load mature public investment projectsLimited progressand promote private investment to foster the economic recovery.Some progressRelevant RRP measures planned as of 2021-2026Focusinvestmentonthegreenanddigitaltransition,inparticularonclean and efficient production and use of energy and resources,Some ProgressRelevant RRP measures planned as of  2023-2026environmental infrastructure Limited ProgressRelevant RRP measures planned as of 2023-2026 andsustainabletransport,contributingtoaprogressivedecarbonisation of the economy, including in the coal regions.Limited ProgressRelevant RRP measures planned as of 2022-20262020 CSR 4Some progressMinimiseadministrativeburdentocompaniesbyimprovingtheeffectiveness of public administrationSome ProgressRelevant RRP measures planned as of 2023, 2024, 2026and reinforcing digital government. Some ProgressRelevant RRP measures planned as of 2022-2026Ensure an effective functioning of the insolvency framework. Some progressRelevant RRP measures planned as of 2022, 2023, 2024 ,2025, 2026Stepuptheeffortstoensureadequateriskassessment,mitigation,effectivesupervisionandenforcementoftheanti-moneylaunderingframework. Some progressRelevant RRP measures planned as of 20212021 CSR1Substantial progressIn2022,pursueasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationallyfinancedinvestment.Keepthegrowthofnationallyfinanced current expenditure under control.Full implementationNot applicableWheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term.Substantial progressNot applicableAtthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition.Substantial progressNot applicableGiveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Limited progressNot applicable 
 
  
 
ENVIRONMENTAL SUSTAINABILITY 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 5: GREEN DEAL 
ANNEX 5: GREEN DEAL 

intends 

The  European  Green  Deal 
to 
transform the  EU  into a  fair and  prosperous 
society,  with  a  modern,  resource-efficient 
and competitive economy where there are no 
net  emissions  of  greenhouse  gases  in  2050 
and  where  economic  growth  is  decoupled 
from resource use. This annex offers a snapshot 
of  the  most  significant  and  economically  relevant 
developments in Bulgaria in the respective building 
blocks  of 
is 
complemented by Annex 6 on the employment and 
social impact of the green transition and Annex 7 
for circular economy aspects of the Green Deal.  

the  European  Green  Deal. 

It 

Graph A5.1: Fiscal aspects of the green transition 
– taxation and government expenditure on 
environmental protection 

With  measures  taken  and  considered  so  far, 
Bulgaria  would  miss 
its  current  2030 
greenhouse  gas  reduction  targets  for  non-
Emissions  Trading  System  (ETS)  sectors. 
Bulgaria’s  total  greenhouse  gas  emissions  have 
remained  approximately  at  the  same  level  since 
2015,  albeit  decreasing  significantly  compared  to 
their  1990  level.  Bulgaria  exceeded  its  2020 
target  emissions  for  non-ETS  sectors  and  is 
projected  to  miss  both  the  current  and  the 
proposed  target  for  2030  under  the  Fit  for  55 
package for non-ETS sectors, even if all additional 
measures  were  implemented.  Under  current  land 
management  practices,  Bulgaria  is  projected  to 
see  no  developments  in  net  removals  by  2030. 
Furthermore, the country’s decarbonisation path to 
long-term  climate  neutrality  is  still  unclear  and 
relevant goals and plans are lacking. 

Source: Eurostat 

Graph A5.2: Thematic – Energy 
Share in energy mix (solids, oil, gas, nuclear, 
renewables) 

high 

records 

collection 

of 
Bulgaria 
environmental  taxes  compared  to  the  EU 
average. This is especially the case in the area of 
energy,  while  the  taxation  of  pollution,  resources 
low (14).  Government 
and  transport 
expenditure on environmental protection has been 
slightly increasing over the past few years, but at 
roughly  the  same  pace  as  total  government 
expenditure.  There  are  significant  public  budget 
climate risks for Bulgaria, with insurance coverage 
for floods and wildfires rather low. 

is  rather 

(14)  For more information on taxation see Annex 18. 

29 

(1) The energy mix is based on gross inland consumption, and 
excludes heat and electricity. The share of renewables 
includes biofuels and non-renewable waste. 
Source: Eurostat 

Bulgaria  is  the  most  energy-  and  emissions-
intensive  Member  State  in  the  EU,  with  its 
energy  mix  still  very  much  reliant  on  fossil 
fuels.  In  2020,  31%  of  the  country’s  electricity 
production  was  based  on  lignite  and  coal,  while 
natural gas is widely used for heating and cooling 

0.02.04.06.08.010.012.0Environmentaltaxes (% of GDP)Environmentaltaxes (% of totaltaxation)Governmentexpenditure onenvironmentalprotection (% oftotal expenditure)BG (2020)EU27 (2020)0102030405060708090100200520102015201820192020RenewablesNuclearGasOilSolid fossil fuels, peat and oil shale 
 
 
                                                 
       
 
       
 
 
and industrial consumption. The share of the gross 
final  energy  consumption derived  from  renewable 
energy reached 23% in 2020. The national energy 
and  climate  plan  puts  forward  a  national 
contribution  of  27%  of  the  share  of  final 
consumption  derived  from  renewable  energy  for 
the  EU’s  2030  target.  This  is  just  in  line  with  the 
result  of 
(EU) 
2018/1999.  No  commitment  to  decommissioning 
coal-based power plants has been made so far. 

in  Regulation 

formula 

the 

In  terms  of  biodiversity  and  ecosystem 
health,  there  is  room  for  improvement.  With 
the third highest share of its territory designated a 
protected  area,  Bulgaria  reports  that  nearly  80% 
of  its  protected  habitats  are  in  poor  conservation 
status  and  just  under  11%  in  good  conservation 
status.  The  species  in  good  conservation  status 
show  a  decline  from  53%  in  2012  to  38%  in 
2018.  However,  54%  of  Bulgaria’s  breeding  bird 
species  show  short-term  increasing  or  stable 
population  trends.  With  an  estimated  2.3%  of 
areas  under  organic  farming,  Bulgaria  has  the 
third lowest value for organic farming, well below 
the EU average. The opportunities organic farming 
provides are therefore still to be fully explored. 

Graph A5.3: Thematic – Biodiversity 
Terrestrial protected areas and organic farming 

(1) For terrestrial protected areas data for 2018, and data for 
the EU average (2016, 2017) is lacking 
Source: EEA (terrestrial protected areas) and Eurostat 
(organic farming) 

In  terms  of  pollution,  air  quality  in  Bulgaria 
continues to be a cause of great concern. The 
the 
latest  available  annual  estimates  from 

European  Environment  Agency (EEA) (15)  point  to 
about  10  600  premature  deaths  attributable  to 
fine  particulate  matter  concentrations,  290  to 
ozone concentration and 1 120 to nitrogen dioxide 
concentration (16). 

The 

The  transition  to  sustainable  transport 
remains  a  key  challenge. 
limited 
development  of  transport  infrastructure  and  slow 
the  Trans-European  Transport 
progress  on 
Network  affects 
the  economic  and  social 
development  of  Bulgaria.  This  contributes  to 
the  different 
significant  disparities  between 
regions and creates a north-south divide. 

for 

Road safety is a major issue. Bulgaria has one 
of  the  worst  track  records  in  the  EU,  with  90 
deaths per million inhabitants in 2019. There is an 
urgent  need 
the 
reforms 
enforcement  of  rules,  increase  the  number  of 
vehicle  inspections,  promote  awareness  of  and 
investments  in  infrastructure/vehicle  safety  and 
remove  black  spots,  especially  in  view  of  the 
target  of  a  50%  reduction  of  victims  by  2030,  in 
line with the EU road safety framework. 

improve 

to 

in 

linked 

taxes  and  charges 

Current 
to 
transport  do  not  cover  the  costs  generated. 
transport 
Costs  of  negative  externalities 
(accidents,  congestion,  air  pollution,  climate 
change, noise and habitat damage) are estimated 
to  be  about  EUR  7  billion  annually  for  road,  rail 
and inland waterways, while total revenue from all 
land  transport  modes  amounts  to  about  EUR  4 
billion (respectively 66% and 46% of the costs for 
passengers and freight). 

The  uptake  of  zero-emission  passenger  cars 
in Bulgaria is low, as is the density of public 
electric charging points. Despite the increase in 
the  number  of  zero-emission  vehicles,  the  speed 
of  the  shift  towards  an  electrified  vehicle  fleet 
remains  slow  compared  to  the  EU  average.  The 
the  deployment  of 
same 
infrastructure  for  electric  vehicles.  While  the 
number  of  public  charging  points  increased  from 
18  in  2015  to  531  in  2021,  the  ratio  of  public 
charging  points per  100 km2 is  one  of the  lowest 

the  case  for 

is 

(15)  European Environment Agency. Air Quality in Europe – 2021 
Report. Please see details in this report as regards the underpinning 
methodology, p.106. 

(16)  These figures refer to the impacts of individual pollutants, 

and to avoid double-counting cannot be added up to derive a 
sum. 

30 

0510152025303540452016201720192020Terrestrial protected areas (% total area)Area under organic farming (% total utilised agricultural area)EU27 (terrestrial)EU27 (organic) 
       
                                                 
the 

increase 

in the EU (0.63 per 100 km2 of land area) and far 
below the average of 13.54 per 100 km2. However, 
the  spread  of 
recharging 
infrastructure  is  not  equal  across  the  EU,  with  a 
small  number  of  Member  States  way  ahead  in 
terms of the density of the network (the top 8 MS 
had  an  average  ratio  of  40.6  public  charging 
points per 100 km2 in 2021). 

in 

Graph A5.4: Thematic – Mobility 
Share of zero-emission vehicles 

(1) Zero emission vehicles (passenger cars) include battery 
and fuel cell electric vehicles (BEV, FCEV). 
Source: European Alternative Fuels Observatory 

31 

0.02.04.06.08.010.0201620172018201920202021% of new registrationsBGEU27 average 
      
 
Table A5.1:  Indicators underpinning  progress on the European Green Deal from a macroeconomic 
perspective 

(1) The 2030 non-ETS GHG target is based on the Effort Sharing Regulation. The FF55 targets are based on the COM proposal to 
increase EU's climate ambition by 2030. Renewables and Energy Efficiency targets and national contributions under the 
Governance Regulation (Regulation (EU) 2018/1999).  (2) Distance to target is the gap between Member States’ 2030 target 
under the Effort Sharing Regulation and projected emissions, with existing measures (WEM) and with additional measures (WAM) 
respectively, as a percentage of 2005 base year emissions. (3) Percentage of total revenues from taxes and social contributions 
(excluding imputed social contributions). Revenues from the ETS are included in environmental tax revenues (in 2017 they 
amounted to 1.5% of total environmental tax revenues at the EU level). (4) Covers expenditure on gross fixed capital formation to 
be used for the production of environmental protection services (i.e. abatement and prevention of pollution) covering all sectors, 
i.e. government, industry and specialised providers. (5) The climate protection gap indicator is part of the European adaptation 
strategy (February 2021), and is defined as the share of non-insured economic losses caused by climate-related disasters. 
(6) Sulphur oxides (SO2 equivalent), Ammonia, Particulates < 10µm, Nitrogen oxides in total economy (divided by GDP). 
(7) Transportation and storage (NACE Section H). (8) Zero emission vehicles include battery electric vehicles (BEV) and fuel cell 
electric vehicles (FCEV). (9) European Commission Report (2019) 'Benchmarking smart metering deployment in the EU-28'. 
(10) European Commission (2021). Each year the DESI is re-calculated for all countries for previous years to reflect any possible 
change in the choice of indicators and corrections to the underlying data. Country scores and rankings may thus differ compared 
with previous publications. 
Source:  Eurostat, JRC, European Commission, EEA, EAFO 

