COMMISSION STAFF WORKING DOCUMENT 2023 Country Report - Bulgaria Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Bulgaria and delivering a Council opinion on the 2023 Convergence Programme of Bulgaria
Date: 2023-05-24
Institutions: European Commission, Secretariat-General
Subjects: Bulgaria, economic policy, economic recovery, economic reform, energy policy, fiscal policy, improvement of housing, stability pact, stability programme, transport policy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.5.2023  SWD(2023) 602 final  COMMISSION STAFF WORKING DOCUMENT 2023 Country Report - Bulgaria Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Bulgaria and delivering a Council opinion on the 2023 Convergence Programme of Bulgaria {COM(2023) 602 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

The  banking 
sector,  dominated  by 
foreign-owned  banks,  is  profitable  and 
well  capitalised.  The  amount  of  new  loans 
continued to grow strongly in 2022, notably in 
the  mortgage  sector.  Credit  expansion  was 
supported by increasing bank deposits, income 
growth and still low nominal interest rates. The 
shift  in  the  interest  rate  cycle  and  the  real 
estate  market  possibly  cooling  off  are  set  to 
test the resilience of the banking sector. 

and 

public 

private 

Structural  factors  continue  to  weigh  on 
investment  and  potential  economic 
growth.  Fixed  capital  investment  declined 
cumulatively by 12.3% in the last 2 years, with 
both 
investment 
contributing  to  the  slump.  In  an  environment 
of  dynamic  economic  activity,  with  relatively 
favourable financing conditions and increasing 
corporate  debt  shrinking  investment  indicates 
structural  barriers  to  more  intensive  capital 
accumulation.  In  addition  to  high  economic 
uncertainty, factors such as limited inflows of 
foreign  direct  investment,  backlogs  and  the 
efficiency  gap  in  public  investment,  including 
investment  supported  by  EU 
funds,  an 
unsupportive  business  environment  and  an 
over-concentration of economic activity in one 
single  region, weigh on aggregate investment. 
Technology adoption and transfer is hampered 
by  the  low  share  of  business  and  public  R&D 
spending,  the  fragmented  public  research 
system  and  low  patent  activity.  In  addition  to 
support  from  the  Recovery  and  Resilience 
Facility  (see  Section  Recovery  and  Resilience 
Plan is underway), Bulgaria also benefits from 
sizeable  EU  cohesion  funds  (EUR  11  billion, 
representing  around  13%  of  GDP  in  2022). 
Swift 
the  Bulgarian 
recovery  and  resilience  plan  and  cohesion 
policy programmes is key. 

implementation  of 

High inflation poses challenges, 
while structural weaknesses limit 
growth potential 

economy 

The  Bulgarian 
performed 
relatively  well  during  the  COVID-19  and 
energy  crises.  GDP  rebounded  strongly  by 
7.6%  in  2021,  after  output  contracted  by  4% 
in  2020.  In  parallel,  inflation  picked  up  in  the 
second  half  of  2021,  driven  by  fuel  and  food 
price increases. Economic expansion continued 
in  2022,  with  GDP  growth  of  3.4%  despite 
high  inflation  rates  and  political  uncertainty. 
Consumer  spending  and  exports  supported 
GDP growth, while fixed investment declined in 
2021  and  2022.  High  employment  rates, 
coupled  with  strong  increases  in  wages  and 
social  benefits  and  the  government  energy 
support  measures, 
consumer 
spending.  Rapid  export  growth  in  2022  was 
underpinned by the possibility to satisfy supply 
shortages  of  energy,  food,  metal  and  other 
materials,  caused  among  other  things  by  the 
Russian war of aggression against Ukraine. 

sustained 

somewhat 

Signs  of  persistence  in  inflation  and 
supply  constraints  have  emerged.  While 
the initial surge in inflation was largely driven 
by  external  factors  such  as  high  energy  and 
food  prices,  domestic  factors  have  become 
increasingly important. This has led to inflation 
becoming 
persistent.  Annual 
average  consumer  price  inflation  (HICP)  was 
13% in 2022, well above EU headline inflation 
of  9.2%,  but  still  below  inflation  rates  in  the 
Baltic states, as well as in Poland, Czechia and 
Hungary.  Nominal  wages  grew  by  16.4%  in 
2022,  well  above  the  inflation  rate.  Fast 
growth in wages creates potential for second-
round  effects  and  more  persistence 
in 
inflation. 

2 

 
 
Box 1: 

Energy policy response in Bulgaria 

Bulgaria has adopted several support measures to cushion the impact of energy price inflation 
on  households  and  businesses.  The  Commission’s  2023  Spring  Economic  Forecast  projects  the 
country’s gross budgetary costs to amount to 1% of GDP in 2023. Most measures are ineffective 
as they reduce the price incentive and are not targeted to the most vulnerable. The measures are 
expected to be phased out by mid-2023. 

Bulgarian household consumers were protected from energy price increases by regulated prices. 
These were frozen in December 2021 at the levels of July 2021 until March 2022 and increased 
by 3.4% for electricity and 24% for heating in the second half of 2022. Heating prices increased 
by 8% in July and then 14% in November. A means-tested targeted heating allowance for the 
heating  season  has  also  been  in  place.  Non-household  consumers  were  compensated  by  a 
support  scheme  that  applies  to  all  companies  regardless  of  their  consumption.  The  scheme 
currently covers all non-household consumers for electricity costs above EUR 102/MWh.  

The support scheme to non-household consumers was partly financed by a special contribution 
on the windfall profits of some state-owned enterprises in the energy sector in 2022. Bulgaria 
applies the EU solidarity contribution when applying Council Regulation (EU) 2022/1854 (1). As of 
January 2023, the country also applies ceilings to the profits that energy producers can obtain 
from the wholesale market. These ceilings include approximately EUR 90/MWh for nuclear power 
plants and EUR 180/MWh for renewable electricity generators. The revenue from this measure is 
transferred to the Electricity System Security Fund. 

Bulgaria  has  taken  steps  to  ensure  the  security  of  energy  supply.  It  fulfilled  its  gas  storage 
obligations, filling 91.53% of the sole underground gas storage facility ‘Chiren’ by 1 November 
2022. It secured liquified natural gas (LNG) deliveries to offset the natural gas supplies cut off 
by  Gazprom  in  April  2022.  The  commercial  operation  of  the  IGB  gas  interconnector  between 
Greece  and  Bulgaria  started  in  October  2022,  while  construction  of  the  natural  gas  pipeline  in 
Kostinbrod  to  connect  Bulgaria  and Serbia  started  in  February  2023.  While  energy  prices  have 
decreased,  uncertainty  remains  regarding  the  next  winter,  which  requires  continued  efforts  to 
structurally reduce gas demand. 

Labour and product market inefficiencies 
together  with  institutional  weaknesses 
are  holding  back  prospects  for  faster 
economic  convergence.  Although 
labour 
market  participation  rates  have  recovered 
from  the  COVID-19  pandemic,  they  are  still 
below the EU average. Economic inactivity and 
low  education  levels  are  important  factors 
behind  poverty  and  income  inequality.  Non-
participation 
is 
particularly high among young people, the low-
educated,  people  with  disabilities,  Roma  as 
well  as  in  poorer  and  rural  areas.  More 
dynamic  business  activity  would  benefit  from 

labour  market 

the 

in 

(1)  The application of a mandatory temporary solidarity 

contribution at a rate of at least 33% to the 
extraordinary and unexpected profits of businesses 
active in the extraction of crude petroleum, natural gas, 
coal, and refinery sectors. It is calculated on taxable 
profits, as determined under national tax rules in the 
fiscal year starting in 2022 and/or in 2023, which are 
above a 20% increase of the average yearly taxable 
profits in 2018-2021.  

the  better  functioning  of  product  and  service 
markets  by  lowering  administrative  barriers, 
better  integration  in  the  single  market  and 
ensuring  a  level  playing  field  among  market 
participants  (see  Annex  12).  In  this  respect,  a 
high  administrative  burden,  restrictiveness  in 
regulated  professions,  a  high  level  of  paid 
work  not  declared  and 
tax  avoidance, 
indications  of  non-competitive  practices  and 
market 
being 
influenced  by  political  connections  hamper  a 
better  allocation  of  available  economic 
resources.  More  generally,  Bulgaria’s  poor 
performance 
and 
key 
governance  indicators  in  the  areas  of  judicial 
independence, 
corporate 
corruption 
governance  of  state-owned  enterprises  has  a 
long-term  impact  on  economic  potential  and 
welfare (2).  Major  regional  disparities  further 

institutional 

outcomes 

perceived 

and 

on 

as 

(2)  Nikolova, Desislava Enikova; Schiffbauer, Marc Tobias; 
Fazekas, Mihaly; Drozd, Maciej Adam; Pennings, Steven 
Michael; Vaughan, Kristina Noelle; Kilinc, Umut. Bulgaria 

3 

 
                                                 
                                                 
 
reduce  business  and  growth  opportunities,  as 
companies  and  workers  in  less  developed 
regions  are 
their 
productivity and competitiveness. 

to  boost 

struggling 

and 

ageing 

Labour and skills shortages have become 
more  prominent.  According  to  the  2021 
Census, the working age population in Bulgaria 
shrank  by  19.1%  between  2011  and  2021. 
Population 
net  migration 
contributed  in  roughly  equal  measure  to  the 
shrinking  number  of  people  of  working  age. 
The lack of available skilled staff represents a 
long-term  barrier  to  investment  for  88%  of 
Bulgarian  firms  according  to  the  investment 
survey by the European Investment Bank (3). At 
the  same  time,  adult  participation  in  learning 
remains very low. 

Low  educational  outcomes  also  hurt 
potential. 
growth 
Bulgaria’s 
Underachievement in basic skills, as measured 
by  the  OECD’s  Programme  for  International 
Student Assessment (PISA), is twice as high as 
the EU average. The rates of low achievement 
in  basic  skills  are  particularly  high  among 
students  from  disadvantaged  backgrounds, 
suggesting that socio-economic factors greatly 
affect  educational  outcomes.  Roma  inclusion 
in  education  remains  a  challenge,  as  well  as 
the 
inclusion  of  people  with  disabilities. 
Tertiary educational attainment is also low (for 
those aged 25-34). Investing more to improve 
people’s  skills  would  bring  about  higher 
productivity  and  income,  more  investment 
opportunities, getting more people into work or 
thereby 
training 
supporting 
the 
the 
European Pillar of Social Rights.  

implementation  of 

inclusion, 

social 

and 

Further progress is needed on 
Sustainable Development Goals 

Despite some progress, Bulgaria needs to 
step  up  efforts  to  achieve  the  UN’s 
Sustainable Development Goals (SDGs).  It 

performs  below  the  EU  average  on  SDG  7 
(Affordable and clean energy) and on SDG 13 
(Climate  action),  with  a  lack  of  progress  on 
improving  the  share  of  renewable  energy  in 
final  energy  consumption.  Despite  some 
improvements  over  the  past  5  years,  waste 
generation  and  management  indicators  (SDG 
12:  Responsible  consumption  and  production) 
remain  far  below  the  EU  average.  Bulgaria 
outperforms the EU average indicators on SDG 
14  (Life  below  water),  in  particular  on  the 
share  of  bathing  sites  with  excellent  water 
of 
quality. 
eutrophication (4) in Bulgarian marine waters is 
comparatively  low.  Despite  performing  above 
the  EU  average  on  SDG  15  (Life  on  land), 
in 
Bulgaria  shows  negative 
particular  on  land  degradation  and  status  of 
ecosystems. Bulgaria has made some progress 
towards  achieving  SDG  9  objectives  (Industry, 
innovation and infrastructure).  

tendencies, 

addition, 

level 

the 

In 

Starting  from  very  low  levels,  progress 
has  been  made  on  poverty,  labour  and 
health-related  objectives.  Even 
though 
poverty  remains  above  the  EU  average,  over 
the past 5 years Bulgaria has made significant 
progress on reducing poverty indicators (SDG 1 
No  poverty).  The  country  has  made  some 
progress on labour market indicators in SDG 8 
(Decent  work  and  economic  growth),  with 
employment  rates  on  the  rise,  surpassing  the 
long-term 
EU  average,  and  shares  of 
unemployed  and  young  people  not 
in 
employment,  education  or  training  falling, 
although  the  latter  is  still  significantly  above 
the  EU  average.  In  addition,  the  country  is 
improving  on  SDG  3  indicators  (Good  health 
and well-being), although at low levels.  

significant 

Nevertheless, 
challenges 
remain  in  several  other  social  SDGs,  in 
particular  in  education.  Bulgaria  is  moving 
away  from  the  SDG  objectives  in  SDG  4 
(Quality  education),  where  it  already  ranks 
among the worst performers in the EU. It also 
performs worse than the EU average on SDG 3 
indicators  (Good  health  and  well-being)  such 
as  standardised  avoidable  mortality,  fatal 
accidents  at  work  and  road  traffic  deaths.  On 

Country Economic Memorandum: A Path to High Income 
(English), 2023. Washington, D.C.: World Bank Group. 