32 

TargetTarget2005201920202030WEMWAM2030WEMWAMNon-ETS GHG emission reduction target (1)MTCO2 eq; %; pp (2)22.317%26%0%711-10%-31200520162017201820192020Share of energy from renewable sources in gross final consumption of energy (1)%9%19%19%21%22%23%27%Energy efficiency: primary energy consumption (1)Mtoe19.217.718.318.418.217.217.5Energy efficiency: final energy consumption (1)Mtoe10.19.69.99.99.89.510.3201520162017201820192020201820192020Environmental taxes (% of GDP)% of GDP3.03.02.82.63.03.02.42.42.2Environmental taxes (% of total taxation)% of taxation (3)10.210.29.48.89.99.96.05.95.6Government expenditure on environmental protection% of total exp.1.931.901.931.891.901.751.661.701.61Investment in environmental protection% of GDP (4) 2.060.580.450.45--0.420.380.41Fossil fuel subsidiesEUR2020bn0.30.50.50.50.6-56.955.7-Climate protection gap (5)score 1-4Net GHG emissions1990 = 100595761585652797669GHG emissions intensity of the economykg/EUR'101.541.441.451.331.251.200.320.310.30Energy intensity of the economykgoe/EUR'100.450.430.430.420.400.400.120.110.11Final energy consumption (FEC)2015=100100.0101.7104.3104.5103.7100.5103.5102.994.6FEC in residential building sector2015=100100.0102.7105.7101.798.6108.6101.9101.3101.3FEC in services building sector2015=100100.0107.3108.2114.1117.5100.1102.4100.194.4Smog-precursor emission intensity (to GDP) (4)tonne/EUR'10 (6)4.883.923.573.332.89-0.990.93-Years of life lost caused due to air pollution by PM2.5per 100.000 inh.19721858207619801606-863762-Years of life lost due to air pollution by NO2per 100.000 inh.89151204167170-12099-Nitrate in ground watermg NO3/litre31.332.729.729.829.8-21.720.7-Terrestrial protected areas% of total-34.340.5-41.041.0-25.725.7Marine protected areas% of total-8.1--8.1--10.7-Organic farming% of total utilised agricultural area2.43.22.72.62.32.38.08.59.100-0606-1212-18Net land takeper 10,000 km213.011.05.0201520162017201820192020201820192020GHG emissions intensity of transport (to GVA) (7)kg/EUR'103.183.413.723.593.473.680.890.870.83Share of zero emission vehicles (8)% in new registrations0.00.00.20.40.51.21.01.95.4Number of plug-in electric vehicles per charging point4345131721198812Share of electrified railways%71.171.271.271.271.2-55.656.0-30.331.034.135.836.2-28.928.8-YearBGEUShare of smart meters in total metering points (9) - electricity% of total20180.035.8Share of smart meters in total metering points (9) - gas% of total20180.013.1ICT used for environmental sustainability (10)%202167.965.9DigitalFiscal and financialindicators2 out of 4 (slight increase from historical level of 1.8). This is a low/medium risk category (4 being a high risk).ClimateEnergyPollutionBiodiversity2000-20062006-20122012-20183.73.93.2MobilityCongestion (average number of hours spent in road congestion per year by a representative commuting driver)Progress to policy targetsNational contribution to 2030 EU targetBULGARIAEU'Fit for 55'DistanceDistance 
 
   
 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 

The  green  transition  not  only  encompasses 
environmental 
to 
improvements 
sustainability, but also includes a significant 
social  dimension. While  measures  in this  regard 
include the opportunity for sustainable growth and 
job creation, it must also be ensured that no one is 
left  behind  and  all groups  in  society  benefit  from 
the  transition.  Bulgaria's  green  transition  could 
benefit  from  the  development  of  renewable 
sources  of  energy  production  such  as  wind,  solar 
energy  and  geothermal  basins.  At  the  same  time, 
Bulgaria  continues  to  rely  heavily  on  coal-fired 
power  plants,  with  the  result  that  lower-income 
groups  and  certain  territories  are  likely  to  face 
transition challenges. 

the 

investments  are  planned 

Bulgaria’s  RRP  outlines  measures  to  support 
a fair green transition. The measures envisaged 
in the plan to tackle energy poverty, which affects 
about  one  third  of  the  Bulgarian  population, 
include  the  development  of  a  definition  and 
criteria to identify energy-poor households as part 
of  the  Energy  Act,  in  the  context  of  market 
liberalisation  and 
financing  of  energy 
efficiency  projects.  The  RRP  also  envisages  the 
establishment of a National Decarbonisation Fund 
as well as the enhancement of investments in the 
energy  efficiency  of  multi-apartment  buildings. 
Some 
in  renewable 
energy  projects,  including  projects  for  residential 
buildings.  These  are  coupled  with  actions  to 
promote renewable energy generation with a view 
to  Bulgaria’s  reaching  its  2030  environmental 
targets. 
the  Recovery  and 
Resilience Facility (RRF), the European Social Fund 
Plus (ESF+) will help unlock the potential of green 
skills  and  jobs,  and  the  Just  Transition  Fund  (EUR 
1.3  billion;  current  prices)  will  help  mitigate  the 
social  impact  of  the  transition  in  three  Bulgarian 
regions (17)  (see  Annex  3).  The  integrated  national 
energy and climate plan of 9 March 2020 provides 
to  some  extent  an  analysis  of  the  employment, 
skills  and  social  impact  of  the  planned  measures. 
It also proposes some measures to address energy 
poverty,  ensuring  the  protection  of  and  energy 
safeguards  for  vulnerable  consumers,  including 
the  provision  of  targeted  heating  allowances  as 
well  as  a  mechanism  for  their  protection  in  the 
process of the liberalisation of electricity prices. 

In  synergy  with 

fossil 

include  coal  and 

The  Bulgarian  economy  has  been  steadily 
reducing  its  carbon  footprint  relative  to 
output,  but  it  remains  one  of  the  EU’s  most 
carbon-intensive  economies. 
Its  greenhouse 
gas  (GHG)  emissions  intensity  (in  terms  of  gross 
value added) decreased by over one third between 
2015 and 2020, but is still around four times the 
EU  average.  The  carbon  footprint  per  worker  is 
also  on  a  declining  trend  –  at  14.22  tonnes,  it  is 
slightly above the EU average (13.61 tonnes) (see 
Figure  1).  Declining  sectors  characterising  the 
Bulgarian  economy 
lignite 
fuel-based  electricity 
extraction  and 
generation.  Upskilling  and  reskilling  measures  are 
particularly  important  in  this  respect  (see  Annex 
15).  The  employment  share  of  energy-intensive 
sectors  (such  as  metals,  chemicals  and  non-
metallic  minerals)  is  broadly  in  line  with  the  EU 
average, with only non-metallic mineral production 
above  the  EU  average.  Conversely, 
in 
environmental  goods  and  services  represent  a 
significantly  lower  share  of  employment  (1.4% 
versus 2.1% in the EU) (18). Wind and solar energy 
potential, 
efficiency 
improvements,  offer  further  opportunities  for 
jobs (19).  The  Bulgarian  working-age 
green 
population  has  been  shrinking  over  the 
last 
decade,  which  contributes  to  increasing  labour 
shortages (see Annex 12). Labour shortages linked 
to  the  transition  to  a  climate-neutral  economy 
have  been  identified  in  several  sectors,  notably 
manufacturing and tourism (Eurofound, 2021). 

as  well 

energy 

jobs 

as 

As  for  the  social  dimension  of  the  green 
transition,  ensuring  access  to  essential 
transport and energy services is difficult. The 
share  of the population  at  risk  of poverty  in  rural 
areas  was  36.3%  in  2020,  well  above  the  EU 
average  (18.8%)  and  among  the  highest  in  the 
EU (20). The share of the population unable to keep 
their  homes  adequately  warm 
is  declining. 
However,  it  remains  one  of  the  highest  in  the  EU 
(27.5%  versus  7.4%  on  average  in  the  EU  in 
2020).  Lower-income  groups  are  affected  the 

(18)  There is currently no common EU-wide definition of green 

jobs. The environmental goods and services sector accounts 
only report on an economic sector that generates 
environmental products, i.e. goods and services produced for 
environmental protection or resource management. 

(19)

(17)  NUTS3 level regions Stara Zagora (plus 10 additional 

neighbouring municipalities affected in terms of commuting 
workforce), Kyustendil and Pernik – pending approval of 
Territorial Just Transition Plans by the Commission. 

https://publications.jrc.ec.europa.eu/repository/handle/J

RC126047 

(20)  Based on COM(2021) 568 final as a proxy for potential 

transport challenges in the context of the green transition. 

33 

 
 
                                                 
                                                 
 
 
Graph A6.2: Energy poverty by income decile 

most  (Graph  A6.2).  The  average  carbon  footprint 
of the top 10% of emitters is 5 times higher than 
that of the bottom 50% of the population. 

Tax  systems  are  crucial  for  ensuring  a  fair 
transition  towards  climate  neutrality (21). 
Bulgaria’s  revenues  from  total  environmental 
taxes marginally increased from 2.95% of GDP in 
2015  to  2.99%  in  2019,  and  remained  relatively 
stable  in  2020  (against  2.24%  in  the  EU).  The 
labour  tax  wedge  for  low-income  earners (22) 
increased  from  33.6%  to  34.9%  from  2015  to 
2018  (with  no  change  until  2021),  compared  to 
31.9% in the EU in 2021 (see Annex 18). 

Graph A6.1: Fair green transition challenges 

Source: Eurostat EU-SILC survey (2020) 

Numbers are the normalised indicator performance relative to 
the EU27 average 
(1) GHG tonnes per Euro of gross added value (MS/EU) 
(2) Share of population in rural areas at risk of poverty 
(MS/EU) 
Source: Eurostat, World Inequality Database 

(21)  COM(2021) 801 final. 

(22)  Tax wedge for a single earner at 50% of the national 
average wage (Tax and benefits indicators database, 
European Commission/OECD). 

34 

0.001.002.003.004.005.006.007.00GHG GVA(MS/EU)(1)GHGtonnes perworker(MS/EU)Employment share inenergy-intensiveindustries(MS/EU)AROP rural(MS/EU)(2)Energypoverty(MS/EU)Carboninequality(MS/EU)BulgariaEU 2020Bulgaria 20150%10%20%30%40%50%60%12345678910Unable to keep home adequately warm(per income decile)Income decileBulgariaEuropean Union 
        
 
                                                 
        
PRODUCTIVITY 
PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 

Graph A7.1: Economic importance and expansion of 
the circular economy – Employment and value 
added in circular economy sectors 

while 

minimising 

The  efficient  use  of  resources  is  key  to 
ensuring  competitiveness  and open strategic 
autonomy, 
the 
environmental  impact.  The  green  transition 
presents  a  major  opportunity  for  European 
industry 
clean 
creating  markets 
technologies  and  products.  It  will  have  an  impact 
across  the  entire  value  chain  in  sectors  such  as 
energy and transport, construction and renovation, 
food and electronics, helping to create sustainable, 
local and well-paid jobs across Europe. 

for 

by 

Source: Eurostat 

Bulgaria  is  among  the  Member  States  that 
lag behind the most in implementing circular 
economy  measures.  The  country’s  circular 
material  use  rate  was  2.6%  in  2020,  around  5 
times lower than the EU average (12.8%). Bulgaria 
does  not  yet  have  a  formal  circular  economy 
strategy,  although  it  is  developing  one.  At  the 
same  time,  the  circular  economy  has  become 
more  important  because  of  the  need  not  only  to 
support  the  green  transition,  but  also  Bulgaria’s 
strategic autonomy. 

The  Bulgarian  economy  is  one  of  the  most 
resource-intensive  in  the  EU,  lagging  behind 
Member  States  in  implementing  the  circular 
economy  principle  and  engaging 
in  eco-
innovation  activities.  Resource  productivity  in 
the  EU  has  been  at  2.23  purchasing  power 
standards (PPS) per kg, but in Bulgaria it was still 
0.82 PPS per kg as of 2020.  

Table A7.1:  Selected resource efficiency indicators 

Source: Eurostat 

35 

1.72%1.76%1.72%1.73%1.14%1.11%1.22%1.12%1.72%1.73%1.75%1.71%0.94%0.94%0.96%0.97%0.0%0.2%0.4%0.6%0.8%1.0%1.2%1.4%1.6%1.8%2.0%2015201620172018Persons employed in the circular economy, BG (% of totalemployment)Value added at factor cost, BG (% of GDP )Persons employed in the circular economy, EU27 (% of totalemployment)Value added at factor cost, EU27 (% of GDP )SUB-POLICY AREA201520162017201820192020EU27 Latest year EU27CircularityResource Productivity (Purchasing power standard (PPS) per kilogram)0.60.70.70.80.80.82.22020Material Intensity (kg/EUR)1.61.41.31.31.21.20.42020Circular Material Use Rate (%)3.14.43.52.52.32.612.82020Material footprint (Tonnes/capita)20.818.120.722.922.9-14.62019Waste Waste generation (kg/capita, total waste)-16 907-18 470--5 2342018Landfilling (% of total waste treated)-83.2-85.4--38.52018Recycling rate (% of municipal waste)29.431.834.631.5--47.82020Hazardous waste (% of municipal waste)-11.1-10.4--4.32018CompetitivenessGross value added in environmental goods and services sector (% of GDP)1.821.921.921.892.83-2.322019Private investment in circular economy (% of GDP)1.821.921.931.9--0.122018 
 
 
 
     
 
 
 
       
 
ANNEX 8: DIGITAL TRANSITION 
ANNEX 8: DIGITAL TRANSITION 

The Digital Economy and Society Index (DESI) 
monitors EU Member States’ digital progress. 
The  areas  of  human  capital,  digital  connectivity, 
the 
technologies  by 
businesses  and  digital  public  services  reflect  the 
Digital  Decade’s  four  cardinal  points (23).  This 
Annex describes Bulgaria’s DESI performance. 

integration  of  digital 

of  64%.  The  use  of  open  data  is  also  lower  than 
the EU average, but only by 3 percentage points. 

to 

contribution 

the  digital 
Bulgaria’s 
objectives in its Recovery and Resilience Plan 
is nearly EUR 1.6 billion, 25.8% of the plan’s 
total  allocation.  Measures  are  dedicated  to 
increasing  the  digital  skills  of  the  population, 
improving  digital  connectivity,  the  digitalisation  of 
public 
business 
digitalisation. 

supporting 

services, 

and 

Bulgaria  scores  low  in  the  DESI  human 
capital  dimension.  Only  about  a  third  of 
Bulgaria’s  population  has  basic  digital  skills,  the 
lowest in the EU. The percentage of ICT specialists 
is  also  one  of  the  lowest  in  the  EU,  although  the 
ratio of female ICT specialists is the highest. 

in 

better 

performs 

digital 
Bulgaria 
is  above  the  EU 
connectivity.  The  country 
average 
in  the  coverage  of  fixed  very-high 
capacity  networks  but  under  the  EU  average  on 
mobile broadband coverage and the assignment of 
5G spectrum is low (25% compared to EU average 
of 56%). On a positive note, broadband prices are 
one  of  the  lowest  in  the  EU,  with  a  score  of  86 
compared to the EU average of 73 (24). 

of 

low 
integration 

in  the  DESI 
Bulgaria  scores  very 
digital 
dimension 
technology.  One  main  challenge  is  the  adoption 
of digital technology in enterprises (mainly SMEs), 
where  the  percentage  is  one  of  the  lowest  in  the 
EU.  The  adoption  of  advanced  technologies  (such 
as big data, cloud and AI) is also very low.  

of 

Bulgaria  has  a  very  low  performance  in  the 
DESI  digital  public  services  dimension.  It 
scores far below the EU average for digital public 
services  for  citizens  (59  vs  75),  but  near  the  EU 
average for businesses (76 vs 82). The percentage 
of  e-government  users  has  also  stagnated  in 
recent years at 36% compared to the EU average 

(23)  2030 Digital Compass: the European Way for the Digital 

Decade Communication, COM (2021) 118 final. 

(24)  Source: Communications Committee (COCOM) based on 

iDATE 

36 

 
 
                                                 
 
Table A8.1:  Key Digital Economy and Society Index indicators 

(*) The 5G coverage indicator does not measure users’ experience, which may be affected by a variety of factors such as the type 
of device used, environmental conditions, number of concurrent users and network capacity. 5G coverage refers to the percentage 
of populated areas as reported by operators and national regulatory authorities 
Source: Digital Economy and Society Index 

37 

EUEU-top performanceHuman capitalDESI 2020DESI 2021DESI 2022DESI 2022DESI 2022At least basic digital skillsNANA31%54%79%% individuals202120212021ICT specialists3.1%3.3%3.5%4.5%8.0%% individuals in employment aged 15-7420192020202120212021Female ICT specialists28%28%28%19%28%% ICT specialists20192020202120212021ConnectivityFixed Very High Capacity Network (VHCN) coverage65%75%85%70%100%% households201920202021202120215G coverage (*)NA0%40%66%99.7%% populated areas2020202120212021Integration of digital technologySMEs with at least a basic level of digital intensityNANA25%55%86%% SMEs202120212021Big data7%6%6%14%31%% enterprises20182020202020202020CloudNANA10%34%69%% enterprises202120212021Artificial IntelligenceNANA3%8%24%% enterprises202120212021Digital public servicesDigital public services for citizensNANA5975100Score (0 to 100)202120212021Digital public services for businessesNANA7682100Score (0 to 100)202120212021Bulgaria 
 
   
 
ANNEX 9: INNOVATION 
ANNEX 9: INNOVATION 

This  Annex  provides  a  general  overview  of 
the  performance  of  Bulgaria’s  research  and 
innovation  system.  Bulgaria  is  an  emerging 
innovation  performer  according  to  the  2021 
edition of the European Innovation Scoreboard (25) 
and  has  difficulties  reducing  the  gap  between  it 
and the EU innovation leaders. Total research and 
development (R&D) intensity was 0.85% of GDP in 
2020, still far below the EU-27 average of 2.32%. 

Low levels of public and private research and 
innovation  (R&I) 
investment  continue  to 
affect  Bulgaria’s  research  and  innovation 
potential.  Public  R&D  intensity  remains  one  of 
the  lowest  in  the  EU,  at  0.27%  of  GDP,  and  the 
country also scores low in terms of business R&D 
expenditure (0.58% in 2020). To overcome this key 
challenge,  Bulgaria  announced  its  intention  to 
gradually  increase  public  R&D  spending  to  reach 
the  target  of  1%  of  GDP  for  2025.  Meeting  this 
the  new  2030  gross 
target,  as  well  as 
expenditures on research and development (GERD) 
target of 3% of GDP, will require a significant and 
continuous  increase  in  science  and  innovation 
funding.   

still 

system 

suffers 

Besides  challenges  arising  from  insufficient 
R&D  funding,  the  Bulgarian  research  and 
innovation 
from 
structural  shortcomings,  holding  back  the 
potential  contribution  of  R&I  to  productivity 
and  economic  growth.  The  high  degree  of 
institutional  fragmentation  of  the  public  science 
base  is  a  key  obstacle  to  improving  scientific 
performance.  The  share  of  the  country’s  scientific 
publications  within  the  top  10%  most  cited 
scientific  publications  worldwide  is  the  lowest  in 
the EU (2.6% in 2018) and has been on a declining 
trend  since  2010.  Science-business 
links  are 
insufficiently  developed,  as  reflected  in  the  low 
share  of  public-private  scientific  co-publications, 
which  remains  far  below  the  EU  average  (5.3% 
compared to 9.05%). Bulgarian inventors file a low 
number  of  patents  (0.5  patent  applications  per 
billion  GDP  compared  to  the  EU  average  of  3.5), 
making domestic industries strongly dependent on 
the  import  of  technology  and  knowledge  capital. 
On  a  positive  note,  employment  in  fast-growing 
enterprises  in  innovative  sectors  (%  of  total 
employment) is above the EU average.   

(25)  2021 European Innovation Scoreboard, Country profile: 

Bulgaria https://ec.europa.eu/docsroom/documents/45907 

38 

 
 
                                                 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A9.1:  Key research, development and innovation indicators 

Source: DG Research and Innovation - Common R&I Strategy and Foresight Service - Chief Economist Unit        
Data: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 

39 

CompoundEUannual growthaverage2010-20Key indicators R&D Intensity (GERD as % of GDP)0.560.950.750.830.854.22.32Public expenditure on R&D as % of GDP0.280.250.210.270.27-0.20.78Business enterprise expenditure on R&D (BERD) as % of GDP0.280.70.540.560.587.41.53Quality of the R&I systemScientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 3.12.42.6::-2.29.9PCT patent applications per billion GDP (in PPS)0.30.60.5::4.63.5Academia-business cooperationPublic-private scientific co-publications as % of total publications4.66.25.65.25.31.69.05Human capital and skills availabilityNew graduates in science & engineering per thousand pop. aged 25-3411.411.49.19:-4.616.3Public support for business enterprise expenditure on R&D (BERD)Total public sector support for BERD as % of GDP:0.025:0.018:18.30.196Green innovation Share of environment-related patents in total patent applications filed under PCT (%)10.228.716.6::6.312.8Finance for innovation and Economic renewalVenture Capital (market statistics) as % of GDP0.0150.0110.0110.0090.01-3.60.054Employment in fast-growing enterprises in innovative sectors (% of total employment)6.26.676.6:0.85.52020Bulgaria2010201520182019 
 
   
 
ANNEX 10: INDUSTRY AND SINGLE MARKET 
ANNEX 10: INDUSTRY AND SINGLE MARKET 

prosperity,  well-being 

Productivity  growth  is  a  critical  driver  of 
and 
economic 
convergence  over  the  long  run (26).  A  major 
source  of  productivity  for  the  EU  economy  is  a 
well-functioning  single  market,  where  fair  and 
effective  competition  and  a  business-friendly 
environment  are  ensured,  in  which  small  and 
medium-sized enterprises (SMEs) can operate and 
innovate  without  difficulty.  Businesses  and 
industry  rely  heavily  on  robust  supply  chains  and 
are facing bottlenecks that bear a negative impact 
on firms’ productivity levels, employment, turnover 
and entry/exit rates. This may impact the Member 
States’  capacity  to  deliver  on  Europe’s  green  and 
digital transformation.  

in  Bulgaria  remains 
Labour  productivity 
about half the EU average. Labour productivity 
growth  accelerated  to  3.6%  in  2019,  but  the 
COVID-19  pandemic  slowed  it  down  to  0.3%  in 
2020.  Small  growth  was  maintained  mainly  in 
professional,  scientific  and  technical  services,  as 
well as wholesale and retail, mainly due to labour 
hoarding  during  the  pandemic,  and  in  the  mining 
industry.  In  2021,  productivity  recovery  picked  up, 
with  total  factor  productivity  swiftly  resuming  its 
pre-pandemic  pace.  RRP  and  cohesion  policy 
support  for  R&I  activities  can 
lead  to  high 
in  coming  years.  However, 
productivity  gains 
persistent structural issues affect productivity and 
competitiveness.  

constraints (29), well above the EU average, as well 
as  by  administrative  burdens  and  regulatory 
barriers. 
the  country  remains 
in 
subdued, at 19.2% of GDP.  