(4)  Excessive richness of nutrients in a lake or other body of 

(3)  EIB Investment Survey 2022: European Union overview. 

water that causes a dense growth of plant life. 

4 

 
                                                                        
                                                 
SDG 5 (Gender equality), despite performing in 
line  with  the  EU  average,  Bulgaria  is  moving 
away  from  the  objectives,  especially  on  the 
gender  employment  gap  and 
leadership 
positions held by women.  

The public deficit has decreased 
but uncertainties remain 

The  public  deficit  decreased  in  2022.  The 
general  government  deficit  was  2.8%  of  GDP 
in  2022,  down  by  more  than  1  percentage 
point compared to the previous year. Growth in 
revenue  more  than  offset  the  growth  in 
expenditure partly because of the higher prices 
of  some  products  subject  to  indirect  taxes, 
such as food and energy. Continued increases 
in wages also contributed positively to revenue 
through  higher  labour  taxes.  Measures  to 
minimise the impact of high energy prices had 
a net budgetary effect of around 1% of GDP in 
2022,  as  they  were  partly  financed  from  a 
levy  imposed  on  the  windfall  profits  of  state-
owned enterprises in the energy sector.  

The  Parliament  has  not  yet  adopted  the 
2023 budget. In the absence of a budget law, 
the  government  has  extended  the  2022 
budget  including  all  policy  measures  adopted 
after  the  2022  budget.  The  government  has 
presented  a  2023  draft  budget  and  a 
convergence programme for the period 2023-
2026  based  on  a  no-policy  change  scenario. 
Based on these plans the deficit is expected to 
exceed 6% of GDP in 2023 and remain in the 
neighbourhood  of  5%  of  GDP  until  2026.  The 
Commission forecasts a deficit of 4.8% of GDP 
in  2023  and  2024,  also  on  the  basis  of 
continued policies.  

Main  drivers  of  the  projected  fiscal  expansion 
are  the  increases  in  wages  and  pensions 
adopted  in  2022.  Measures  to  minimise  the 
impact  of  high  energy  prices  are  also  set  to 
continue in  2023,  but  with  a lower  cost  given 
the  reduction  in  energy  prices  and  expected 
phasing  out.  Similarly,  the  costs  for  the 
accommodation  of  people  fleeing  Ukraine  is 
projected to fall substantially this year. Public 
debt  remained  low  at  around  23%  of  GDP  in 
2022  but  is  expected  to  increase  to  above 

28%  of  GDP  if  there  is  no  change  in  fiscal 
policy.  

Budgetary  developments  are  subject  to 
upside  risks.  The  Bulgarian  authorities  are 
working  on  policy  proposals  to  contain  the 
deficit,  including  the  one  of  2023.  Should 
these  proposals  be  adopted  public  deficit 
projections  and  debt  sustainability  analysis 
(see Annex 21) could improve substantially. 

Dependence on Russian energy 
sources has been reduced 

Although  energy  imports  were  heavily 
dependent  on  Russia,  supply  shortages 
were avoided. Gazprom cut off the supply of 
natural  gas  in  April  2022,  which  posed  an 
immediate  challenge.  Security  of  gas  supply 
improved, and prices moderated after the IGB 
interconnector  between  Greece  and 
gas 
Bulgaria  started  operating  in  October  2022 
and  gas  prices  fell  in  regional  markets.  IGB 
enabled Bulgaria to receive the full volume of 
contracted  supplies  from  Azerbaijan,  covering 
roughly  30 %  of  domestic  consumption.  The 
supply of Russian natural gas was replaced by 
short-term contracts for LNG deliveries via the 
Revythousa LNG terminal in Greece. This led to 
an  82%  increase  in  gas  prices  for  large 
industrial consumers in the first half of 2022. 
Households were largely protected from these 
price  developments  as  they  still  benefitted 
from regulated tariffs.  

Electricity  generation  in  Bulgaria  does 
not  rely  on  natural  gas,  but  largely  on 
nuclear  and  coal.  There  was  a  significant 
increase  in  the  electricity  generated  by  the 
thermal power plants using domestic lignite  – 
not only to satisfy domestic demand, but even 
more  so  for  exports  to  the  regional  market. 
This  secured  exceptional  record  profits  for 
power  plant  operators,  including  the  state-
owned  companies.  In  2022,  Bulgaria  failed  to 
take  steps  towards  a  coal  phase-out  despite 
the  commitments  made  in  its  recovery  and 
(RRP).  The  two  operating 
resilience  plan 
nuclear  reactors  are  dependent  on  Russian 
fuel. Bulgaria has signed contracts with French 

5 

 
and  Swedish  operators  for  an  alternative 
supply of nuclear fuel, which should be in use 
as of mid-2024 and 2025 respectively.    

The  Lukoil-owned  oil  refinery  Neftohim 
Burgas is the main supplier of petroleum 
products in the country. The refinery is able 
to  mainly  process  Russian  crude  oil,  and 
modernisation  will  allow  for  diversification  to 
other  suppliers.  The  sanctions  on  exports  of 
Russian  petroleum,  in  effect  since  February 
2023,  present  a  risk  to  exports  of  refined 
petroleum  products.  The  domestic  supply 
through  an  agreed 
appears  protected, 
exemption  and 
the 
government to take operational  control of the 
refinery. 

the  possibility 

for 

6 

 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

will not be fulfilled at the time of submission. 
Work  on  the  addendum  of  the  plan  and 
REPowerEU  chapter  should  be  accelerated, 
while  maintaining  focus  on  implementation.  It 
is still unclear when this work can be finalised 
due to the political situation.  

request  was  based  on 

Bulgaria received its first payment under 
the Recovery and Resilience Facility (RRF) 
on 16 December 2022. On 31 August 2022, 
it  submitted  a  request  to  the  Commission  for 
the disbursement of EUR 1.37 billion under the 
the 
RRF.  The 
achievement of the 22 milestones and targets 
linked to the first instalment. These milestones 
cover reforms in the areas of education, smart 
industry, climate neutrality, digital connectivity, 
sustainable  transport  and road  safety,  justice, 
anti-money 
inclusion, 
healthcare,  and  the  audit  and  control  system 
linked to the RRF. 

laundering, 

social 

Some of  the  completed  milestones  ought 
to help implement the plan by providing a 
suitable  information  and  administrative 
environment.  Bulgaria  has  set  up  an 
information  system 
for  monitoring  and 
managing  the  implementation  of  the  plan.  A 
management  and  control  system  has  been 
approved and covers the ministries and bodies 
responsible  for  carrying  out  controls  on  the 
implementation of the plan, as well as specific 
measures  to  combat  fraud,  corruption,  double 
funding, 
and 
arrangements  for  reporting  and  correcting 
serious  irregularities.  To  ensure  appropriate 
administrative  capacity,  a  workload  analysis 
was  carried  out  for  the  National  Funds 
Directorate,  the  Central  Coordination  Unit  and 
the Executive Agency ‘Audit of EU Funds', and 
relevant recommendations were implemented. 
Bulgaria  also  completed  one 
target  on 
updating  video  guides  on  all  business 
processes of the RRP information system. 

conflicts 

interest 

of 

Bulgaria’s  RRP  aims  to  address  the  key 
challenges  related  to  the  green  and 
digital  transition,  business  environment, 
including  rule  of  law,  social  inclusion, 
access  to  quality  education,  training  and 
healthcare.  The  Bulgarian  RRP  is  ambitious 
and  comprehensive. 
It  consists  of  103 
individual  measures  (47  reforms  and  56 
investments),  with  a  total  of  346  milestones 
and targets. In 2021, the plan’s total allocation 
amounted  to  EUR  6.3  billion  in  grants,  which 
represents  around  10.2%  of  GDP  in  2019.  In 
June  2022,  this  amount  was  revised  to  EUR 
5.7 billion (around 8% of GDP in 2021). 58.9% 
of  the  plan’s  total  allocation  contributes  to 
climate  objectives  and  25.8% 
to  digital 
objectives. In addition, the plan is expected to 
improve Bulgaria’s institutional framework and 
business environment, boost  access to quality 
education,  adult 
learning  and  healthcare, 
inclusion  and  reform  the 
promote  social 
research and innovation system. The following 
review  of progress made  in  implementing the 
RRP  in  no  way  implies  formal  Commission 
approval or rejection of any payment requests. 

Bulgaria’s recovery and resilience plan is 
underway,  however  with  increasing  risk 
of  delays.  Bulgaria  submitted  one  payment 
request,  corresponding  to  22  milestones  and 
targets in the plan  and  resulting  in  an  overall 
disbursement of EUR 1.37 billion.  A high level 
of  governmental  instability  has  led  to  delays 
on  key  legislative  reforms,  such  as  those  on 
public  procurement,  anti-corruption,  and  the 
accountability  of  the  prosecutor  general.  Lack 
of  political 
stability  and  administrative 
capacity also translated into a slowdown in the 
implementation  work  on  several  important 
energy  and  transport  investments  and  to  the 
questioning of key aspects of the plan, namely 
on  decarbonization  of  the  energy  sector.  The 
second  payment  request  has  been  delayed 
and  is  now  planned  for  September  2023. 
However, there is a significant risk that several 
milestones and targets related to key reforms 

7 

 
 
Initial  steps  have  been  taken  to  support 
the green transition. They include reforms in 
the  area  of  decarbonisation  and  sustainable 
transport,  but  delays  are  piling  up  and  risk 
hampering  further  progress.  For  the  green 
transition, the first milestone achieved was the 
establishment  of  the  Green  Energy  Transition 
Commission.  It  aims to  prepare  scenarios  and 
recommendations  for  a  roadmap  to  climate 
neutrality, but its work has been delayed. As a 
first step  towards more sustainable transport, 
Bulgaria  put  in  place  a  national  plan  to 
develop  combined  transport  by  2030  for 
cleaner  transport  and  signed  contracts  to 
extend  the  Sofia  metro  in  order  to  provide 
clean, rapid and efficient public transport.  

There  has  been  progress  on  flagship 
measures  linked  to  the  digital  transition 
in the first payment request. This includes 
a reduction in the fees for spectrum use in an 
effort  to  encourage  faster  deployment  of  5G 
networks  in the  country,  as  well  as  legislative 
changes that support a favourable investment 
environment  to  boost  the  deployment  of  very 
high capacity networks throughout the country. 
The  government  has  also  awarded  contracts 
for  developing,  building  and  optimising  the 
TETRA  digital  system  and  radio  relay  network 
managed by the Ministry of Interior. 

first  payment 

request  covers 
This 
reforms  of  the  education  system  at  all 
levels.  This  includes  pre-school,  primary  and 
secondary  school  and  higher  education.  In 
particular,  Bulgaria  amended  the  Pre-school 
and  School  Education  Act  and 
related 
secondary  legislation.  This  included  making 
pre-school education mandatory from the age 
of four, amending the Higher Education Act to 
introduce  a  revised  accreditation  system  for 
higher education institutions, and adopting the 
National Map of Higher Education to support a 
more  balanced  higher  education  offer  across 
the country.  

cohesion 

Bulgaria  also  took  first  steps  towards 
strengthening 
and 
social 
modernising  mental  healthcare  services. 
Measures include legislation to gradually raise 
the minimum income and expand its coverage 
in  2022-2024,  together  with  legislation  that 
regulates  minimum  quality  standards  for  the 

8 

provision  of  social  services.  In  the  area  of 
healthcare,  Bulgaria  adopted  the  National 
Strategy  for  the  Mental  Health  of  Citizens  of 
the  Republic  of  Bulgaria  2021-2030  and  an 
action  plan,  which  aims  to  address  the  key 
problems of its psychiatric care system. 

the 

justice 

Bulgaria  has  also  made  progress  on 
system  and 
improving 
business  environment.  This  was  done  by 
completing the first steps of key reforms that 
aim 
to  ensure  accessible,  effective  and 
predictable  justice,  strengthen  the  anti-money 
laundering framework and improve the quality 
of the legislative process. In addition, the entry 
into  force  of  the  new  Industrial  Parks  Act 
created  a  consolidated  regulatory  framework 
to 
investment  and 
production in industrial parks. 

stimulate 

industrial 

second 

Although  the  first  payment  request  was 
approved, there have been some delays in 
implementation. 
payment 
The 
request  was  scheduled  for  Q1-2023  but  has 
not  yet  been  submitted.  Milestones  and 
targets linked to the second and third payment 
requests are facing considerable delays. This is 
lack  of  a  functioning 
also  due  to  the 
parliament  and  political  instability,  where  a 
fifth  round  of  parliamentary  elections  in  2 
years  took  place  on  2  April  2023.  The  two 
payment requests include 112 milestones and 
targets, with indicative due dates between Q3-
2022  and  Q2-2023.  They  cover  reforms  and 
investments that are expected to contribute to 
the  green  and  digital  transition  and  boost 
economic, institutional and social resilience.  

example, 

independent 

The most notable delays are in the areas 
of  transport,  business  environment  and 
decarbonisation. 
the 
For 
Parliament has not yet adopted a resolution to 
approve  a  roadmap  on  climate  neutrality, 
based  on  the  report  and  recommendations  of 
the 
Transition 
Commission.  There  are  also  delays  in  rule  of 
law  reforms  related  to  anti-corruption  and 
public 
legislative 
amendments to improve criminal proceedings, 
introduce  a  mechanism  for  the  accountability 
and criminal liability of the Prosecutor General, 
set  up  a  new  financially  and  politically 
independent  anti-corruption  body  as  well  as 

procurement.  Relevant 

Energy 

 
improve  the  public  procurement  framework 
have not been adopted.  

in 

and 

national 

Complementarity with other EU funds will 
play  an  important  role  in  improving  the 
reach  and  efficacy  of  the  reforms  and 
investments  under  the  RRP.  To  reap  the 
benefits  of  potential  synergies  between  the 
the  RRP  and  additional 
measures 
complementary initiatives funded via other EU 
instruments 
resources, 
implementation  of  the  different  measures 
needs  to  be  properly  coordinated.  So  far,  in 
addition  to  the  RRP,  the  Commission  has 
adopted 
the  Partnership  Agreement  with 
Bulgaria.  This  lays  down  the  cohesion  policy 
investment  strategy  for  2021-2027  that  will 
implement key EU and national priorities such 
as  the  green  and  digital  transition,  support  to 
the most vulnerable people across the territory 
and a more inclusive labour market. However, 
Bulgaria  still  needs  to  make  progress  on  the 
implementation  of  the  Just  Transition  Fund, 
which  provides  support  to  the  regions  most 
affected  by  the  coal  phase-out,  reaping  the 
benefits of the green transition throughout the 
country.  The  absorption  of  a  considerable 
amount of EU  funds available to Bulgaria will 
be  a  key  challenge  (see  Further  priorities 
ahead). 

9 

 
Box 2: 

Key deliverables under the RRP in 2023-2024 

  Reducing emissions from the energy sector and entry into force of legislation that introduces 
a coal phase-out calendar and a CO2 emissions cap for lignite and coal-fired power plants 

  Signing  contracts  to  make  the  building  stock  more  energy  efficient  and  establishing  the 

National Decarbonisation Fund  

 

Integrating sustainable urban mobility into territorial strategies and development planning 

  Law  on  promoting  electric  vehicles  and  progress  report  on  the  implementation  of  the  new 

road safety action plan 

  Publication of the market assessment for the public rail  transport service, underpinning the 

scope of the new public service contract 

  Measures to strengthen the insolvency and restructuring framework 

  Amendments to the Biodiversity Act 

  100 000  additional  people  and  100  municipality  centres  with  access  to  very  high  capacity 

networks 

  1 200 providers of services of general interest with access to 1 Gbps access points 

  Measures to strengthen the anti-money laundering framework 

  Registry reform to unlock the potential of e-government 

  Digital reform of the Bulgarian construction sector 

  Publication of the lists of projects approved for funding for technological modernisation and 

for the acquisition and integration of digital technologies 

  Measures on the governance of state-owned enterprises 

  Measures to improve criminal proceedings, the accountability of the Prosecutor General,  the 

quality of institutions and setting up a new anti-corruption body 

  Measures  to  improve  competition  in  public  procurement  as  well  as  improve  and  intensify 

controls and related sanctions 

  Signature  of  contracts  to  develop  the  e-platform  for  adult  learning  and  to  construct  or 

renovate educational infrastructure 

  Finalisation of the minimum wage reform and the National Map of Social Services 

  Signature of contracts to construct or renovate healthcare facilities 

  Amendments  to  relevant  legislation  and  establishment  of  a  national  fund  to  address 
shortages and promote a more balanced distribution of healthcare professionals across the 
country 

10 

 
 
 
 
FURTHER PRIORITIES AHEAD 

Beyond the challenges tackled in its RRP, 
Bulgaria  faces  additional  ones.  Although 
the  RRP  contains  a  comprehensive  and 
ambitious  set  of  reforms  and  investments,  it 
does not address high out-of-pocket payments 
for  healthcare  services.  More  attention  could 
be  given  to  the  provision  of  employment 
services  better  targeted  to  individual  needs, 
particularly  for  vulnerable  groups.  Several 
improve 
aspects  of  Bulgaria’s  RRP  help 
regional  disparities,  but  some  challenges  for 
overall  cohesion  remain.  In  addition,  delays in 
RRP  implementation,  along  with  increased 
uncertainty  due 
invasion  of 
Ukraine,  pose  challenges  for  the  required 
transformation  of  the  energy  sector.  It  will 
also  be  key  to  properly  implementing  several 
key  reforms  envisaged  in  the  area  of  rule  of 
law  to  create  a  better  business  environment. 
Addressing  these  challenges  will  also  help 
the 
make  further  progress 
Sustainable  Development  Goals  (SDGs)  where 
Bulgaria  has  room  for  improvement,  namely 
SDG  4 
education),  SDG  12 
(Responsible consumption and production) and 
SDG 16 (Peace, justice and strong institutions). 

in  achieving 

to  Russia’s 

(Quality 

Bulgaria is lagging behind on the 
green transition  

nuclear 

remains 

Bulgaria 
the  most  carbon-
intensive  economy  in  the  EU.  Greenhouse 
gas  intensity  is  more  than  four  times  higher 
than the EU average. The share of fossil fuels 
in  Bulgaria’s  energy  mix  was  63%  in  2021, 
with 
and 
renewables  15% 
the  EU 
renewables average of 19%). Nonetheless, the 
country  managed  to  reduce  gas  demand  by 
23.9%  between  August  2022  and  January 
2023,  which  is  above  the  EU  average.  To 
continue  this  trend,  Bulgaria  should  take 
advantage  of  the  REPowerEU  plan  and  scale 
that  further 
up  energy-related  measures 

representing 
(lower 

22% 

than 

11 

of 

energy 

communities; 

including  for  offshore  wind; 

strengthen  the  decarbonisation  objectives,  in 
particular (i) identification of go-to areas for a 
faster  deployment  of  the  renewable  energy 
(ii) 
sources, 
creation 
(iii) 
monitoring  of  greenhouse  gas  and  industrial 
emissions 
(iv) 
the  building 
investments 
renovations 
sectors. 
is  an  essential  part  of 
Decarbonisation 
ensuring the security of supply, in parallel with 
continuing  actions  to  diversify  away  from 
Russian  fossil  fuels  and  focusing  on  reducing 
demand.  

in 
renewables 

from 
in 
and 

installations; 

training 

and 

remains 

electricity 

challenge.  Coal  and 

Decarbonisation  of  the  energy  sector,  in 
line  with  the  European  Green  Deal  and 
REPowerEU 
a 
objectives, 
pressing 
lignite 
electricity  generation  in  Bulgaria  grew  in  the 
past  year,  resulting  in  high  profits  due  to 
increased 
exports  and  high 
electricity  prices.  However,  adopting  a  clear 
roadmap  to  climate  neutrality  would  allow 
Bulgaria  to  kick-start  the  decarbonisation 
process  and  the  just  and  fair  transition  in 
affected  regions.  It  would  also  enable  it  to 
make  full  use  of  available  EU  funds,  along 
with  private  investments.  Furthermore,  the 
Commission  referred  Bulgaria  to  the  Court  of 
Justice  of  the  European  Union  in  January 
2023.  It  requested  that  the  Court  impose 
financial  sanctions  on  Bulgaria  in  accordance 
with  Article  260(3)  Treaty  on  the  Functioning 
of 
to 
incorporate the EU Renewable Energy Directive 
into  national  law.  This  highlights  the  urgency 
for  action.  Bulgaria  will  need  to  greatly 
strengthen  its  renewable  energy  target  in  the 
updated  national  energy  and  climate  plan  to 
reflect  the  more  ambitious  EU  climate  and 
energy targets proposed by the Commission in 
July  2021  under  the  ‘Fit  for  55’  package 
(designed  to  cut  the  bloc’s  emissions  by  55% 
in  2030)  and 
in  May  2022  under  the 
REPowerEU plan. 

the  European  Union 

failing 

for 

 
 
energy-efficient  measures 

Bulgaria would benefit from significantly 
accelerating  investments  that  support 
the green transition of its economy. Faster 
deployment  of  a  much  larger  capacity  of 
renewable  energy,  coupled  with  energy 
storage  to  balance  the  system,  would  help 
make  energy  prices  more  affordable  for 
consumers. It would also enable the country to 
phase  out  coal  and  lignite  at  the  latest  by 
2038,  as  envisaged  in  the  RRP.  It  would  be 
crucial  to  complement  such  investments  by 
deploying 
in 
industry  and  public  and  private  buildings, 
investing  in  modernising  and  smartening  the 
grids,  and  making  rapid  and 
large-scale 
investments  in  energy  storage.  Furthermore, 
accelerating the transition towards sustainable 
mobility  is  a  key  aspect  that  contributes  to 
Bulgaria’s shift to a greener economy. This can 
be  accomplished  by  reforms  and  investments 
that  complement  those 
in  the  RRP,  for 
example  by  boosting  investments  in  railways, 
particularly  in  the  development  of  the  Trans-
improving 
Transport  Network, 
European 
multimodality  in  both  national  and  urban 
transport  networks  and  promoting  electric 
mobility, including the deployment of charging 
stations.  Taking  these  steps  will  help  bring 
about  a  modal  shift  and  decarbonise  the 
transport sector.  

Grid-scale renewable projects continue to 
face  delays  due  to  complex  and  lengthy 
administrative  procedures.  While  the  RRP 
includes 
the  deployment  of  3.5 GW  of 
renewables,  with  1.4 GW  collocated  with 
storage,  the  envisaged  reforms  on  simplified 
permitting  face  significant  delays  and  their 
implementation  has  not  started.  Another 
investment from the RRP that is stalling is the 
national  infrastructure  of  grid-scale  electricity 
storage  located  near  renewable  generating 
capacity.  Once  implemented,  it  will  contribute 
to  system  balancing  and  grid  congestion 
management,  which  is  necessary  to  integrate 
higher  shares  of  electricity  generated  from 
renewable energy. In this regard, full and swift 
implementation of EU legislation in the area of 
renewable energy, including Council Regulation 
(EU) 2022/257, Directive (EU) 2018/2001 and 
its  forthcoming  amendments,  would  facilitate 
and  speed  up  permitting  and  grid  connection 
procedures for renewables. 

the 

RRP 

Constraints  to  the  development  of  grid 
capacity  and  to  further  upgrades  are  a 
significant  bottleneck  to  scaling  up 
renewables.  While 
includes 
upgrading  the  transmission  grid  to  integrate 
new  generation  capacities  from  renewable 
sources  of  at 
least  4.5  GW,  significant 
improvements to  the  existing  grid  are  needed 
as  well  as  the  deployment  of  energy  storage 
facilities  to  ensure  that  additional  grid-scale 
renewable  capacity  can  be  integrated  swiftly 
without  creating  system  balancing 
issues. 
There are delays in deploying both large-scale 
and small-scale renewables due to the limited 
availability  of  grid capacity.  Priority  should  be 
given 
upgrading 
transmission and distribution. 