Investment 

The  Bulgarian  economy  is  well  integrated 
into  the  single  market,  but  some  barriers 
remain.  The  professions  of  lawyers,  architects, 
engineers,  and  tourist  guides  are  more  regulated 
than the EU  average and unnecessary restrictions 
have  not  been  addressed.  Competition  in  public 
tenders remains a challenge, with a high share of 
procedures  with  no  calls  for  bids  (29%)  or  with  a 
single bidder (26%). In over 80% of public tenders, 
the  price  is  the  only  award  criterion,  limiting  the 
possibility  for  the  acquisition  of  higher  quality  or 
more  sustainable  products  and  services.  The 
Bulgarian  RRP  includes  concrete  measures  to 
tackle some of these key issues.  

Bulgaria  has  an  open  economy,  well 
integrated  into  global  value  chains,  the 
domestic  value  added  of  exports  is  still  low. 
The  country  is  more  involved  in  assembling  and 
processing  input  from  other  countries,  but  overall 
its  economy  has  been  relatively  less  affected  by 
global supply chain disruptions, possibly due to the 
relative 
of  manufacturing 
production. Material shortages are reported by 7% 
of  companies,  compared  to  the  EU  average  of 
26%. 

diversification 

Despite  some  improvements,  the  business 
environment is still not entirely conducive to 
investments. Access to finance has worsened for 
Bulgarian  companies,  along  with  a  growing  share 
of  rejected  loans.  Around  15%  of  SMEs  did  not 
manage to obtain the amount they requested for a 
loan (27).  Equity  financing  remains  limited,  with 
venture  capital  investments  around  0.01%  of 
GDP (28). The RRP and ESIF measures are expected 
to  bring  improvements.  The  liquidity  measures 
introduced  by 
the 
of 
down 
pandemic 
bankruptcies.  However,  the  insolvency  framework 
needs  further  improvements  to  avoid  trapping 
resources in non-productive firms. The RRP covers 
this. Business dynamism is also affected by labour 
facing 
shortages,  with  27%  of  companies 

the  government  during 
number 

slowed 

the 

(26)  Annual Sustainable Growth Survey 

(27)  SAFE survey on access to finance, 2021.  

(28)  InvestEurope. 

(29)  ECFIN consumer & business survey.  

40 

 
 
                                                 
                                                 
 
Table A10.1:Key Single Market and Industry indicators 

(*) latest available 
Source: See above in the table the respective source for each indicator in the column “Description”. 

41 

SUB-POLICY AREAINDICATOR NAMEDESCRIPTION20212020201920182017Growth ratesEU27 average*Value added by source (domestic)VA that depends on domestic intermediate inputs, % [source: OECD (TiVA), 2018]58.4862.6%Value added by source (EU)VA imported from the rest of the EU, % [source: OECD (TiVA), 2018]22.0219.7%Value added by source (extra-EU)% VA imported from the rest of the world, % [source: OECD (TiVA), 2018]19.517.6%Cost competi-tivenessProducer energy price (industry)Index (2015=100) [source: Eurostat, sts_inppd_a]137.3111.9114.5107.7100.237.0%127.3Material Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]7445475%26%Labour Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]2728444435-23%14%Sectoral producer pricesAverage (across sectors), 2021 compared to 2020 and 2019, index [source:Eurostat]5.9%5.4%Concentration in selected raw materialsImport concentration a basket of critical raw materials, index [source: COMEXT]0.160.140.150.160.160%17%Installed renewables electricity capacity Share of renewable electricity to total capacity, % [source:Eurostat, nrg_inf_epc]47.846.346.048.1-1%47.8%Net Private investmentsChange in private capital stock, net of depreciation, % GDP [source: Ameco]4.14.54.64.6-10.9%2.6%Net Public investmentsChange in public capital stock, net of depreciation, % GDP [source: Ameco]1.10.80.4-0.5-320%0.4%Single Market integrationIntra-EU tradeRatio of Intra-EU trade to Extra-EU trade, index [source: Ameco]1.721.721.671.741.626.0%1.59Professional services restrictivenessRegulatory restrictiveness indicatorRestrictiveness of access to and exercise of regulated professions (professions with above median restrictiveness, out of the 7 professions analysed in SWD (2021)185 [source: SWD (2021)185; SWD(2016)436 final])4   333.3%3.37Professional qualifications recognitionRecognition decisions w/o compensationProfessionals qualified in another EU MS applying to host MS, % over total decisions taken by host MS [source: Regulated professions database]1.345%Transposition - overall5 sub-indicators, sum of scores [source: Single Market Scoreboard]Below averageAbove averageOn averageOn averageInfringements - overall4 sub-indicators, sum of scores [source: Single Market Scoreboard]Below averageOn averageOn averageOn averageInvestment protectionConfidence in investment protectionCompanies confident that their investment is protected by the law and courts of MS if something goes wrong, % of all firms surveyed [source: Flash Eurobarometer 504]3756%BankruptciesIndex (2015=100) [source: Eurostat, sts_rb_a]107.90129.30118.00126.70-14.8%70.10Business registrationsIndex (2015=100) [source: Eurostat, sts_rb_a]70.693.6100.3103.7-31.9%105.6Late paymentsShare of SMEs experiencing late payments in past 6 months, % [source: SAFE]32.430.334.5n.a.n.a.-5.8%45%EIF Access to finance index - LoanComposite: SME external financing over last 6 months, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.470.410.270.2592.0%0.56EIF Access to finance index - EquityComposite: VC/GDP, IPO/GDP, SMEs using equity, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.060.050.10.07-9.9%18%% of rejected or refused loansSMEs whose bank loans’ applications were refused or rejected, % [source: SAFE]15.59.67.1157.4110.1%12.4%SME contractorsContractors which are SMEs, % of total [source: Single Market Scoreboard]6968675623.2%63%SME bidsBids from SMEs, % of total [source: Single Market Scoreboard]6967665427.8%70.8%Public procurement SINGLE MARKETCompliance - cooperation EC and MSBUSINESS ENVIRONMENT - SMEsBusiness demog-raphyAccess to financeInvestment dynamicsHEADLINE INDICATORSEconomic structureRESILIENCEShortages / supply chain disruptionsStrategic dependen-cies 
 
   
 
Graph A11.1: E-government benchmark scores and 
(lhs) and e-government users (rhs) 

Source: Eurostat (ICT use survey), E-government benchmark 
report 

Graph A11.2: Performance on the single market 
public procurement indicator 

ANNEX 11: PUBLIC ADMINISTRATION 
ANNEX 11: PUBLIC ADMINISTRATION 

capacity 

administrative 

Good 
enables 
economic  prosperity,  social  progress  and 
fairness. Public administrations at all government 
levels deliver crisis response, ensure the provision 
of  public  services  and  contribute  to  building 
resilience needed for the sustainable development 
of the EU economy.  

remains  particularly 

Bulgaria’s  public  administration  is  ranked 
substantially  below  the  EU  average (30). 
Ongoing  reforms  for  digitalisation,  better  service 
delivery  and  policymaking,  including  with  support 
from  EU  funds,  have  produced  mixed  results  so 
far.  The  e-government  indices  are  well  below  the 
EU  average  (Graph  A11.1).  The  COVID-19  crisis 
triggered  some  advancements  in  the  provision  of 
digital  public  services.  However,  cross-border 
mobility 
low  and  user-
centricity  also  remains  below  the  EU-27  average. 
E-government  users  represent  only  36%  of 
internet  users,  well  below  the  EU  average  of 
70.8%. The RRP aims to give impetus to the digital 
transformation  of  public  administration,  including 
the judiciary. Key reforms and investments include 
registry  data  and  e-
the  digitalisation  of 
certification  based  on  information  in  registries, 
electronic  submission  of  legal  documents,  remote 
court  hearings,  the  digitalisation  of  key  judicial 
processes in the administrative justice system, the 
digitalisation of the Bulgarian Post Office and the 
introduction  of  building  information  modelling  for 
the  construction  sector.  Investments  in  digital 
improve  strategic 
systems  are  expected 
planning, 
the 
management of emergencies and healthcare. 

to 
implementation, 

reform 

Public  procurement  remains  a  challenge.  In 
the  Single  Market  Scoreboard,  Bulgaria  keeps 
ranking at the bottom due to underperformance in 
transparency,  competition  and  efficiency  in  public 
procurement  (Graph  A11.2).  The  RRP  contains 
reforms  to  reduce  the  share  of  non-competitive 
and in-house bids and to advance e-procurement.  

(1) The competition and transparency indicators are triple-
weighted, whereas the efficiency and quality indicators have 
unitary weights. All others receive a 1/3 weighting in the SMS 
composite indicator.  
Source: Single Market Scoreboard, 2020 data 

of 

use 

The 

coordination. 

Bulgaria  underperforms  in  policy  planning 
and 
impact 
assessments and ex-post evaluations still needs to 
be applied consistently for all legislative proposals. 
remains  weak.  Civil 
Administrative  capacity 
servants  have  high  education  levels,  but  their 
participation in adult learning is very low (BG 1.7%; 
EU average 18.6%). 

(30)  Worldwide Governance Indicators, 2020.  

42 

01020304050607080BGEU27 averageBGEU27 averageUser centricityTo obtain informationTransparencyTo download official formsKey EnablersTo submit completed formsCross-border servicesE-governmentbenchnark scoreE-government users 
 
                                                 
       
 
     
 
Table A11.1:Public administration indicators – Bulgaria 

(1) High values stand for good performance barring indicators # 7 and 8. (2) Measures the user centricity (including for cross-
border services) and transparency of digital public services as well as the existence of key enablers for the provision of those 
services. (3) Break in the series in 2021. (4) Defined as the absolute value of the difference between the share of men and 
women in senior civil service positions. 
Source: ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Fiscal Governance 
Database (# 4, 9, 10); Labour Force Survey, Eurostat (# 5, 6, 8), European Institute for Gender Equality (# 7), Single Market 
Scoreboard public procurement composite indicator (# 11); OECD Indicators of Regulatory Policy and Governance (# 12). 

The judicial system faces various challenges. 
Administrative  courts  are  among 
the  most 
efficient  in  the  EU  in  terms  of  the  length  of 
proceedings.  However,  the  lack  of  data  on  the 
efficiency  of  litigious  and  non-litigious  civil  and 
commercial  cases  (first  and  second 
instance 
courts) does not enable a proper evaluation of the 
overall  efficiency  of  the  judicial  system.  The 
quality  of 
justice  system  faces  some 
challenges as regards courts fees, access to legal 
slight 
aid 
improvement,  digital  tools  are  seldom  used  in 
courts. 
judicial 
concerns 
independence remain (31) 

digitalisation: 

despite 

Certain 

about 

and 

the 

a 

(31)  For more detailed analysis of the performance of the justice 
system in Bulgaria, see the 2022 EU Justice Scoreboard 

(forthcoming) and the country chapter for Bulgaria of the 
Commission’s 2022 Rule of Law Report (forthcoming). 

43 

BG20172018201920202021EU27131.033.036.036.034.070.82nananana61.470.93nananana78.081.1453.955.255.255.2na56.8555.355.055.855.656.355.361.91.91.9na1.718.670.43.48.28.819.021.8818.621.922.220.521.421.390.730.730.730.73na0.72102.82.82.83.0na1.511-3.7-3.3-1.3-5.3na-0.7121.70nananana1.6Public Financial Management Medium term budgetary framework indexStrength of fiscal rules indexPublic procurement composite indicatorEvidence-based policy makingIndex of regulatory policy and governance practices in the areas of stakeholder engagement, Regulatory Impact Assessment (RIA) and ex post evaluation of legislation Scope Index of Fiscal InstitutionsEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with tertiary education, levels 5-8  (3)Participation rate of public administration employees in adult learning (3)Gender parity in senior civil service positions (4)Share of public sector workers between 55 and 74 years (3)2021 open data maturity indexIndicator (1)E-government Share of individuals who used internet within the last year to interact with public authorities (%)2021 e-government benchmark´s overall score (2) Open government and independent fiscal institutions 
                                                 
 
                                                                              
 
     
 
FAIRNESS 
FAIRNESS 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The European Pillar of Social Rights provides 
for  upward  convergence 
the  compass 
towards better working and living conditions 
in the EU. The implementation of its 20 principles 
on  equal  opportunities  and  access  to  the  labour 
market,  fair  working  conditions,  social  protection 
and inclusion, supported by the 2030 EU headline 
targets  on  employment,  skills  and  poverty 
reduction, will strengthen the EU’s drive towards a 
digital,  green  and  fair  transition.  This  Annex 
provides  an  overview  of  Bulgaria’s  progress  in 
achieving  the  goals  under  the  European  Pillar  of 
Social Rights. 