to  modernising 

and 

More  and  swifter  energy  efficiency 
renovations  of  public  and  private 
buildings can help reduce energy demand 
and fossil fuel use. The RRP includes several 
measures on energy efficiency covering over 5 
million square meters of total gross floor area, 
with the related calls for applications ongoing. 
However,  higher  primary  and  final  energy 
consumption  in  2021  compared  to  2019 
reveals a worrying trend that could jeopardise 
the  achievement  of 
the  2030  energy 
efficiency  targets  unless  further  action  is 
taken.  Bulgaria  is  one  of  only  two  Member 
States that missed the 2020 energy efficiency 
targets  on  both  primary  and  final  energy 
consumption, while also underachieving on the 
energy  savings  obligation  under  Article  7  of 
the  Energy  Efficiency  Directive.  Broader 
ranging  measures 
for  single-family 
(e.g. 
homes)  and  more  ambitious  measures  that 
instruments  are 
also 
therefore  required  to  meet  the  higher  energy 
efficiency target under the Fit for 55 package. 

financial 

include 

Promoting  new  future-proof  solutions  in 
district  heating  could  lead  to  significant 
energy  savings  and  reduced  dependency 
on  gas  and  other  fossil  fuels.  The  RRP 
envisages  the  deployment  of  a  10  MW  pilot 
project  on  combined  heat  and  power  from 
geothermal  sources  as  well  as  seismic 
mapping  of  the  geothermal  potential  across 
the country. However, Bulgaria lacks a plan to 
decarbonise  district  heating  and  has  failed  to 
make  progress  in  identifying  new  sustainable 

12 

 
solutions  (e.g.  centralised  heat  pump,  solar 
heating  systems,  secondary  heat  sources), 
while this aspect remains even more relevant. 
First,  the  district  heating  systems  in  major 
cities  such  as  the  capital  Sofia  and  the 
second-biggest  city  Plovdiv  are  based  on 
natural  gas  and  are  responsible  for  around 
30%  of  natural  gas  consumption  in  Bulgaria. 
Second, heating and cooling are major sources 
of emissions in the effort sharing sector where 
Bulgaria needs to take additional measures to 
achieve  its  Fit  for  55  target.  Third,  district 
linked  with  energy  poverty.  A 
heating 
dedicated  working  group  was  created  under 
the  Council  of  Ministers  to  elaborate  a 
proposal for the definition of energy poverty in 
the national legislation but so far no definition 
has  been 
required  by 
legislated,  as 
commitments  in  the  RRP.  The  share  of  the 
Bulgarian  population  unable  to  keep  their 
homes  adequately  warm is  the  highest  in  the 
EU,  although  some  improvements  have  been 
made since 2015.  

is 

in 

Labour  and  skill  shortages  in  several 
green  sectors  have  increased  in  recent 
years, 
the 
creating  bottlenecks 
transition to a net-zero economy. In 2022, 
labour  shortages  were  reported  for  a  number 
of  occupations  that  required  specific  skills  or 
knowledge  for  the  green  transition (5). 
In 
addition,  a  recent  report  from  Eurofound 
identified labour shortages linked to the green 
transition  in  several  sectors,  especially  in 
manufacturing  and  tourism (6).  Upskilling  and 
reskilling for the green transition, including for 
people  most  affected,  are  essential  policy 
levers  to  accelerate  the  transition  to  net  zero 
and ensure fairness (see Annex 8).  

Bulgaria  appears  to  be  particularly 
vulnerable  to  suffer  from  economic 

(5)  European Labour Authority (2023), EURES Report on 
labour shortages and surpluses 2022. Skills and 
knowledge requirements are based on the ESCO 
(European Skills Competences and Occupations) 
taxonomy of skills for the green transition (for 
occupations at ISCO 4-digit level of which there are 
436 in total). Examples are identified based on their 
ESCO ‘greenness’ score and relevant sectors.  

losses  after  floods (7). 
  The  current 
protection gap for floods in Bulgaria suggests 
that  the  insurance  coverage  remains  low 
compared to the projected risk, and this could 
result  in  losses  to  be  covered  by  the  public 
sector,  thereby  potentially  posing  a  risk  to 
public finances. Between 1980 and 2020, only 
around  2% (8)  of  disaster  losses  were  insured 
in Bulgaria. 

Healthcare services still not 
available to everyone 

to 

point 

indicators 

the 
Key 
ineffectiveness  and  lack  of  resilience  of 
the  health  system.  Life  expectancy 
in 
Bulgaria continues to be the lowest in the EU. 
Its  health  system  is  characterised  by  limited 
and  unequal  access  to  healthcare  services 
across  the  country,  which  is  exacerbated  by 
professionals, 
healthcare 
shortages 
In  addition,  healthcare 
especially  nurses. 
spending 
and  mostly 
low 
concentrated in inpatient care (hospitals), with 
little focus on outpatient care and prevention. 

overall 

of 

is 

Bulgaria has taken steps to address some 
of  these  structural  challenges.  Some 
measures  to  address  these  challenges  are 
funded by the Recovery and Resilience Facility. 
They  include  setting  up  outpatient  care  units 
with  a  focus  on  remote  areas  with  no 
reasonable 
facilities  within  a 
healthcare 
distance,  measures  to  address  shortages  of 
healthcare 
their 
geographical distribution, as well as improving 

professionals 

and 

(7)  The climate protection gap refers to the share of non-
insured economic losses caused by climate-related 
disasters. This indicator is based on the modelling of the 
current risk from floods, wildfires, and windstorms as 
well as earthquakes, and the estimation of the current 
insurance penetration. The indicator does not provide 
information on the split private/public cost of climate 
related disasters. A score of 0 means no protection gap, 
while a score of 4 corresponds to a very high gap. 
EIOPA considers that a score below 3 is not a relevant 
protection gap but that countries with a score of 2.5 
need to be monitored (EIOPA, 2022). 

(6)  Tackling labour shortages in EU Member States | 

(8)  Disaster Risk Financing: Limiting the Fiscal Cost of 

Eurofound (europa.eu) 

Climate-Related Disasters (Radu, 2022) 

13 

 
                                                 
                                                 
the provision of telemedicine services and the 
establishment of an air ambulance system. 

difficulties in accessing the labour market. The 
share  of  NEETs  also  remains  relatively  high, 
particularly among Roma. 

However, access to health services is still 
out of reach for a significant share of the 
population.  Despite  some  improvements  in 
access to the National  Health Insurance Fund, 
the  country’s  health  system  relies  heavily  on 
out-of-pocket  payments.  They  represent  36% 
of total healthcare spending in Bulgaria, which 
is  the  highest  in  the  EU  (see  Annex  16).  High 
out-of-pocket  payments  are  a  major  obstacle 
to  accessing  health  services,  particularly  for 
low-income  households. 
of 
households  impoverished  after  out-of-pocket 
payments  (8%)  and  the  share  of  households 
with  catastrophic  health  spending  (19%)  are 
high  compared  to  other  EU  countries (9).  In 
addition,  15%  of  the  population  is  uninsured, 
with  access  to  only  a  few  publicly  financed 
health services (10).  The insurance gap  is even 
higher  among  vulnerable  groups,  including 
Roma,  where  53%  of  the  population 
is 
uninsured (11). 

share 

The 

Challenges persist in the areas of 
labour market and social inclusion  

remain, 

particularly 

improvements, 

structural 
Despite 
challenges 
for 
vulnerable groups. This includes groups such 
as  children,  people  with  disabilities,  Roma, 
young  people  and  those  living  in  rural  and 
remote  areas.  These  challenges  are  linked  to 
the  labour  market,  social  inclusion  and  the 
take-up of education and training. 

The  recent  positive  labour  market  trend 
has  not  spread  equally  across  all  groups 
in society. In particular, the employment rate 
of  the  low-skilled  remains  below  the  EU 
average.  Similarly,  young  people  aged  15-29 
not  in  education,  employment  or  training 
face  substantial 
(NEET)  and  Roma  still 

(9)  World Health Organization, 2022 

(10)  World Health Organization, 2022 

(11)  Roma in 10 European Countries – Main results | 
European Union Agency for Fundamental Rights 
(europa.eu) 

14 

outcomes 

educational 

pose 
Low 
bottlenecks  to  productivity  and  potential 
growth.  The  share  of  adults  with  at  least 
basic  digital  skills  lags  badly  behind  the  EU 
average  together  with  adult  participation  in 
learning, where Bulgaria has set an ambitious 
national  target  for  2030.  While  decreasing  in 
recent  years,  the  rate  of  early  school  leavers 
remains a challenge and is especially high for 
Roma and people in less developed, rural  and 
remote  areas.  Participation  in  early  education 
and  care  remains  low  and  is  significantly 
below  the  EU  average  (18.7%  vs  36.2%  in 
2021).  In  addition,  almost  half  of  young 
Bulgarians 
reading, 
lack  basic  skills 
mathematics or science, in the face of growing 
teacher  shortages.  Teachers  in  Bulgaria  are 
also  some  of  the  oldest  in  the  EU  (see  Annex 
15). The employment rate of recent graduates 
from  vocational  education  and  training  (VET) 
remains a challenge. Important VET measures 
were  adopted  recently,  including  with  the 
support  of  EU  funding,  especially  dual  VET 
(work-based learning),  although  it is too  early 
to  see  results  (see  Annex  14).  In  addition, 
quality and equity in education, particularly for 
Roma and in rural areas, remains a challenge.  

in 

Levels  of  poverty  and  income  inequality 
are  particularly  high  among  children, 
people  with  disabilities,  Roma  and  those 
living  in  rural  and  remote  areas.  In  2021, 
the 
income  of  the  richest  20%  of  the 
population  was  7.5  times  higher  than  that  of 
the  poorest  20%,  well  above  the  EU  average 
of  5  times  higher.  The  share  of  children  in 
poverty  or  social  exclusion  stood  at  33%  and 
for  people  with  disabilities  at  45.3%,  both 
among  the  highest  in  the  EU.  Poverty  and 
social  exclusion  also  greatly  affect  people 
living  in  rural  areas  (42.5%  vs  22.5%  in  the 
EU)  and  almost  four-fifths  of  all  Roma 
(78.7%) (12).  Bulgaria 
is  partly  addressing 
these social challenges with increased funding 
from the European Social Fund Plus (of which 
EUR  135  million  has  been  allocated  to  tackle 

(12)  National Statistics Institute (2022), Poverty and Social 

Inclusion Indicators in 2021. 

 
                                                 
                                                 
child poverty). This will ultimately contribute to 
achieving 
target  on 
the  2030  national 
reducing (child) poverty. 

to 

Against  this  background  and  a  declining 
working age population, labour shortages 
are  increasing.  This  highlights  the  need  to 
further  promote  labour  market  activation  and 
the  employment  of 
remove  barriers 
underrepresented  groups.  Spending  on  active 
labour  market  policies  in  Bulgaria  is  among 
the lowest in the EU and is largely dependent 
on  external  funding.  Slow  adaptation  to  the 
needs  of  the  business  environment  also 
means worsening skills shortages. According to 
a business survey of the National Employment 
Agency,  businesses  will  need  more  than 
200 000  workers  and  specialists  in  2023 
across a range of sectors. Despite a relatively 
low job vacancy rate overall (0.9% on average 
in  the  first  three  quarters  of  2022,  compared 
to  3%  for  the  EU),  it  is  difficult  to  fill  certain 
vacancies in real estate, education, healthcare 
and social work (13). In 2022, labour shortages 
were 
reported  as  a  factor  constraining 
production in industry (for 34.9% of firms) and 
construction (for 39.5% of firms) (14). 

Regional indicators point to wide 
disparities across regions 

Bulgaria faces significant disparities both 
between and within its regions. Despite the 
fact that some of the least developed regions 
such  as  Severozopaden 
(North-West)  and 
Severen  tsentralen  (North-Central)  registered 
high  growth  rates  in  2011-2020,  economic 
activity  remains  highly  concentrated  in  the 
capital  region,  which  generates  51%  of 
national  GDP.  Economic  disparities  between 
urban and rural  areas are among the highest. 
While  Bulgaria’s  GDP  per  capita  was  55%  of 
the EU average in 2020, the capital region was 
at  92%,  while  all  other  regions  ranged  from 
36%  to  42%.  Addressing root  causes  such  as 
differences in labour productivity, employment, 

(13)  National Employment Agency (2022), Employer Labour 

Needs Survey, W2/2022. 

(14)  Business and consumer surveys (europa.eu) 

demographic  trends,  infrastructure,  research 
and  innovation  performance  and  access  to 
funding  and  investment  opportunities  could 
unlock 
less 
developed  regions  and  help  reverse  the  rapid 
decline  in  the  population.  Moreover,  rail  and 
road  density  are  far  below  the  EU  average, 
with northern regions lagging behind.  

the  economic  potential  of 

level 

to  strong 

Employment  and  productivity  at  regional 
level  contribute 
regional 
disparities.  In  2021,  the  unemployment  rate 
was  as  low  as  3.5%  in the  capital  region  and 
as high as 11% in the least developed region 
(Severozapaden).  Nominal  labour  productivity 
per  hour  worked  reaches  only  53.4%  of  the 
(in  purchasing  power 
2021  EU 
standards).  Although 
regional 
disparities  remain,  less  developed  regions  are 
catching  up  with  higher  productivity  growth. 
Investments  in  the  regional  research  and 
innovation system, industrial development and 
human capital (investing in improving people’s 
skills)  are  important  to  boost  competitiveness 
and 
stable 
environment for businesses. 

innovation  and 

create  a 

significant 

Challenges related to the green transition 
vary significantly across regions. The coal 
regions  are  particularly  affected  by 
the 
stuttering green transition. In the Stara Zagora 
region in particular, emissions from fossil fuels 
are  2.5  times  higher  than  the  EU  average, 
caused  by  the  concentration  of  several  coal-
fired  power  plants  and  the  country's  largest 
coal  mine  located  in  the  Yuzhen  tsentralen 
(South-Central)  region.  As  a  result,  the  socio-
economic impacts on coal regions in achieving 
their  targets  under  the  European  Green  Deal 
are  greater.  In  this  context,  the  territorial  just 
transition  plans  are  particularly  important  to 
support and properly address the vulnerability 
of  identified  districts,  including  Stara  Zagora, 
Kyustendil  and  Pernik.Bulgaria  has  access  to 
sizeable EU funds but there are delay risks 

Implementation  of  the  EU  financed 
programmes  will  be  challenging  in  2023. 
Price  increases  in  energy  and  construction 
sectors coupled with political uncertainty make 
investment 
it  very  difficult 
projects.  The  financial  support  available  to 
Bulgaria through EU funds up to 2027 exceeds 

to  complete 

15 

 
                                                 
adaptation, 

EUR  16  billion.  The  2021-2027  EU  cohesion 
policy funds are set to support investments up 
to  EUR  10.8  billion  in  Bulgaria.  In  particular, 
under the policy objective Greener Europe, EUR 
2  billion  is  expected  to  assist  the  green 
transition as well as climate change mitigation 
and 
and 
risk 
sustainable  urban  mobility.  In  2023-2027, 
Bulgaria will  also  benefit from EUR 5.6 billion 
from 
to 
support  rural  areas  and  social,  environmental, 
innovative 
economically 
the 
agriculture.  This  will  contribute 
European  Green  Deal  and  ensure  long-term 
food security. 

the  common  agricultural  policy 

sustainable  and 

prevention 

to 

All 10 programmes under the 2021-2027 
cohesion  policy  have  now  been  adopted, 
with  the  exception of  the  Just Transition 
Fund.  The  implementation  of  the  measures 
described in the territorial just transition plans 
will  be  financed  by  the  ‘Development  of 
Regions’  programme.  The  remaining  Just 
for  Bulgaria 
Transition  Fund  allocation 
corresponds  to  EUR  1.2  billion  to  lessen  the 
socio-economic impacts of the green transition 
in  the  most  vulnerable  regions.  Bulgaria's 
failure to programme the Just Transition Fund 
has  resulted  in  a  loss  of  almost  EUR  100 
million from its overall allocation in 2022. The 
country now risks losing an additional EUR 826 
million  in  2023.  The main  issue is the lack  of 
clear  evidence  of  a  transition  process,  in 
particular for the Stara Zagora region.    

16 

 
 
 
KEY FINDINGS 

Bulgaria’s  RRP 
includes  measures  to 
address a series of structural challenges, 
but delays put the plan at risk. 

plan,  and  swiftly  finalise  the  REPowerEU 
chapter  with  a  view  to  rapidly  starting  its 
implementation. 

  There  are 

considerable  delays  with 
measures  to  speed  up  the  deployment  of 
renewable  energy,  cut  greenhouse  gas 
emissions  and  define  energy  poverty.  The 
Green  Energy  Transition  Commission,  for 
preparing  scenarios  and  recommendations 
for  a  roadmap  to  climate  neutrality,  was 
put  in  place,  but  its  work  has  stalled. 
Investments  in  sustainable  transport  are 
also  lagging,  despite  the  adoption  of  the 
national  plan  for  the  development  of 
combined  transport  by  2030  and  progress 
on extending the Sofia metro. 

  Bulgaria  has  taken  steps  to  promote  the 
accelerated  deployment  of  5G  networks 
and high capacity networks.  

  Legislative 

reforms  were  adopted 

to 
increase quality of legislative process, help 
create  a  more  accessible  and  effective 
justice  system  and  improve  the  regulatory 
framework  for  anti-money  laundering  and 
industrial  investment.  It  is  necessary  to 
swiftly  adopt  and  implement  important 
rule-of-law  reforms  on  anti-corruption  and 
public procurement. 

  Progress  has  been  made  in  making  pre-
school  education  mandatory  from  4  years 
of age, alongside  the adoption of strategic 
documents  and 
in  higher 
education,  social  services  and  mental 
health. 

legislation 

  Legislation 

increase 

to  gradually 

the 
minimum  income  and  expand  its  coverage 
over 2022-2024 has been amended. This is 
a  step  to  achieving  a  broader  reform  by 
end of 2023. 

improve  the 
Bulgaria  should  significantly 
structure  and  administrative 
governance 
capacity  to  allow  for  a  swift  and  steady 
implementation  of  its  recovery  and  resilience 

17 

  Beyond  the  reforms  and  investments 
in  the  RRP,  Bulgaria  would  benefit 
from: 

  Further  reducing  overall  reliance  on  fossil 
fuels  by  accelerating  the  deployment  of  a 
much  larger  capacity  of  renewable  energy 
sources  and 
in 
electricity infrastructure and storage; 

investments 

increasing 

  Stepping  up  energy  efficiency  renovations 
and deployment of renewable solutions for 
space  heating,  and  promoting  new  future-
proof solutions in district heating to reduce 
air pollution and fossil fuel use in buildings; 

  Developing decarbonisation measures to be 

included in the REPowerEU chapter; 

core 

  Boosting investment in the transport sector 
through 
railway 
the  development  of 
infrastructure  (namely  by  complementing 
Transport 
the 
Trans-European 
Network), 
in 
national,  regional  and  urban  transport 
networks,  and  promoting  electric  mobility, 
to curb the greenhouse gas emissions from 
the domestic transport sector; 

improving  multimodality 

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

  Further  strengthening  active  inclusion  by 
integrating employment and social services 
and providing active labour market policies 
in  order  to  narrow  regional  disparities  and 
tackle the challenges of vulnerable groups, 
including Roma and people with disabilities; 

  Promoting green skills needed for the green 

transition; 

  Removing 

obstacles 
and 

to 

the 

deployment 
investments funded by all EU instruments. 

implementation 

swift 
of 

 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Cross-cutting indicators 

A1.  Sustainable Development Goals 

A2.  Progress in the implementation of country-specific recommendations 

A3.  Recovery and resilience plan - overview 

A4.  Other EU instruments for recovery and growth 

A5.  Resilience 

Environmental sustainability 

A6.  European Green Deal 

A7.  Energy security and affordability 

A8.  Fair transition to climate neutrality 

Productivity 

A9.  Resource productivity, efficiency and circularity 

A10.  Digital transformation 

A11.  Innovation 

A12.  Industry and single market 

A13.  Public administration 

Fairness 

A14.  Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

A15.  Education and training 

A16.  Health and health systems 

A17.  Economic and social performance at regional level 

Macroeconomic stability 

A18.  Key financial sector developments 

A19.  Taxation 

A20.  Table with economic and financial indicators 

A21.  Debt sustainability analysis 

LIST OF TABLES 

A2.1. 
A3.1. 

Summary table on 2019-2022 CSRs 
Key elements of the Bulgaria's RRP 

21 

23 

23 

25 

29 

31 

33 

34 

34 

39 

44 

46 

46 

48 

50 

52 

56 

58 

58 

60 

62 

64 

66 

66 

68 

70 

71 

26 
29 

 
 
 
A5.1. 
Resilience indices summarising the situation across RDB dimensions and areas 
A6.1. 
Indicators tracking progress on the European Green Deal from a macroeconomic perspective 
A7.1. 
Key Energy Indicators 
A8.1. 
Key indicators for a fair transition in Bulgaria 
A9.1. 
Overall and systemic indicators on circularity 
A10.1.  Key Digital Decade targets monitored by DESI indicators 
A11.1.  Key innovation indicators 
A12.1. 
Industry and the Single Market 
A13.1.  Public administration indicators 
A14.1.  Social Scoreboard for Bulgaria 
A14.2.  Situation of Bulgaria on 2030 employment, skills and poverty reduction targets 
A15.1.  EU-level targets and other contextual indicators under the European Education Area strategic framework 
A16.1.  Key health indicators 
A17.1.  Selected indicators at regional level - Bulgaria 
A18.1.  Financial Soundness Indicators 
A19.1.  Taxation indicators 
A20.1.  Key economic and financial indicators 
A21.1.  Debt sustainability analysis - Bulgaria 
A21.2.  Heat map of fiscal sustainability risks - Bulgaria 

LIST OF GRAPHS 

Progress towards the SDGs in Bulgaria in the last 5 years 
Bulgaria’s progress on the 2019-2022 CSRs (2023 European Semester) 
Disbursements per pillar 
Total grants disbursed under the RRF 
Fulfilment status of milestones and targets 
Cohesion policy funds 2021-2027 in Bulgaria: budget by fund 
Synergies between cohesion policy funds and the RRF with its six pillars in Bulgaria 
Cohesion policy funds contribution to the SDGs in 2014-2020 and 2021-2027 in Bulgaria 
Thematic – greenhouse gas emissions from the effort sharing sectors in Mt CO2eq, 2005-2021 
Energy mix (top) and Electricity mix (bottom), 2021 
Thematic – environmental investment needs and current investment, p.a. 2014-2020 
Underground gas storage levels in Bulgaria 
Gas consumption in Bulgaria, 2021 
Gas consumption per industry, in thousands of terajoules – 2021 
Bulgaria´s retail energy prices for industry (top) and households (bottom) 
Fair transition challenges in Bulgaria 
Distributional impacts of energy prices due to rising energy expenditure (2021-2023) 
Trend in material use 
Treatment of municipal waste 
Innovation performance 2015-2022 

A1.1. 
A2.1. 
A3.1. 
A3.2. 
A3.3. 
A4.1. 
A4.2. 
A4.3. 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2. 
A7.3. 
A7.4. 
A8.1. 
A8.2. 
A9.1. 
A9.2. 
A11.1. 
A12.1.  Labour productivity per person by sector 
A12.2.  Government investment 
A12.3.  Business environment and productivity drivers 
A13.1.  Bulgaria. Participation rate of 25-64 year-olds in adult learning (%) by sector and occupation 
A15.1.  The share of underachievers in reading, maths and science (combined) by socio-economic status, PISA 2018 
A16.1.  Life expectancy at birth, years 
A16.2.  Projected increase in public expenditure on healthcare over 2019-2070 
A17.1.  GDP per head (2010) and GDP growth (2011-2020), Bulgaria (NUTS-3 regions) 
A17.2.  Labour productivity (real GVA per worker), EU-27, Bulgaria (NUTS 2 regions), 2000-2020 
A17.3.  Unemployment in Bulgarian regions, 2019-2021 
A18.1.  Evolution of credit activity 
A19.1.  Tax wedge for single and second earners as a % of total labour costs, 2022 
A19.2.  Tax revenue from different tax types as % of total taxation revenue 

22 

33 
34 
39 
44 
47 
48 
51 
52 
56 
58 
59 
60 
62 
64 
66 
68 
70 
73 
73 

24 
25 
29 
30 
30 
31 
31 
32 
34 
35 
36 
39 
40 
40 
40 
44 
45 
46 
47 
50 
52 
52 
54 
56 
60 
62 
62 
64 
64 
65 
66 
68 
69 

 
 
 
 
CROSS-CUTTING INDICATORS 
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  and  the 
environmental crisis, 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  the  SDGs  in  an 
EU context. 