The  labour  market  in  Bulgaria  is  recovering, 
but overall outcomes remain below their pre-
crisis period. The employment rate was 73.6% in 
Q4-2021,  0.3 percentage  points  (pps)  below  the 
pre-pandemic  (reference  Q4  2019),  and  slightly 
below  the  EU  average  (74.0%).  The  employment 

44 

in  2016  to  64.8% 

rate  of  workers  aged  55-64  increased  steadily 
(from  54.5% 
in  2021), 
surpassing  the  EU  average  (54.9%).  At  the  same 
time, the  employment  rate  of  people  aged  20-64 
with  low  qualifications  (46.3%  in  2021)  remains 
is 
well  below  the  EU  average  (54.9%)  and 
significantly 
lower  (42.4 pps)  than  for  highly 
skilled people. The share of young people (15-29) 
not in employment, education or training (NEET) is 
high  (17.6%  in  2021  compared  to  13.1%  on 
average in the EU). The disability employment gap 
is well above the EU average (33 pps vs 24.3 pps), 
with  an  employment 
rate  of  people  with 
disabilities of 43.1% in 2020, compared to 76.1% 
for  those  without.  In  2020,  only  47%  of  Roma 
were  engaged  in  any  form  of  paid  work.  These 
figures  point  to  the  need  for  strengthening  the 
provision  of  more  tailored  active  labour  market 
policies  for  vulnerable  and  underrepresented 
groups  (e.g.  people  with  disabilities  and  Roma), 
while  taking  into  account  the  significant  regional 
differences  in  labour  market  outcomes.  The  need 
to  integrate  vulnerable  groups  into  the  labour 
market is made all the more pressing by the fact 
that  the  working-age  population  is  expected  to 
have  decreased  by  12.5%  by  2030.  Bulgaria  will 
focus 
(ESF+) 
its  European  Social  Fund  Plus 
investments  on  improving  access  to  employment, 
upskilling  and  reskilling,  improving  the  capacity 
and  effectiveness  of  public  employment  services 
and improving social services.  

Low levels of basic and digital skills and low 
adult  participation  in  learning  are  major 
issues  for  Bulgaria,  given,  on  top  of 
everything else, adverse demographic trends 
and  the  imperative  to  ensure  the  green  and 
digital  transitions  are  fair.  The  participation 
rate  of  children  under  3  in  formal  childcare  was 
15% in 2020, well below the EU average (32.3%). 
The early school leaving rate was 12.2% in 2021, 
above  the  EU  average  (9.7%).  The  challenge  is 
particularly  acute  in  certain  regions  and  among 
disadvantaged groups, especially Roma (see Annex 
13).  Only  31%  of  the  population  report  basic  or 
above  basic  levels  of  digital  skills  in  2021, 
compared  to  54%  on  average  in  the  EU.  Adult 
participation  in  learning  (25-64)  over  the  past  4 
weeks was well below the 2020 EU average (1.8% 
versus 10.8%). As part of the RRP, investment in a 
new  digital  platform  for  adult  learning,  and  the 
provision  of  training  in  digital  skills  for  500  000 

 
 
 
 
 
 
registered  unemployed  people  and  workers  could 
address  some  of  the  challenges  outlined  here.  In 
close cooperation with the social partners and civil 
society  organisations,  the  ESF+  interventions  will 
focus 
quality  and 
inclusiveness  of  education  and  training.  This  will 
help  Bulgaria  reach  the  2030  EU  headline  target 
on skills. 

strengthening 

the 

on 

Bulgaria is facing very high levels of income 
inequality  and  risk  of  poverty  or  social 
exclusion,  which  have  worsened  as  a  result 
of  the  COVID-19  crisis.  In  2020,  the  income  of 
the  richest  20%  of  the  population  was  8  times 
higher  than  that  of  the  poorest  20%  (versus  4.9 
times higher in the EU). The share of people at risk 
of  poverty  or  social  exclusion  stood  at  33.6%  in 
2020, among the highest in the EU. 14.4% of the 
population  experience  housing  overburden  cost. 
Bulgaria  recorded  one  of  the  lowest  impacts  of 
social  transfers  (other  than  pensions)  on  poverty 
reduction  in  the  EU  (20.4%  in  2020),  well  below 
the  EU  average  (33.2%).  The  coverage  of  home 
care for older people is one of the lowest in the EU 
(11.6%  versus  28.6%  in  the  EU  in  2019).  As  part 
of  the  RRP,  Bulgaria  plans  to  reform  minimum 
income  support.  A  recent  study (32)  simulates  the 
social 
income  support 
reform, planned to be gradually implemented until 
2024, showing a decrease of 5.8% in the depth of 
poverty,  measured  by  the  at-risk-of-poverty  gap, 
but  only  very  modest  impacts  on  severe  material 
deprivation  and  risk-of-poverty  rates.  Further 
efforts  will  therefore  be  needed,  in  other  areas 
also, to have a significant impact on the country’s 
consistently high poverty rates. 

impacts  of  minimum 

(32)  European Commission, Joint Research Centre, based on the 

Euromod model. 

45 

 
 
                                                 
ANNEX 13: EDUCATION AND SKILLS 
ANNEX 13: EDUCATION AND SKILLS 

This  Annex  outlines  the  main  challenges  for 
Bulgaria’s  education  and  training  system  in 
light of the EU-level targets of the European 
Education  Area  strategic  framework  and 
other  contextual  indicators,  based  on  the 
analysis  from  the  2021  Education  and 
Training Monitor. Ensuring the quality and equity 
of  education  remain  major  challenges  and  risk 
worsening  due  to  the  pandemic.  Bulgaria  lags 
behind  the  EU  average  and  EU-level  targets  in 
terms of participation in early childhood education, 
basic  skills,  early  leavers  from  education  and 
training, and tertiary education. 

Participation  in  early  childhood  education 
and  care  remains  low  and  is  decreasing. 
Socio-economic  factors  as  well  as  an  insufficient 
number of places in certain municipalities have an 
impact on the participation rate (79.9%), below the 
EU  average  (92.8%).  The  participation  rate  of 
children under 3 in formal childcare (15% in 2020) 
has increased compared to previous years, but it is 
still well below the EU average (32.3%). In spite of 
sustained efforts in recent years, the participation 
of  children  from  disadvantaged  backgrounds, 
including Roma children, is still low.  

status 

confirm 

Educational  outcomes  are  low,  with  almost 
half  of  Bulgaria’s  teenagers  lacking  basic 
skills. Results of the Programme for International 
Student  Assessment  (PISA)  show  that  twice  as 
many  Bulgarian  15-year  olds  than  on  average  in 
the  EU  failed  to  demonstrate  a minimum  level  of 
reading knowledge (e.g. 47.1% vs 22.5%). Data on 
the  achievement  of  15-year  old  pupils  and  their 
socio-
socio-economic 
economic  status  strongly  affects  educational 
outcomes.  Learning  losses  due  to  the  repeated 
school  closures  and  shift  to  remote  learning 
improve 
threaten  the  past  years’  efforts  to 
educational outcomes and exacerbate inequalities. 
Although 
government 
expenditure  on  education  increased  by  14%  in 
2019,  it  remained  one  of  the  lowest  in  the  EU 
(3.9%  compared  to  4.7%  of  GDP  in  the  EU-27). 
Lack of adequate IT infrastructure and insufficient 
digital  skills  among  teachers  create  additional 
difficulties (see Annexes 7 and 12). 

Bulgaria’s 

general 

that 

The  rate  of  early  school  leaving  is  high  and 
risks  worsening  due  to  the  pandemic.  It  has 
not  improved  over  the  last  decade  and  stood  at 
12.2% in 2021 (EU-27 average of 97%). The rate 
is  particularly  high  among  disadvantaged  groups, 

46 

including  Roma,  and 
in  rural  areas  (23.7%). 
Disadvantaged  pupils  are  often  concentrated  in 
schools  in  which  the  quality  of  education  and the 
learning conditions are poor. In spite of measures 
taken, including with support from EU funds, Roma 
inclusion in education remains a challenge. 

Graph A13.1: Low achievement in reading by socio-
economic status, PISA 2018 

(1) The EU average does not include Spain. 
Source: OECD (2019), PISA 2018 

Tertiary  attainment  is  quite  low,  with  a 
marked  gender  gap  and  low  percentage  of 
science,  technology,  engineering  and  maths 
(STEM)  graduates.  Only  33.6%  of  Bulgarians 
aged 25-34 held a university degree in 2021: 28% 
of  men  in  this  age  group  completed  tertiary 
education, compared to 39.5% of women. Regional 
imbalances between the demand for and supply of 
educational  services  compound  labour  market 
mismatches. The percentage of STEM graduates is 
one  of  the  lowest  in  the EU  (19.8%,  compared to 
EU average 26%).  

candidates 

The teacher population is one of the oldest in 
the  EU,  with  about  half  of  school  teachers 
older  than  50.  Salaries  are 
increasing  the 
attractiveness  of  the  profession,  but  attracting 
teacher  education 
into 
talented 
programmes remains difficult, in particular in rural 
areas.  To  strengthen  the  profession,  additional 
measures,  including  with  support  from  EU  funds, 
were taken to strengthen initial teacher education 
and 
development. 
Nevertheless, the  need  to upgrade  teachers’  skills 
remains.  

professional 

continuous 

0%10%20%30%40%50%60%70%EUBGAll studentsStudents in the bottom socio-economic quartileStudents in the top socio-economic quartile 
 
   
 
Table A13.1:EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

The 2018 EU average on PISA reading performance does not include Spain;  
b = break in time series, c = confidential, u = low reliability, : = not available.  
Data are not yet available for the remaining EU-level targets under the European Education Area strategic framework, covering 
underachievement in digital skills, exposure of vocational education and training graduates to work-based learning and 
participation of adults in learning. 
Source: Eurostat (UOE, LFS); OECD (PISA) 

be 

The  reforms  and  investments  under  the 
recovery and resilience plan will help address 
some  of  these  longstanding  challenges.  Key 
reforms  focus  on  pre-school,  school  education, 
learning  and  higher  education.  Such 
lifelong 
reforms  will 
the 
complemented 
corresponding investments in, among other things, 
infrastructure,  equipment  and  digitalisation,  as 
well as training programmes, the modernisation of 
educational  institutions  and  the  establishment  of 
an  online  platform  for  adult  learning.  Increased 
ESF+  funding  for  education  also  provides  a  key 
opportunity 
improve  Bulgaria’s  education 
system. 

by 

to 

47 

96%84.8%91.9%79.9%201992.8%2019Reading< 15%41.5% 20.4%47.1%201822.5%2018Mathematics< 15%42.1% 22.2%44.4%201822.9%2018Science< 15%37.9% 21.1%46.5%201822.3%2018Total< 9 %13.4%11.0%12.2%9.7%Men13.3%12.5%11.5%11.4%Women13.4%9.4%12.9%7.9%Cities3.6%9.6%6.8% 8.7%Rural areas29.4%12.2%23.7%10.0%Native13.5%10.0%12.2%8.5%EU-born:u20.7%:u21.4%Non EU-born:u23.4%:u21.6%Total45%31.8%36.5%33.6%41.2%Men24.6%31.2%28.0%35.7%Women39.6% 41.8%39.5%46.8%Cities45.7%46.2%47.4%51.4%Rural areas10.4%26.9%13.7%29.6%Native31.8%37.7%33.5%42.1%EU-born:u32.7%:u40.7%Non EU-born:u27.0%:u34.7%47.7% 38.3%49.5%201938.9%2019Share of school teachers (ISCED 1-3) who are 50 years or overBy country of birthBy genderBy degree of urbanisationBy country of birthTertiary educational attainment (age 25-34)Participation in early childhood education (age 3+)Low achieving 15-year-olds in:By genderBy degree of urbanisationEarly leavers from education and training (age 18-24)20152021IndicatorTargetBulgariaEU27BulgariaEU27 
 
   
 
projected  to  increase  by  0.2  percentage  points  of 
GDP by 2070 (compared to 0.9 percentage points 
for the EU) (33).  