While  Bulgaria  performs  well  on  indicators 
related  to  environmental  sustainability  (SDG 
14),  it  is  improving  on  others  (SDGs  9,  11, 
12). However, it is moving away from SDGs 6, 
7,  13  and  15.  Bulgaria  outperforms  the  EU 

average  indicators  on  SDG  14  (Life  below  water), 
in  particular  on  the  share  of  marine  waters 
affected by eutrophication (0.00% of the Exclusive 
Economic  Zone  in  2022,  0.51%  in  the  EU).  In 
addition, despite performing above the EU average 
on SDG 15 (Life on land), Bulgaria shows negative 
tendencies,  in  particular  on  land  degradation  and 
status  of  ecosystems.  Bulgaria  has  made  some 
progress  on  sustainable  industry  (SDG  9)  and  the 
green  economy  (SDG  12),  in  particular  on  gross 
value  added  in  environmental  goods  and  services 
sector  (from  1.6%  of  GDP  in  2016  to  2.8%  in 
2019, 2.3% in the EU in 2019), and on sustainable 
infrastructure  (SDG  9).  In  addition,  Bulgaria  has 
made  significant  progress  on  quality  of  life  in 
cities  and  communities  indicators  (SDG  11),  such 
as  the  severe  housing  deprivation  rate  (8.6%  of 
the  population  in  2020  compared  to  11.4%  in 
2015) and the population reporting crime, violence 
or  vandalism  in  their  area  (19.1%  in  2020 
compared  to  26.3%  in  2015).  Nevertheless,  it 
remains below the EU average. Water quality (SDG 
6)  and  climate  mitigation  indicators (SDG  13)  are 

Graph A1.1: Progress towards the SDGs in Bulgaria in the last 5 years 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’; for 
details on extensive country-specific data on the short-term progress of Member States: Key findings – Sustainable development 
indicators – Eurostat (europa.eu). The status of each SDG in a country is the aggregation of all indicators for the specific goal 
compared to the EU average. A high status does not mean that a country is close to reaching a specific SDG, but signals that it is 
doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past 5 
years. The calculation does not take into account any target values as most EU policy targets are only valid for the aggregate EU 
level. Depending on data availability for each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat,  latest update of early April 2023, except for the EU Labour Force Survey (LFS) indicators released on 27 April 
2023. Data mainly refer to 2016-2021 or 2017-2022. 

23 

 
 
 
 
 
 
moving away from SDGs, in particular on the share 
in  gross  final  energy 
of  renewable  energy 
consumption  (from  18.8%  in  2016  to  17.02%  in 
2021).  Waste  generation  and  management  (SDG 
12)  remains  a  challenge  for  Bulgaria  as  the 
generation  of  waste  indicator  and  the  circular 
material  use  rate  are  significantly  below  the  EU 
average.  Bulgaria’s  recovery  and  resilience  plan 
(RRP)  includes  measures  to  address  some  of  the 
energy  and  climate-related  challenges,  namely 
developing  a  framework  to  phase  out  coal, 
deploying 
and 
constructing  and  modernising  waste  water 
treatment plants.   

renewable 

projects 

energy 

improved  on  access 

While  Bulgaria  underperforms  on  SDG 
indicators related to fairness, it is improving 
on  several  of  them  (SDGs  1,  3,  8),  while 
moving  away  on  quality  education  (SDG  4).  
Bulgaria  is  significantly  improving  on  all  SDG  1 
indicators  (No  poverty),  such  as  people  at  risk  of 
poverty  or  social  exclusion  (31.7% 
in  2021 
compared  to  41%  in  2016)  and  the  severe 
material  and  social  deprivation  rate  (19.1%  in 
2021  compared  to  33.5%  in  2016).  In  addition, 
Bulgaria  has  also 
to 
healthcare  (SDG  3;  1%  of  those  aged  16  or  over 
with self-reported unmet needs for medical care in 
2021  compared  to  2.8%  in  2016)  and  on  the 
share of the population unable to keep their home 
adequately warm (SDG 7; 23.7% of the population 
in  2021  compared  to  39.2%  in  2016).  On  SDG  8 
(Decent  work  and  economic  growth),  the  share  of 
working  poor  is  making  progress  towards  the  EU 
average  (10.0%  in  2021  compared  to  11.4%  in 
2016,  8.9%  in  the  EU).  Moreover,  the  percentage 
of  young  people  aged  15-29  not  in  education, 
employment or training (SDG 8) has fallen (17.6% 
in 2021 compared to 22.4% in 2016) but remains 
high  and  above  the  EU  average  (13.1%  in  2021). 
On  the  negative  side,  Bulgaria  is  moving  away 
from  SDGs  on  Gender  equality  (SDG  5). 
In 
particular,  the  gender  employment  gap  (8.4%  of 
those  aged  20-64  in  2021  compared  to  6.8%  in 
2016)  and  positions  held  by  women  in  senior 
management.  Moreover,  Bulgaria  is  also  moving 
away  from  SDGs  on  basic  education  and  adult 
learning indicators (SDG 4), mainly on the share of 
low  achieving  15-year-olds  in  reading  (47.1%  in 
2018  compared  to  41.5%  in  2015)  and  on  adult 
participation in learning in the past 4 weeks (1.8% 
of those aged 25-64 in 2021 compared to 2.2% in 
2016).  The  Bulgarian  RRP  includes  measures  to 
address  some  of  these  challenges.  In  particular, 
measures in the plan aim at improving the quality 

24 

and  effectiveness  of  the  education  and  training 
and 
systems, 
availability  of  health  services  and  supporting 
social inclusion and the reduction of poverty.   

strengthening 

provision 

the 

is 

industry 

improving 
and 

in  R&D, 
While  Bulgaria 
sustainable 
employment 
indicators  related  to  productivity  (SDGs  8 
and  9),  challenges  remain  on  digital  skills 
(SDG  4).  Despite  some  improvements  on  the 
productivity indicators, the country ranks below the 
EU  average  on  all  of  them.  Bulgaria  has  made 
some  progress  on  R&D  and  innovation  indicators, 
in  particular  on  gross  domestic  expenditure  on 
R&D (SDG 9; 0.81% of GDP in 2021 compared to 
0.77% in 2016) and on patent applications to the 
European  Patent  Office  (6  per  million  inhabitants 
in  2021  compared  to  3  per  million  inhabitants  in 
2016).  In  addition,  Bulgaria  has  made  significant 
progress on the share of households with a high-
speed  internet  connection  (SDG  9;  84.7%  of 
households in 2021 compared to 38.2% in 2016) 
and  on  some  sustainable  economic  growth 
indicators, such as the real GDP per capita (EUR 6 
950 per capita in 2021 compared to EUR 5 910 in 
2016.. On the negative side, challenges remain on 
digital skills. As such, the country ranks below the 
EU  average  on  the  share  of  adults  with  at  least 
basic digital skills (31.2% of those aged 16 to 74 
compared  to  53.9%  in  the  EU  in  2021).    The 
Bulgarian RRP includes significant measures aimed 
at improving innovation, such as the adoption of a 
the 
Innovation 
Research 
establishment of the Innovation Board.  

and 

and 

Act 

the  EU  on 

While it performs well on SDG 17, Bulgaria is 
indicators  related  to 
improving  on  SDG 
macroeconomic stability (SDGs 8 and 16), but 
still  needs  to  catch  up  compared  to  the  EU. 
several 
Bulgaria  outperforms 
Partnerships for the goals indicators (SDG 17). The 
country has improved on SDG 8 (Decent work and 
economic  growth)  and  on  SDG  16  (Peace,  justice 
in  particular  on  the 
and  strong 
employment  rate  (73.2%  of  the  population  aged 
20-64 compared to 67.0% in 2016), the long-term 
unemployment rate (2.6% of the active population 
in  2021  compared  to  5.0%  in  2016)  and  general 
government  total  expenditure  on  law  courts  (EUR 
63.80 per capita in 2020 compared to EUR 42.30 
in  2015).  Nevertheless,  the  indicators  remain 
below the EU average.  

institutions), 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other Annexes. 

 
ANNEX 2: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 

Graph A2.1: Bulgaria’s progress on the 2019-2022 
CSRs (2023 European Semester) 

The Commission has assessed the 2019-2022 
country-specific  recommendations  (CSRs) (15) 
addressed  to  Bulgaria  as  part  of  the  European 
Semester. These recommendations concern a wide 
range of policy areas that are related to 14 of the 
17 Sustainable Development Goals (see Annexes 1 
and 3). The assessment considers the policy action 
the 
taken  by  Bulgaria 
commitments  in  its  recovery  and  resilience  plan 
(RRP) (17).  At  this  stage  of  RRP  implementation, 
60%  of  the  CSRs  focusing  on  structural  issues 
from  2019-2022  have  recorded  at  least  ‘some 
progress’,  while  30%  recorded  ‘limited  progress’ 
(see  Graph  A2.1).  As  the  RRP  is  implemented 
further,  considerable  progress 
in  addressing 
structural CSRs is expected in the years to come. 

to  date (16)  and 

Source: European Commission 

(15)  2022 CSRs: EUR-Lex - C:2022:334:TOC - EN - EUR-Lex 

(europa.eu) 
2021 CSRs: EUR-Lex - C:2021:304:TOC - EN - EUR-Lex 
(europa.eu) 
2020 CSRs: EUR-Lex - 32020H0826(02) - EN - EUR-Lex 
(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(02) - EN - EUR-Lex 
(europa.eu) 

(16)  Including policy action reported in the national reform 

programme and in Recovery and Resilience Facility (RRF) 
reporting (twice a year reporting on progress in implementing 
milestones and targets and resulting from the payment 
requests assessment). 

(17)  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 considers the 
degree of implementation of the measures included in the 
RRP and of those carried out outside of the RRP at the time 
of assessment. Measures laid down in the Annex of the 
adopted Council Implementing Decision on approving the 
assessment of the RRP, which are not yet adopted or 
implemented but considered 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. 

25 

No progress10%Limited progress30%Some progress52%Substantial progress6%Full implementation2% 
 
                                                 
                  
 
 
 
 
 
Table A2.1: Summary table on 2019-2022 CSRs 

(Continued on the next page) 

26 

BulgariaAssessment in May 2023*RRP coverage of CSRs until 2026Relevant SDGs2019 CSR 1Some progressImprove tax collection through targeted measures in areas such as fuel and labour taxes.Some ProgressSDG 8, 16UpgradetheState-ownedenterprisecorporategovernancebyadopting and putting into effect the forthcoming legislation.Some ProgressRelevant RRP measures planned as of 2022 and 2023SDG 92019 CSR 2Some progressEnsure the stability of the banking sector by reinforcing supervisionSubstantial ProgressSDG 8, promoting adequate valuation of assets, including bank collateralSome ProgressSDG 8, and promoting a functioning secondary market for non-performing loans.Some ProgressSDG 8Ensure effective supervision and the enforcement of the AML framework.Some ProgressRelevant RRP measures being implemented as of 2021SDG 8Strengthen the non-banking financial sector by effectively enforcing risk-based supervisionSubstantial ProgressSDG 8, the recently adopted valuation guidelinesSome ProgressSDG 8and group-level supervision.Some ProgressSDG 8Implement the forthcoming roadmap tackling the gaps identified in the insolvency framework. Some ProgressRelevant RRP measures planned as of 2023SDG 8Foster the stability of the car insurance sector by addressing market challenges and remaining structural weaknesses.Some ProgressSDG 82019 CSR 3Limited progressFocus investment-related economic policy on research and innovationLimited ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2023SDG 9, 10, 11, transport, in particular on its sustainabilitySome ProgressRelevant RRP measures being implemented as of 2020 and planned as of 2023SDG 10, 11, water, waste and energy infrastructure and energy efficiency, taking into account regional disparities, Limited ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2023SDG 6, 7, 9, 10, 11, 12, 13and improving the business environment.Some ProgressRelevant RRP measures being implemented as of 2022 and planned for 2023,2025,2026SDG 8, 92019 CSR 4Limited progressStrengthen employability by reinforcing skills, including digital skills.Limited ProgressRelevant RRP measures being implemented as of 2020 and planned for 2023,2024,2026SDG 4, 8Improvethequality,labourmarketrelevance,andinclusivenessofeducationandtraining,inparticularforRomaandotherdisadvantaged groups.Limited ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2025SDG 4, 8, 10Addresssocialinclusionthroughimprovedaccesstointegratedemployment and social servicesLimited ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2023SDG 1, 2, 10and more effective minimum income support.Some ProgressRelevant RRP measures being implemented as of 2022 and planned for 2023,2024,2025,2026SDG 1, 2, 10Improveaccesstohealthservices,includingbyreducingout-of-pocket payments and addressing shortages of health professionals.Limited ProgressRelevant RRP measures being implemented as of 2022 and planned for 2023,2026SDG 32020 CSR 1Some progressInlinewiththegeneralescapeclause,takeallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability,whileenhancinginvestment. Not relevant anymoreNot applicableSDG 8, 16Mobiliseadequatefinancialresourcestostrengthentheresilience,accessibilityandcapacityofthehealthsystem,andensureabalanced geographical distribution of health workers.Some ProgressRelevant RRP measures being implemented as of 2022 and planned for 2023,2026SDG 32020 CSR 2Limited progressEnsure adequate social protection and essential services for all Limited ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2023SDG 1, 2, 10and strengthen active labour market policies.Limited ProgressRelevant RRP measures being implemented as of 2020 and planned for 2022,2023,2024,2026SDG 8Improve access to distance workingLimited ProgressRelevant RRP measures planned as of 2023SDG 8and promote digital skillsSome ProgressRelevant RRP measures being implemented as of 2020 and planned for 2022,2023,2024,2026SDG 4 
 
 
 
  
 
Table (continued) 

(Continued on the next page) 

27 

and equal access to education.Limited ProgressRelevant RRP measures being implemented as of 2020 and planned for 2022,2023,2024,2026SDG 4, 8, 10Addresstheshortcomingsintheadequacyoftheminimumincomescheme. Some ProgressRelevant RRP measures being implemented as of 2022 and planned for 2023,2024,2025,2026SDG 1, 2, 102020 CSR 3Some progressStreamline and accelerate the procedures to provide effective support to small and medium-sized enterprises and self-employed, Substantial ProgressRelevant RRP measures being implemented as of 2022SDG 8, 9alsoensuringtheircontinuedaccesstofinanceandflexiblepaymentarrangements.Some ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2023SDG 8, 9Front-load mature public investment projectsLimited ProgressSDG 8, 16and promote private investment to foster the economic recovery.Some ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2023SDG 8, 9Focusinvestmentonthegreenanddigitaltransition,inparticularonclean and efficient production and use of energy and resources,Some ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2023SDG 6, 7, 9, 12, 13, 15environmental infrastructure Limited ProgressRelevant RRP measures planned as of 2023-2026 SDG 7, 9, 13andsustainabletransport,contributingtoaprogressivedecarbonisation of the economy, including in the coal regions.Limited ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2023SDG 10, 112020 CSR 4Some progressMinimiseadministrativeburdentocompaniesbyimprovingtheeffectiveness of public administrationSome ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2023, 2024, 2026SDG 16and reinforcing digital government. Limited ProgressRelevant RRP measures being implemented as of 2022 and planned as of 2023-2026SDG 9, 16Ensure an effective functioning of the insolvency framework. Some ProgressRelevant RRP measures planned as of 2022, 2023, 2024 ,2025, 2026SDG 8Stepuptheeffortstoensureadequateriskassessment,mitigation,effectivesupervisionandenforcementoftheanti-moneylaunderingframework. Some ProgressRelevant RRP measures being implemented as of 2021SDG 8, 162021 CSR 1Some progressIn2022,pursueasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationallyfinancedinvestment.Keepthegrowthofnationallyfinanced current expenditure under control.Full ImplementationNot applicableSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term.No ProgressNot applicableSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticular investment supporting the green and digital transition.Some ProgressNot applicableSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Limited ProgressNot applicableSDG 8, 162022 CSR 1Limited progressIn 2023, ensure that the growth of nationally financed primary current expenditureisinlinewithanoverallneutralpolicystance,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeingUkraine.Standreadytoadjustcurrentspendingtotheevolvingsituation.No progressNot applicableSDG 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryandResilienceFacilityandother Union funds.Some progressNot applicableSDG 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachieving prudent medium-term fiscal positions.No progressNot applicableSDG 8, 16 
 
 
  
 
Table (continued) 

Note:            
* See footnote (17). 
** RRP measures included in this table contribute to the implementation of CSRs. Nevertheless, additional measures outside the 
RRP are necessary to fully implement CSRs and address their underlying challenges. Measures indicated as 'being implemented' 
are only those included in the RRF payment requests submitted and positively assessed by the European Commission.   
Source: European Commission 

28 

2022 CSR 2Proceedwiththeimplementationofitsrecoveryandresilienceplan,inlinewiththemilestonesandtargetsincludedintheCouncilImplementing Decision of 4 May 2022.Submitthe2021-2027cohesionpolicyprogrammingdocumentswithaviewtofinalisingthenegotiationswiththeCommissionandsubsequently starting their implementation.2022 CSR 3Limited progressReduce overall reliance on fossil fuels and fossil fuel importsNo ProgressRelevant RRP measures planned as of 2022-2026SDG 7, 9, 13by accelerating the development of renewables,Some ProgressRelevant RRP measures planned as of 2022-2026SDG 7, 9, 13anddiversifygassupplysourcesandroutesbyincreasinginterconnections with neighbouring countries.Some ProgressRelevant RRP measures planned as of 2022-2026SDG 7, 9, 13Stepupeffortstoreduceenergydemandbyincreasingenergyefficiency in industry and in private and public building stock.Some ProgressRelevant RRP measures planned as of 2022-2026SDG 7Promote new sustainable solutions in centralised district heating.No ProgressRelevant RRP measures planned as of 2022-2026SDG 7RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports. Progress on the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
  
 
ANNEX 3: RECOVERY AND RESILIENCE PLAN - OVERVIEW 

the RRF as a whole, in a transparent manner. The 
graphs in this Annex show the current state of play 
of  the  milestones  and  targets  to  be  reached  by 
Bulgaria 
as 
subsequently 
satisfactorily fulfilled by the Commission. 

assessed 

and 

important  first  steps 

positively  assessed  by 

EUR 1.37 billion has so far been disbursed to 
Bulgaria under the RRF. Bulgaria’s first payment 
the 
request  was 
Commission, taking into account the opinion of the 
Economic and Financial Committee, leading to EUR 
1.37 billion being disbursed in financial support on 
16 December 2022.  The  related  22  milestones 
cover 
in  reforms  and 
investments  towards  decarbonising  the  energy 
large-scale  deployment  of 
sector,  promoting 
judicial 
digital 
system,  strengthening  the  anti-money  laundering 
framework, 
sector, 
strengthening  the  adequacy  and  coverage  of  the 
minimum  income  scheme.  Measures  to  ensure 
that  the  audit  and  control  system  for  the 
implementation of the RRF is up to standard were 
also included.  

infrastructure, 

digitalising 

reforming 

public 

the 

the 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the centrepiece of the EU’s efforts to help it 
recover  from  the  COVID-19  pandemic,  speed 
up  the  twin  transition  and  strengthen 
resilience  against  future  shocks.  The  RRF 
also  contributes  to  implementation  of  the 
SDGs  and  helps  to  address  the  Country 
Specific  Recommendations 
(see  Annex 2). 
its  current  recovery  and 
Bulgaria  submitted 
resilience  plan  (RRP)  on  15  October  2021.  The 
Commission’s positive assessment on 7 April 2022 
and  Council’s  approval  on  5  May  2022  paved  the 
way  for  disbursing  EUR 6.3  billion in  grants  under 
the RRF over the 2021-2026 period.   

Since  the  entry 
into  force  of  the  RRF 
Regulation  and  the  assessment  of  the 
national  recovery  and  resilience  plans, 
geopolitical  and  economic  developments 
have caused major disruptions across the EU. 
In  order  to  effectively  address  these  disruptions, 
the  (adjusted)  RRF  Regulation  allows  Member 
States to amend their recovery and resilience plan 
for  a  variety  of  reasons.  In  line  with  article  11(2) 
of the RRF, the maximum financial contribution for 
Bulgaria was moreover updated on 30 June 2022 
to  an  amount  of  EUR  5.7  billion  in  grants.  No 
revision  was  submitted  at  the  time  of  publication 
of this country report yet.  

Table A3.1: Key elements of the Bulgaria's RRP 

Source: RRF Scoreboard 

Bulgaria’s  progress  in  implementing  its  plan 
is  published  in  the  Recovery  and  Resilience 
Scoreboard (18).  The  Scoreboard  also  gives  an 
overview  of  the  progress  made  in  implementing 

(18)  https://ec.europa.eu/economy_finance/recovery-and-

resilience-scoreboard/country_overview.html 

29 

Current RRPScope Initial planCID adoption date5 May 2022Total allocation EUR 6.3 billion in grants (9.2% of 2021 GDP)Investments and reforms 49 investments and 53 reforms Total number of milestones and targets346 
 
 
  
 
                                                 
 
Graph A3.1: Disbursements per pillar 

Note: Each disbursement reflects progress in the implementation of the RRF, across the six policy pillars. This graph displays how 
disbursements under the RRF (excluding pre-financing) relate to the pillars. The amounts were calculated by linking the milestones 
and targets covered by a given disbursement to the pillar tagging (primary and secondary) of their respective measures. 
Source: RRF Scoreboard  

Graph A3.2: Total grants disbursed under the RRF 

Graph A3.3: Fulfilment status of milestones and 
targets 

Note: This graph displays the amount of grants disbursed so 
far under the RRF. Grants are non-repayable financial 
contributions. The total amount of grants given to each 
Member State is determined by an allocation key and the 
total estimated cost of the respective RRP. 
Source: RRF Scoreboard 
https://ec.europa.eu/economy_finance/recovery-and-resilience-
scoreboard/country_overview.html 

This graph displays the share of satisfactorily fulfilled 
milestones and targets. A milestone or target is satisfactorily 
fulfilled once a Member State has provided evidence to the 
Commission that it has reached the milestone or target and 
the Commission has assessed it positively in an implementing 
decision. 
Source: RRF Scoreboard 
https://ec.europa.eu/economy_finance/recovery-and-resilience-
scoreboard/country_overview.html 

30 

€ 1.37billionSatisfactorily fulfilledNot fulfilled0 mn100 mn200 mn300 mn400 mn500 mnGreen transitionDigitaltransformationSmart,sustainable andinclusive growthSocial andterritorialcohesionHealth, andeconomic, socialand institutionalresiliencePolicies for thenext generation 
 
     
 
     
 
 
 
   
ANNEX 4: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The  EU  budget  of  over  EUR  1.2  trillion  for 
2021-2027  is  geared  towards  implementing 
the  EU’s  main  priorities.  Cohesion  policy 
investment amounts to EUR 392 billion across the 
EU and represents almost a third of the overall EU 
budget, including around EUR 48 billion invested in 
line with REPowerEU objectives. 

European  Social  Fund  Plus  (ESF+)  allocates  EUR 
315 million to youth employment support and EUR 
630 million to social inclusion measures, of which 
EUR 136 million will tackle child poverty. EUR 787 
million  will  be  dedicated to  improving  educational 
outcomes and creating a more inclusive and high-
quality education system. 

Graph A4.1: Cohesion policy funds 2021-2027 in 
Bulgaria: budget by fund 

(1) million EUR in current prices, % of total; (total amount 
including EU and national co-financing) 
Source: European Commission, Cohesion Open Data 

In  2021-2027,  in  Bulgaria,  cohesion  policy 
funds (19)  will  invest  EUR  5.3  billion  in  the 
green  transition  and  EUR  0.7  million  in  the 
digital  transformation  as  part  of  the 
country’s total allocation of EUR 11 billion. In 
particular,  the  European  Regional  Development 
Fund (ERDF) will boost investment in research and 
innovation  (R&I),  competitiveness,  digitalisation 
and energy and resource efficiency. It will support 
around  10  000  companies  in  total  and  trigger  at 
least  an  additional  EUR  1.1  billion  in  private 
investment. SMEs lie at the heart of ERDF support 
to  businesses,  and  selection  procedures  will  be  in 
line  with  Bulgaria’s  smart  specialisation  strategy 
by  region.  Investment  in  the  energy  efficiency  of 
buildings  is  expected  to  benefit  some  3 800 
homes  and  180  000  square  meters  of  public 
buildings  in  urban  and  rural  areas.  At  the  same 
time,  the  finalisation  of  the  Just  Transition  Fund 
(JTF)  programming  could  help  Bulgaria  support 
sustainable  energy 
training  and 
education,  and  diversify  the  local  economy  in  the 
affected  coal  regions.  This  will  help  alleviate  the 
socio-economic impacts of Bulgaria’s commitment 
to phase out the use of coal by 2038 at latest. The 

solutions, 

(19)  European Regional Development Fund (ERDF), Cohesion Fund 
(CF), European Social Fund+ (ESF+), Just Transition Fund 
(JTF) excluding Interreg programmes. Total amount including 
national and EU contributions. Data source: Cohesion Open 
Data.  