Graph A14.2: Projected increase in public 
expenditure on health care over 2019-2070 
(reference scenario) 

ANNEX 14: HEALTH AND HEALTH SYSTEMS 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

Especially  relevant  in  light  of  the  ongoing 
COVID-19 pandemic, resilient healthcare is a 
prerequisite  for  a  sustainable  economy  and 
society.  This  Annex  provides  a  snapshot  of  the 
healthcare sector in Bulgaria. 

in 

Life expectancy in Bulgaria was the lowest in 
in  2020.  Moreover,  the  COVID-19 
the  EU 
life 
led  to  a  significant  drop 
pandemic 
expectancy  of  18  months  between  2019  and 
2020. As of 17 April 2022, Bulgaria reported 5.29 
cumulative  COVID-19  deaths  per  1  000 
inhabitants and 165 confirmed cumulative COVID-
19  cases  per  1  000  inhabitants.  The  treatable 
mortality rate per 100 000 population was 189.0 
(2019), well above the EU average of 92.1 (2017), 
although  cancer  mortality  rates  are  lower  than  in 
the EU overall. Cardiovascular disease is a leading 
cause of death. 

Graph A14.1: Life expectancy at birth, years 

Source: European Commission/EPC (2021) 

The  health  system  is  characterised  by  high 
out-of-pocket  payments  and  a  hospital-
centred  care  model  (nearly  double  the  EU 
average  of  acute  care  beds).  The  COVID-19 
pandemic  highlighted  the  need  for  additional 
investment  in  the  health  sector,  including  better 
preparedness for future health system shocks. For 
Bulgaria,  this  challenge  also  includes  investment 
to  create  a  uniform  health  information  system  to 
speed  up  the  use  of  e-health,  and  to  support 
working  conditions  for  the  health  workforce. 
Hospitalisation  rates  in  Bulgaria  are  high,  partly 
due to the underdevelopment and underfunding of 
both  preventive  health  services  and  primary  care. 
The capacity of the Bulgarian healthcare system is 
undermined  by  severe  shortages  of  nursing 
professionals. The distribution of doctors is uneven 
across the country. The consumption of antibiotics 
(daily defined dose per 1 000 inhabitants per day) 
was  20.7,  well  above  the  EU  average  of  14.5 
(2020).  This  raises  public  health  concerns  about 
antimicrobial resistance. 

(33)  ‘The 2021 Ageing Report: Economic and Budgetary 

Projections for the EU Member States (2019-2070)’, 
European Commission (ECFIN) and Ageing Working Group 
(EPC). 

48 

Source:  Eurostat database 

spending 

in  Bulgaria 

Health 
remains 
significantly  lower  than  the  EU  average. 
When  measured  as  a  share  of  GDP,  Bulgaria’s 
spending on health stood at 7.1% in 2019, below 
the  EU  average  of  9.9%.  Despite  significant 
increases in expenditure on health per capita over 
the past decade, Bulgaria’s per capita expenditure 
(adjusted  for  differences  in  purchasing  power) 
stood at EUR 1 273 in 2019, the lowest in the EU. 
Public  financing  of  the  health  system  accounted 
for  61%  of  health  spending  in  2019.  Out-of-
pocket 
(38%  of  all  healthcare 
expenditure),  driven  mainly  by  the  costs  of 
outpatient  pharmaceuticals,  was  over  2.5  times 
the  EU  average.  Public  expenditure  on  health  is 

spending 

80.580.980.981.081.380.474.774.974.875.075.173.6201520162017201820192020EUBulgaria6.64.60.90.202468EUBulgaria% of GDP20192070increase 
 
   
   
                                                 
 
Table A14.1:Key health indicators 

Doctors' density data refer to practising doctors in all countries except FI, EL, PT (licensed to practice) and SK (professionally 
active). Nurses' density data refer to practising nurses in all countries (imputation from year 2014 for FI) except IE, FR, PT, SK 
(professionally active) and EL (nurses working in hospitals only). More information: https://ec.europa.eu/health/state-health-
eu/country-health-profiles_en   
Source: Eurostat Database, except: * Eurostat and OECD, ** ECDC. 

49 

20162017201820192020EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)194.4191.8188.2189.092.1 (2017)Cancer mortality per 100 000 population232.1232.4232.5242.2252.5 (2017)Current expenditure on health, % GDP 7.57.57.37.19.9 (2019)Public share of health expenditure, % of current health expenditure55.456.459.160.679.5 (2018)Spending on prevention, % of current health expenditure 2.82.82.83.02.8 (2018)Acute care beds per 100 000 population603.1616.8624.5641.2387.4 (2019)Doctors per 1 000 population *4.14.24.24.23.8 (2018)Nurses per 1 000 population *4.34.44.44.48.2 (2018)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day **17.618.919.519.120.714.5 (2020) 
 
     
 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

is  an 

The  regional  dimension 
important 
factor  when  assessing  economic  and  social 
developments  in  a  Member  State.  Taking  into 
account  this  dimension  enables  a  well-calibrated 
and targeted policy response that fosters cohesion 
and  ensures  sustainable  and  resilient  economic 
development  across  all  regions.  Internal  regional 
disparities continue to be significant in Bulgaria. All 
but the capital region remain below 50% of the EU 
average  in  terms  of  GDP/capita  (in  purchasing 
power standards). Disparities are driven by gaps in 
labour  productivity,  demographics,  education 
levels, employment, infrastructure quality and R&I 
performance.  This  could  create  bottlenecks  and 
slow  down  the  country’s  contribution  to  the  EU’s 
green and digital objectives. 

Graph A15.1: Average GDP per head growth vs GDP 
per head in 2010 

Graph A15.2: Labour productivity, EU-27, Bulgaria 
NUTS 2 regions, 2000-2019 

(1) Unit: real GVA in EUR million (2015 prices) by employment 
in thousands of people 
(2) The light red circle shows the capital city region. 
(3) The blue circles show the remaining NUTS2 regions.            
(4) The green diamond shows the national average. 
(5) The purple line shows the EU27 average. 
Source: European Commission 

(1) Bubble size: population, 2019 
Source: European Commission 

Bulgarian  regions  have  been  slowly  catching 
up in terms of GDP per head with the rest of 
the  EU  since  Bulgaria’s  accession,  but 
internal convergence is slow. In 2019, GDP per 
head  in  Severozapaden  corresponded  to  32%  of 
the  EU  average  while  in  the  capital  region  it  was 
89%,  with  all  other  regions  below  the  national 
average.  Economic  activity  in  Bulgaria  remains 
highly  concentrated  in  the  capital  region,  which 
generates 51% of national GDP. 

the 

lowest 

less  developed 

Labour productivity has steadily increased in 
regions 
Bulgaria,  with 
catching up, but the country is lagging behind 
the  EU  and  significant  regional  disparities 
remain.  Bulgaria  has 
labour 
productivity in the EU, equal to around 23% of the 
EU  average.  Labour  productivity  is  the  highest  in 
the  capital  region,  almost  twice  as  high  as  in 
Yuzhentsentralen,  the 
least  productive  region. 
However,  productivity  growth  has  generally  been 
higher in the less developed regions, notably in the 
least  productive  region,  where  labour  productivity 
grew  by  3.5%  a  year  between  2010  and  2019. 
Productivity  growth  in  the  capital  region  was  one 
of the lowest in the country, at 2.5% a year. 

Climate  transition  challenges  differ  greatly 
between  Bulgarian  regions.  Bulgaria’s  is  the 
most  energy-intensive  economy  in  the  EU  and  its 
CO2  emissions  in  comparison  to  GDP  remain  the 
highest  in  Europe.  The  energy  sector  is  the  main 
source  of  GHG  emissions.  Due  to  a  concentration 
of  several  coal-fired  power  plants  and  the 
country’s  biggest  coal  mine  in  Yuzhentsentralen, 
emissions  from  fossil  fuels  in  that  region  exceed 
2.5  times  the  EU  average.  As  a  consequence,  the 
Stara  Zagora  NUTS3  region  has  the  highest 
number  of  people  affected  by  the  climate 
transition. 

50 

1.01.52.02.53.03.54.0102030405060708090Annual average growth of GDP per head in %, 2010-2019GDP (PPS) per head in 2010 (EU = 100)Capital regionOther NUTS2 regionsNational averageEU27 
 
   
   
 
Graph A15.3: Territories most affected  by the 
climate transition in Bulgaria 

Graph A15.5: Unemployment rate 

Source: European Commission 

The unemployment rate (5.1%) is lower than 
in the EU (7.1%) but there are wide regional 
variations. In 2020, the unemployment rate was 
as low as 3.4% in Yuzhentsentralen, but peaked at 
region  of 
13.0% 
Severozapaden.  The  employment  rate 
in  this 
region  is  also  particularly  low,  at  63.3%  against 
the national average of 73.4%. 

least  developed 

the 

in 

could 

constitute  a  major  hurdle 

The  country  and  some  of  its  less  developed 
regions  are  rapidly  losing  their  population. 
in 
This 
Severozapaden  and  Severentsentralen,  whose 
populations  have  declined  by  14.3%  and  10.4% 
respectively.  In  comparison,  the  population  in  the 
capital  region  decreased  by  only  1.9%  as  the 
natural population change was compensated by an 
increase in net migration (+1.7%). 

Bulgaria  was  severely  affected  by  the 
COVID-19  pandemic,  with 
far-reaching 
regional  socio-economic  consequences.  The 
unemployment rate dropped rapidly between 2015 
and 2019, but increased by 2.1 percentage points 
(pps)  in  Severozapaden  and  by  1.3  pps  in  the 
capital region. By contrast, it only increased by 0.2 
pps in Severoiztochen. 

Source: European Commission 

Graph A15.4: Innovation performance in Bulgaria 

Source: European Commission 

Key  assets  such  as  transport  infrastructure 
and  human  capital  are  still  lacking  in  many 
of  the  country’s  less  developed  regions.  This 
results  in  Bulgaria’s  low  innovation  performance. 
Transport  infrastructure,  in  particular  roads,  is 
more  developed  in  southern  regions,  in  particular 
in the capital. In some less developed regions, less 
than  25%  of  the  population  aged  30-34  has  a 
tertiary  degree,  against  46.4%  in  the  capital 
region.  Employment  in  high-technology  sectors 
and  R&D  expenditure  are also much lower in less 
developed regions. 

is  characterised  by  a  strong 
Bulgaria 
regional digital divide. The ICT uptake is low: in 
2021,  34%  of  the  population  used  internet  for 
interaction with public authorities against 65% on 
average in the EU. The capital region has a higher 
share  of  ICT  uptake  (41%)  compared  to  the  least 
developed regions where it can be as low as 17 % 
(Severozapaden and Severen tsentralen). 

51 

 
   
 
   
   
Table A15.1:Selected indicators at regional level – Bulgaria 

Source: Eurostat, *EDGAR Database 

52 

NUTS 2 RegionGDP per head (PPS)Real productivity growthGDP per head growthPopulation growthPopulation with high educational attainmentR&D expenditureTransport performance by carRegional Competitiveness IndexCO2 emissions from fossil fuels  per headInnovation performanceEU27=100, 2019Avg % change on preceding year, 2010-2019Avg % change on preceding year, 2010-2019Total % change, 2011-2019% of population aged 30-34, 2017-2019% of GDP, 2018% Pop. within a 1h30 travel / within 120 km radius, 2018Range 0-100, 2019tCO2 equivalent, 2018RIS regional performance groupEuropean Union1001.001.391.839.42.1957.37.2Bulgaria532.873.12-5.733.00.7656.925.1Severozapaden322.602.72-14.318.30.4929.47.64.5Emerging innovator -Severen tsentralen352.472.91-10.432.40.3237.119.13.5Emerging innovatorSeveroiztochen412.532.59-4.330.90.4346.920.05.8Emerging innovatorYugoiztochen403.053.00-5.021.60.3256.513.817.8Emerging innovator -Yugozapaden892.512.85-1.946.41.1471.444.34.1Emerging innovator +Yuzhen tsentralen373.453.38-5.024.70.4467.721.25.5Emerging innovator 
 
   
 
MACROECONOMIC STABILITY 
MACROECONOMIC STABILITY 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 

increased to 94.3% of GDP (on consolidated basis) 
in  2020,  driven  to  a  large  extent  by  the  GDP 
contraction  during 
the  COVID  19  pandemic. 
Financial    literacy    among    households remains 
low,  limiting  the  capacity  to  make  informed 
choices and to plan for retirement. 

sector 

This  Annex  provides  an  overview  of  key 
developments  in  Bulgaria’s  financial  sector. 
Overall,  Bulgaria’s  banking 
remains 
relatively robust and is dominated by subsidiaries 
and  branches  of  euro  area  banks.  Total  banking 
sector  assets  stood  at  almost  109%  of  GDP  in 
2021,  with  the  five  largest  banks  having  a  share 
of  67.1%  at  the  end  of  2020,  higher  than  in 
previous  years.  The  loan-to-deposit  ratio  has 
declined since the start of the pandemic, driven by 
strong  deposit  growth.  The  market-funding  ratio 
has declined further and was quite low in 2020, as 
companies’  access  to  financial  market  funding, 
listed  shares  and  debt  securities, 
especially 
in 
limited.  The  banking  sector 
remains  very 
Bulgaria  maintained  high  capitalisation  and 
profitability  rates,  despite  the  adverse  impact  of 
the  pandemic  on  the  economy.  The  system-wide 
capital  adequacy  ratio  was  22.6%  at  the  end  of 
Q3-2021,  above  the  EU  average.  Following  a 
pronounced  decline  in  2020,  banks’  profitability 
strongly  rebounded  in  2021,  with  a  return  on 
equity of 9.1% in Q3. The cost-to-income ratio has 
slightly declined,  on the back of the efforts made 
by banks to increase efficiency.  

(NPLs) 

including 

throughout 

remain 
loans 
Non-performing 
relatively  high,  but  have  been  steadily 
decreasing, 
the 
pandemic. The NPL ratio has been on a downward 
trend  across 
individual  banks  and  segments, 
declining  to  5.3%  at  the  end  of  Q3-2021  (from 
5.9% at the end of 2020). However, it remains one 
of  the  highest  in  the  EU  (well  above  the  EU 
average of 2.1% in Q3-2021), as the pace of NPL 
reduction  has  been  more  limited  compared  to 
many other Member States. NPLs to non-financial 
corporations (NFCs) also decreased, but still stood 
at  8.5%  of  total  loans  and  advances  in  Q3-2021 
(compared  with  9.6%  at  the  end  of  2020),  and 
were even higher for domestically owned banks. 

Bank  credit  activity  strengthened  further,  in 
particular  household  lending. 
In  Q4-2021, 
growth  rates  in  new  lending  reached  5.7%  for 
NFCs  and  14.5%  year-on-year  for  households.  At 
the  same  time,  mortgage  loans  grew  strongly,  by 
18.1 %  year-on-year  in  December  2021.  Strong 
lending  activity  in  the  housing  loans  segment, 
amid  higher  house  prices  and  heightened 
competition  among  credit  institutions,  requires 
special  attention 
the 
residential  real  estate market.  Private  sector  debt 

risks  arising  from 

to 

53 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A16.1:Financial soundness indicators 

(1) Last data: Q3 2021. 
Source: ECB, Eurostat, Refinitiv 

54 

20172018201920202021Total assets of the banking sector (% of GDP)101.5101.6100.0108.2108.9Share (total assets) of the five largest banks (%)56.559.762.567.1-Share (total assets) of domestic credit institutions (%)123.622.122.322.828.8Financial soundness indicators:1- non-performing loans (% of total loans)10.27.76.55.95.3- capital adequacy ratio (%)21.820.619.523.122.6- return on equity (%)10.211.811.24.99.1NFC credit growth (year-on-year % change)4.88.67.64.05.7HH credit growth (year-on-year % change)8.99.110.67.614.5Cost-to-income ratio (%)145.145.346.847.245.0Loan-to-deposit ratio (%)172.675.578.069.771.4Central bank liquidity as % of liabilities0.00.0-0.0-Private sector debt (% of GDP)98.695.090.794.3-Long-term interest rate spread versus Bund (basis points)128.549.668.276.456.3Market funding ratio (%)17.115.515.413.7-Green bond issuance (bn EUR)----- 
 
   
 
ANNEX 17: TAXATION 
ANNEX 17: TAXATION 

This  Annex  provides  an 
indicator-based 
overview  of  Bulgaria’s tax  system.  It  includes 
information  on  the  tax  structure,  i.e.  the  types  of 
tax  that  Bulgaria  derives  most  revenue  from,  the 
tax  burden  for  workers,  and  the  progressivity  and 
redistributive  effect  of  the  tax  system.  It  also 
provides 
tax  collection  and 
compliance,  and  on  the  risks  of  aggressive  tax 
planning activity. 

information  on 

The VAT gap in Bulgaria in 2019 amounted to 
8.3  %,  slightly  below  the  EU  average. 
According  to  the  VAT  Gap  Study  Report  2021, 
Bulgaria  is  one  of  the  countries  with  the  most 
significant  decreases  in  the  VAT  gap,  with  a 
decline  of  2.5  pps  compared  to  2018  (together 
with  Greece,  Lithuania  and  Slovakia,  recording 
reductions in the VAT gap of between 3.2 and 2.2 
pps).  

Bulgaria’s  total  tax  revenues  are  low  in 
relation  to  GDP,  and  the  tax  system  relies 
heavily  on  indirect  taxation.  With  only  a  10% 
rate,  the  country  has  the  lowest  personal  income 
tax rate in the EU,  which is also very close to the 
average income tax rate in Bulgaria. A result of the 
flat  tax  system,  this  shows  a  very  similar  degree 
of  taxation  of  high-income  and 
low-income 
earners.  Finally, 
the  average  forward-looking 
effective  corporate  income  tax  rates  persistently 
remain considerably below the EU average 

The  progressivity  of  personal  income  tax  is 
an  important  measure  of  the  redistributive 
effect of tax and benefit systems. The degree 
of  progressivity  of  labour  income  taxation  can  be 
approximated  by  comparing  the  tax  wedges  of 
high-  (167%)  vs  low-  (50%)  income  earners 
(percentages  of  the  average  wage),  with  Bulgaria 
showing  the  least  progressivity  in  the  EU  in  that 
respect. 

Bulgaria’s labour tax burden is relatively low 
across the income distribution. Overall, the tax 
system  is  effectively  regressive  in  Bulgaria  and 
does not promote redistribution. The tax burden on 
labour  is  generally  lower  in  Bulgaria  than  the  EU 
average,  but  with  significant  exceptions, 
in 
particular  for  single  parents  with  2  children, 
earning  67%  of  the  average  wage  (20.77%  vs 
18.43 in 2021%). 

Bulgaria  is  doing  moderately  well  on  the 
digitalisation  of  tax  administration,  which 
can  help  reduce  tax  arrears  as  well  as  cut 
compliance costs. The country has introduced an 
option  for  individuals  to  use  pre-filled  annual  tax 
returns.  The  share  of  e-returns  of  both  corporate 
income taxes (CIT) and personal income taxes (PIT) 
has  increased  considerably  in  recent  years,  with 
100% of CIT and 83.2% of PIT returns being filed 
electronically in 2021.  

55 

 
 
  
  
 
 
Table A17.1:Taxation indicators 

(1) Forward-looking effective tax rate (OECD). 
(*) EU-27 simple average, as no aggregated EU-27 value. 
Source: European Commission and OECD 

Graph A17.1: Tax wedge indicators 

The tax wedge measures the difference between the total labour cost of employing a worker and the worker’s net earnings: sum 
of personal income taxes and employee and employer social security contributions, net of family allowances, expressed as a 
percentage of total labour costs (the sum of the gross wage and social security contributions paid by the employer). 

(1) The second earner average tax wedge measures how much extra personal income tax plus employee and employer social 
security contributions (SSCs) the family will have to pay as a result of the second earner entering employment, as a proportion of 
the second earner’s gross earnings plus the employer SSCs due on the second earner’s income. For a more detailed discussion see 
OECD (2016), Taxing Wages 2016, OECD Publishing, Paris. http://dx.doi.org/10.1787/tax_wages-2016-en  

(2) EU-27 simple average, as no aggregated EU-27 value 

Source: European Commission 

56 

34.934.934.934.934.9At 50% of Average Wage (Single person)At 67% of Average Wage (Single person)At 100% of Average Wage (Single person)At 167% of Average Wage (Single person)For second earner at 67% of Average Wage(Two earner couple, 1st earner 100% ofAW) (1)BGEU-27 (2)2010201820192020202120102018201920202021Total taxes (including compulsory actual social contributions) (% of GDP)25.429.730.330.637.940.139.940.1Labour taxes (as % of GDP)8.410.911.111.520.020.720.721.5Consumption taxes (as % of GDP)13.414.114.314.110.811.111.110.8Capital taxes (as % of GDP)3.64.75.05.07.18.28.17.9Total property taxes (as % of GDP)0.50.80.80.71.92.22.22.3Recurrent taxes on immovable property (as % of GDP)0.30.30.30.31.11.21.21.2Environmental taxes as % of GDP2.72.63.03.02.42.42.42.2Tax wedge at 50% of Average Wage (Single person) (*)32.534.934.934.934.933.932.432.031.531.9Tax wedge at 100% of Average Wage (Single person) (*)32.534.934.934.934.941.040.240.139.939.7Corporate Income Tax - Effective Average Tax rates (1) (*)9.19.19.119.819.519.3Difference in GINI coefficient before and after taxes and cash social transfers (pensions excluded from social transfers)3.64.43.74.28.47.97.48.3Outstanding tax arrears: Total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)27.123.831.931.8VAT Gap (% of VTTL)10.88.311.210.5Dividends, Interests and Royalties (paid and received) as a share of GDP (%)4.04.13.210.710.5FDI flows through SPEs (Special Purpose Entities), % of total FDI flows (in and out)0.00.00.047.846.236.7BulgariaEU-27Tax structureProgressivity & fairnessTax administration & complianceFinancial Activity Risk 
 
     
         
 
 
 
   
 
ANNEX 18: KEY ECONOMIC AND FINANCIAL INDICATORS 
ANNEX 18: KEY ECONOMIC AND FINANCIAL INDICATORS 

Table A18.1:Key economic and financial indicators 

(1) NIIP excluding direct investment and portfolio equity shares         
(2) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
Source: Eurostat and ECB as of 2 May 2022, where available; European Commission for forecast figures (Spring Forecast 2022) 

57 

2004-072008-122013-1820192020202120222023Real GDP (y-o-y)6.71.42.04.0-4.44.22.13.1Potential growth (y-o-y)5.91.82.12.11.61.51.51.7Private consumption (y-o-y)9.21.41.46.0-0.48.02.83.0Public consumption (y-o-y)2.5-0.32.32.08.34.00.31.7Gross fixed capital formation (y-o-y)16.5-4.21.44.50.6-11.04.06.9Exports of goods and services (y-o-y)15.02.95.84.0-12.19.94.54.2Imports of goods and services (y-o-y) 19.7-1.15.45.2-5.412.25.04.5Contribution to GDP growth:Domestic demand (y-o-y)10.5-0.31.54.71.33.42.43.3Inventories (y-o-y)0.7-0.70.20.0-1.21.90.00.0Net exports (y-o-y)-4.52.20.3-0.7-4.4-1.1-0.3-0.2Contribution to potential GDP growth:Total Labour (hours) (y-o-y)1.8-1.00.10.0-0.3-0.2-0.3-0.3Capital accumulation (y-o-y)2.01.70.80.80.80.40.50.6Total factor productivity (y-o-y)2.11.11.21.31.21.31.31.3Output gap1.40.7-0.42.5-3.5-1.0-0.41.0Unemployment rate11.110.39.75.26.15.35.45.3GDP deflator (y-o-y)7.54.02.85.24.26.29.53.9Harmonised index of consumer prices (HICP, y-o-y)6.84.60.02.51.22.811.95.0Nominal compensation per employee (y-o-y)8.69.87.66.97.29.59.77.7Labour productivity (real, hours worked, y-o-y)3.53.21.63.60.33.00.22.7Unit labour costs (ULC, whole economy, y-o-y)4.76.55.93.19.55.47.74.8Real unit labour costs (y-o-y)-2.62.53.1-2.05.1-0.8-1.70.9Real effective exchange rate (ULC, y-o-y)2.94.35.60.0....Real effective exchange rate (HICP, y-o-y)3.41.60.00.22.91.3..Net savings rate of households (net saving as percentage of net disposable income).-2.6......Private credit flow, consolidated (% of GDP)28.08.42.15.64.2...Private sector debt, consolidated (% of GDP)86.7134.7110.290.794.3...of which household debt, consolidated (% of GDP)18.027.923.723.024.4...of which non-financial corporate debt, consolidated (% of GDP)68.7106.886.667.769.9...Gross non-performing debt (% of total debt instruments and total loans and advances) (2)3.314.712.25.75.1...Corporations, net lending (+) or net borrowing (-) (% of GDP).-0.6......Corporations, gross operating surplus (% of GDP).28.6......Households, net lending (+) or net borrowing (-) (% of GDP).-2.7......Deflated house price index (y-o-y)24.8-6.52.13.95.2...Residential investment (% of GDP)3.93.42.22.82.92.5..Current account balance (% of GDP), balance of payments-14.6-6.51.61.9-0.1-0.4-1.1-1.1Trade balance (% of GDP), balance of payments-15.4-6.71.93.21.91.8..Terms of trade of goods and services (y-o-y)2.81.21.12.54.91.1-0.7-0.6Capital account balance (% of GDP)0.21.11.81.41.50.7..Net international investment position (% of GDP)-51.2-88.5-55.7-30.2-27.1-19.8..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (1)..23.240.247.149.1..IIP liabilities excluding non-defaultable instruments (% of GDP) (1)..53.239.842.041.6..Export performance vs. advanced countries (% change over 5 years)59.124.610.913.316.6...Export market share, goods and services (y-o-y)6.3-0.23.22.8-0.5-0.1-0.2-0.1Net FDI flows (% of GDP)-18.5-6.1-2.1-2.0-4.5-1.7..General government balance (% of GDP)1.5-1.8-0.72.1-4.0-4.1-3.7-2.4Structural budget balance (% of GDP)..0.01.4-2.9-3.8-3.5-2.7General government gross debt (% of GDP)24.914.724.420.024.725.125.325.6forecast 
 
 
 
 
  
 
ANNEX 19: DEBT SUSTAINABILITY ANALYSIS 
ANNEX 19: DEBT SUSTAINABILITY ANALYSIS 

‘adverse interest-growth rate’ scenario assumes a 
in  the 
less  favourable  snowball  effect  than 
baseline.  In  the  ‘financial  stress’  scenario,  the 
country  temporarily  faces  higher  market  interest 
rates in 2022.  

Graph 2 shows the outcome of the stochastic 
projections.  These  projections  show  the  impact 
on  debt  of  2  000  different  shocks  affecting  the 
government’s 
economic 
growth,  interest  rates  and  exchange  rates.  The 
cone covers 80% of all the simulated debt paths, 
therefore excluding tail events. 

budgetary 

position, 

Table  2  shows  the  S1  and  S2  fiscal 
sustainability 
indicators  and  their  main 
drivers.  S1  measures  the  consolidation  effort 
needed to bring debt to 60% of GDP in 15 years. 
S2  measures  the  consolidation  effort  required  to 
stabilise  debt  over  an  infinite  horizon.  The  initial 
budgetary position measures the effort required to 
cover  future  interest  payments,  the  ageing  costs 
component  accounts  for  the  need  to  absorb  the 
projected 
public 
expenditure  such  as  pensions,  health  care  and 

in  ageing-related 

change 

This  annex  assesses  fiscal  sustainability 
risks for Bulgaria over the short, medium and 
long term. It follows the same multi-dimensional 
approach as the 2021 Fiscal Sustainability Report, 
updated  on  the  basis  of  the  Commission  2022 
spring forecast. 

Table  1  presents 
the  baseline  debt 
projections.  It  shows  the  projected  government 
debt  and  its  breakdown  into  the  primary  balance, 
the  snowball  effect  (the  combined  impact  of 
interest payments and nominal GDP growth on the 
debt  dynamics)  and  the  stock-flow  adjustment. 
These projections assume that no new fiscal policy 
measures  are  taken  after  2023,  and  include  the 
expected  positive  impact  of  investments  under 
Next Generation EU.  

Graph  1  shows  four  alternative  scenarios 
around  the  baseline, to  illustrate the  impact 
of changes in assumptions. The ‘historical SPB’ 
scenario  assumes  that  the  structural  primary 
balance (SPB) gradually returns to its past average 
level.  In  the  ‘lower  SPB’  scenario,  the  SPB  is 
permanently  weaker  than  in  the  baseline.  The 

Table A19.1:Debt sustainability analysis for Bulgaria 

Source: European Commission 

58 

Table 1. Baseline debt projections20192020202120222023202420252026202720282029203020312032Gross debt ratio (% of GDP)20.024.725.125.325.626.126.627.429.430.832.233.735.336.8Change in debt-2.14.70.40.20.30.50.60.82.01.41.41.51.61.6of whichPrimary deficit-2.73.53.63.11.91.51.41.52.22.22.22.22.22.2Snowball effect-1.40.6-1.9-2.1-1.1-1.0-0.8-0.7-0.2-0.8-0.7-0.7-0.6-0.7Stock-flow adjustment1.90.6-1.3-0.8-0.40.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)0.55.53.43.52.82.82.82.93.73.84.04.14.34.4S1S2Overall index (pps. of GDP)-1.23.7of whichInitial budgetary position1.32.4Debt requirement-2.6Ageing costs0.01.3of whichPensions-0.20.7Health care0.10.2Long-term care0.00.1Others0.10.3                                                                       Table 2. Breakdown of the S1 and S2 sustainability gap indicators01020304050602019202120232025202720292031BaselineHistorical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioGraph 1. Deterministic debt projections (% of GDP)p10-p20p20-p40p40-p60p60-p80p80-p90010203040506020192020202120222023202420252026Graph 2. Stochastic debt projections(% of GDP)MedianBaseline 
 
 
 
  
 
fiscal  adjustment  would  be  needed  to  bring  the 
debt ratio to 60% of GDP in 15 years’ time (Table 
2).  Overall,  the  medium  risk  reflects  the  large 
deficit, the projected increase in government debt, 
and the high uncertainty.  

the 

long 

term,  both 

Long-term  risks  to  fiscal  sustainability  are 
medium.  Over 
the 
sustainability gap indicator S2 (at 3.7 pps. of GDP) 
and  the  DSA  point  to  medium  risks.  The  S2 
indicator  suggests  that,  to  stabilise  debt  over  the 
long  term, 
it  will  be  necessary  to  address 
budgetary  pressures  stemming  from  population 
to  public  pension 
related 
ageing,  especially 
expenditure (Table 2). 

long-term  care,  and 
requirement 
measures  the  additional  adjustment  needed  to 
reach the 60% of GDP debt target. 

the  debt 

risk 

sustainability 

Finally,  the  heat  map  presents  the  overall 
classification 
fiscal 
(Table A19.2).  The  short-term  risk  category  is 
based  on  the  S0  indicator,  an  early-detection 
indicator of fiscal stress in the upcoming year. The 
medium-term  risk  category  is  derived  from  the 
debt  sustainability  analysis  (DSA)  and  the  S1 
indicator.  The  DSA  assesses  risks to  sustainability 
based  on  several  criteria: the  projected  debt level 
in 10 years’ time, the debt trajectory (‘peak year’), 
the plausibility of fiscal assumptions and room for 
tighter  positions  if  needed  (‘fiscal  consolidation 
space’),  the  probability  of  debt  not  stabilising  in 
the  next  5  years  and  the  size  of  uncertainty.  The 
long-term  risk  category  is  based  on  the  S2 
indicator and the DSA.  

short-term 

Overall, 
fiscal 
sustainability are low. The Commission’s early-
detection  indicator  (S0)  does  not  signal  major 
short-term fiscal risks (Table A19.2).  

risks 

to 

Medium-term  risks  to  fiscal  sustainability 
are  medium.  On  the  one  hand,  the  debt 
sustainability analysis (DSA) points to medium risk. 
In  the  baseline,  government  debt  is  projected  to 
rise from 25.3% of GDP in 2022 to around 37% of 
GDP  in  2032  (Table 1).  This  debt  path  is  rather 
robust to possible shocks to fiscal, macroeconomic 
and  financial  variables.  At  the  same  time,  a  high 
uncertainty 
is  surrounding  the  projections  as 
illustrated  by  the  stochastic  simulations  (Tables 
A19.1  and  A19.2).  On  the  other  hand,  the 
sustainability  gap  indicator  S1  signals  that  no 

Table A19.2:Heat map of fiscal sustainability risks for Bulgaria 

(1) Debt level in 2032: green: below 60% of GDP, yellow: between 60% and 90%, red: above 90%. (2) The debt peak year 
indicates whether debt is projected to increase overall over the next decade. Green: debt peaks early; yellow: peak towards the 
middle of the projection period; red: late peak. (3) Fiscal consolidation space measures the share of past fiscal positions in the 
country that were more stringent than the one assumed in the baseline. Green: high value, i.e. the assumed fiscal position is 
plausible by historical standards and leaves room for corrective measures if needed; yellow: intermediate; red: low. (4) Probability 
of the debt ratio exceeding in 2026 its 2021 level: green: low probability, yellow: intermediate, red: high (also reflecting the initial 
debt level). (5) The difference between the 90th and 10th percentiles measures uncertainty, based on the debt distribution under 
2000 different shocks. Green, yellow and red cells indicate increasing uncertainty.  
Source:  European Commission (for further details on the Commission’s multi-dimensional approach, see the 2021 Fiscal 
Sustainability Report). 

59 

BaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallLOWLOWLOWLOWLOWMEDIUMDebt level (2032), % GDP3722423937Debt peak year20322024203220322032Fiscal consolidation space92%76%95%92%92%Probability of debt ratio exceeding in 2026 its 2021 level55%Difference between 90th and 10th percentiles (pps. GDP)50Short termMedium termLong termOverall                               (S0)Overall     (S1+DSA)S1Debt sustainability analysis (DSA)S2Overall     (S2+DSA)OverallMEDIUMMEDIUMDeterministic scenariosStochastic projectionsLOWMEDIUMLOWMEDIUM