Of  the  investments  mentioned  above,  EUR 
639  million  will  be  invested  in  line  with 
REPowerEU objectives. This is on top of the EUR 
533  million  dedicated  to  REPowerEU  under  the 
2014-2020 budget. EUR 499 million (2021-2027) 
and EUR 195 million (2014-2020) is for improving 
energy  efficiency;  EUR  112  million  (2021-2027) 
and EUR 339 million (2014-2020) is for renewable 
energy  and  low-carbon  R&I;  and  EUR  28  million 
(2021-2027) is for smart energy systems. 

Graph A4.2: Synergies between cohesion policy 
funds and the RRF with its six pillars in Bulgaria 

(1) million EUR in current prices (total amount, including EU 
and national co-financing)   
Source: European Commission  

In  2014-2020,  cohesion  policy  funds  made 
EUR  7.9  billion  available  to  Bulgaria (20). 
Including  national  financing,  the  total  investment 
amounts to EUR 9.2 billion  - around 2.5% of GDP 
for 2014-2020.  

flexibility 

Bulgaria  continues  to  benefit  from  cohesion 
policy 
support  economic 
to 
recovery,  step  up  convergence  and  provide 
vital support to regions following the COVID-
19  pandemic.  The  Recovery  Assistance  for 
Cohesion and the Territories of Europe instrument 
(REACT-EU) (21)  under  NextGenerationEU  provides 
EUR  576  million  on  top  of  the  2014-2020 

(20)  Cohesion policy funds include the ERDF, CF, ESF and the 
Youth Employment Initiative (YEI). ETC programmes are 
excluded here. According to the ‘N+3 rule’, the funds 
committed for 2014-2020 must be spent by 2023. REACT-
EU is included in all figures. The total amount includes EU 
and national co-financing. Data source: Cohesion Open Data. 

(21)  REACT-EU allocation on Cohesion Open Data. 

31 

1,46013%6,82260%3,14327%CFERDFESF+4 496 108 1 511 1 519 681 309 5 344 703 1 286 2 091 452 924 0100020003000400050006000Green transitionDigitaltransformationSmart, sustainableand inclusive growthSocial and territorialcohesionHealth, economic,social andinstitutionalresiliencePolicies for the nextgenerationEU CP 2014-2020 (million EUR)EU CP 2021-2027 (million EUR) 
 
  
                                                 
   
                                                 
 
 
cohesion policy allocation for Bulgaria. Of this, the 
Bulgarian  authorities  used  EUR  164.3  million  to 
further  support  working  capital  and  energy 
efficiency  in  more  than  4 500  SMEs.  With  SAFE 
(Supporting  Affordable  Energy),  the  2014-2020 
cohesion  policy  funds  may  also  be  mobilised  by 
Bulgaria  to  support  vulnerable  households,  jobs 
and  companies  particularly  affected  by  high 
energy prices. 

In addition, Cohesion’s Action for Refugees in 
Europe  (CARE)  supports  Bulgaria  and 
its 
regions  in  providing  emergency  assistance  to 
people  fleeing  from  Russia’s  invasion  of  Ukraine 
with a total budget of EUR 75.1 million. 

Graph A4.3: Cohesion policy funds contribution to 
the SDGs in 2014-2020 and 2021-2027 in 
Bulgaria 

sustainability  and  innovation  in  agriculture  and 
rural  areas,  in  coordination  with  other  EU  Funds. 
The  European  Maritime  and  Fisheries  Fund  made 
EUR 81 million available to Bulgaria in 2014-2020 
and 
the  European  Maritime,  Fisheries  and 
Aquaculture  Fund  will  make  available  EUR  85 
million in 2021-2027. 

Bulgaria  also  benefits  from  other  EU 
programmes,  notably  the  Connecting  Europe 
Facility,  which  under  CEF  2  (2021-2027)  has  so 
far  allocated  EU  funding  of  EUR  273  million  to 
three  specific  projects  on  strategic  transport 
networks.  Similarly,  Horizon  Europe  has  so  far 
allocated more than EUR 39.8 million to Bulgarian 
R&I  actors,  while  in  the  previous  programming 
period,  Horizon  2020  earmarked  EUR  162  billion. 
The  Public  Sector  Loan  Facility  set  up  under  the 
Just  Transition  Mechanism  makes  EUR  98  million 
of  grant  support  from  the  Commission  available 
for projects in 2021-2027, which will be combined 
with  EIB  loans  to  support  investments  by  public 
sector entities in just transition regions. 

under 

support 

received 

the 
Bulgaria 
European  instrument  for  temporary  support 
to  mitigate  unemployment  risks 
in  an 
emergency  (SURE)  to  finance  short-time  work 
schemes to mitigate the impact of COVID-19. The 
Council granted financial assistance to Bulgaria of 
EUR 971 million in loans, which supported around 
10%  of  workers  and  6%  of  firms  in  2020,  and 
around 5% of workers and 3% of firms in 2021. 

Instrument 
designing 

(TSI) 
The  Technical  Support 
and 
in 
Bulgaria 
supports 
implementing  growth-enhancing 
reforms, 
including  the  implementation  of  its  recovery 
and resilience plan (RRP). Bulgaria has received 
significant  support  since  2016.  Examples (23) 
include: (i) strengthening the governance of state-
owned  enterprises;  (ii)  drafting  the  territorial  just 
transition  plan;  (iii)  mitigating  money  laundering 
and  terrorism  financing  risks;  and  (iv)  identifying 
the  most  suitable  reforms  and  investments  for 
decreasing  its  dependency  on  fossil  fuels  from 
Russia in line with the REPowerEU plan.  

(1) 5 largest contributions to SDGs in million (EUR) current 
prices 
Source: European Commission  

In both 2014-2020 and 2021-2027, cohesion 
policy  funds  have  contributed  substantially 
to  the  Sustainable  Development  Goals’ 
(SDGs).  These  funds  support  11  of  the  17  SDGs, 
notably  SDG  9 
innovation  and 
‘industry, 
infrastructure’  and  SDG  8 
‘decent  work  and 
economic growth’ (22). 

Other  EU  funds  make  significant  resources 
available for Bulgaria. The common agricultural 
policy  (CAP)  made  EUR  9.8  billion  available  in 
2014-2022,  and  will  continue  to  support  Bulgaria 
with  EUR  5.6  billion  in  2023-2027.  The  two  CAP 
Funds  (European  Agricultural  Guarantee  Fund  and 
Rural 
European 
Development),  contribute  to  the  European  Green 
Deal while ensuring long-term food security. They 
promote  social,  environmental  and  economic 

Agricultural 

Fund 

for 

(22)  Other EU funds contribute to the implementation of the 
SDGs. In 2014-2022, this includes both the European 
Agricultural Fund for Rural Development (EARDF) and the 
European Maritime and Fisheries Fund (EMFF). 

(23)  Country factsheets on reform support are available here. 

32 

2 447 2 016 694 184 348 2 790 1 396 1 269 1 201 919 05001 0001 5002 0002 5003 000SDG 9 Industry,innovation, infrast...SDG 8 Decent work andeconomic grow...SDG 4 Quality educationSDG 13 Climate actionSDG 1 No povertyEU CP 2014-2020 (millions EUR)EU CP 2021-2027 (millions EUR) 
   
                                                 
                                                 
adaptation’ (28), ‘sustainable use of resources’ and 
‘cybersecurity’. 

Table A5.1: Resilience indices summarising the 
situation across RDB dimensions and areas 

ANNEX 5: RESILIENCE 

This  Annex  illustrates  Bulgaria’s  relative 
resilience capacities and vulnerabilities using 
the  Commission’s 
resilience  dashboards 
(RDB) (24).  Comprising  a  set  of  124  quantitative 
indicators,  the  RDB  provide  broad  indications  of 
Member  States’  ability  to  make  progress  across 
four interrelated dimensions: social and economic, 
green, digital, and geopolitical. The indicators show 
vulnerabilities (25)  and  capacities (26)  that  can 
become  increasingly  relevant,  both  to  navigate 
ongoing  transitions  and  to  cope  with  potential 
future shocks. To this end, the RDB help to identify 
areas  that  need  further  efforts  to  build  stronger 
and  more  resilient  economies  and  societies.  They 
in  Table  A5.1  as  synthetic 
are  summarised 
resilience 
illustrate  the  overall 
relative  situation  for  each  of  the  four  dimensions 
and  their  underlying  areas  for  Bulgaria  and  the 
EU-27 (27). 

indices,  which 

slightly  higher 

According  to  the  set  of  resilience  indicators 
under the RDB, Bulgaria generally displays a 
similar  but 
level  of 
vulnerabilities  compared  to  the  EU  average. 
Bulgaria shows medium-high vulnerabilities in the 
social and economic and the digital dimensions of 
the RDB, medium vulnerabilities in the geopolitical 
dimension  and  medium-low  vulnerabilities  in  the 
green  dimension.  Compared  to  the  EU  average, 
Bulgaria has higher vulnerabilities in areas such as 
‘inequalities  and 
the 
the  social 
transitions’  (especially  due  to  its  high  AROPE  and 
income quintile share ratio) and most areas of the 
digital dimension (mainly due to limited access of 
individuals  and  businesses 
to  digital  public 
services and lack of cloud services). It shows lower 
vulnerabilities  compared  to  the  EU  average  in 
‘climate  change  mitigation  and 
relation 

impact  of 

to 

(24)  For details see https://ec.europa.eu/info/strategy/strategic-
planning/strategic-foresight/2020-strategic-foresight-
report/resilience-dashboards_en; see also 2020 Strategic 
Foresight Report (COM(2020) 493). 

(25)  Vulnerabilities describe features that can exacerbate the 

negative impact of crises and transitions, or obstacles that 
may hinder the achievement of long-term strategic goals. 

(26)  Capacities refer to enablers or abilities to cope with crises 
and structural changes and to manage the transitions.  

(27)  This Annex is linked to Annex 1 on SDGs, Annex 6 on the 
green deal, Annex 8 on the fair transition to climate 
neutrality, Annex 9 on resource productivity, efficiency and 
circularity, Annex 10 on the digital transition and Annex 14 
on the European pillar of social rights. 

33 

(1) Data are for 2021, and EU-27 refers to the value for the 
EU as a whole. Data underlying EU-27 vulnerabilities in the 
area ‘value chains and trade’ are not available as they 
comprise partner concentration measures that are not 
comparable with Member States’ level values. 
Source: JRC Resilience Dashboards – European Commission 

Compared to the EU average, Bulgaria shows 
an overall lower level of capacities across all 
RDB  indicators. 
It  has  overall  medium-low 
resilience  capacities  in  the  social  and  economic, 
the  green  and  the  digital  dimensions,  but  shows 
medium  capacities  in  the  geopolitical  dimension. 
While  Bulgaria  shows  stronger  capacities  relative 
to  the  EU  in  the  ‘value  chains  and  trade’  area, 
there is room for improving capacities in all areas 
of  the  social  and  economic,  the  green  and  the 
digital dimensions (29), but also regarding ‘financial 
globalisation’ and ‘security and demography’. 

(28)  For example, when looking at the per capita CO2 emissions 

from road transport and GHG emissions. 

(29)  For example, with respect to the impact of social transfers 
(other than pensions) on poverty reduction, resource 
productivity and circular material use rate, but also when it 
comes to the digital skills for adults and young people.  

BGEU-27BGEU-27Vulnerabilities IndexHighMedium-highMediumMedium-lowLowNot availableCapacities IndexHighMedium-highMediumMedium-lowLowNot availableDimension/AreaVulnerabilitiesCapacitiesSocial and economicHealth, education and workInequalities and social impact of the transitionsGreenEconomic & financial stability and sustainabilitySustainable use of resourcesClimate change mitigation & adaptationDigitalEcosystems, biodiversity, sustainable agricultureDigital for industryDigital for personal spaceCybersecurityDigital for public spaceRaw material and energy supplyGeopoliticalValue chains and tradeFinancial globalisationSecurity and demography 
 
                                                 
 
  
 
                                                 
 
 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 6: EUROPEAN GREEN DEAL 

green 

transition 

Bulgaria’s 
requires 
significant action on several aspects, notably 
the  energy  intensity  of  its  economy,  its 
heavy  dependence  on  coal,  and  its  relative 
lack  of 
long-term  climate  commitments. 
Implementation  of  the  European  Green  Deal  is 
underway  in  Bulgaria;  this  Annex  provides  a 
snapshot of the key areas involved (30).  

less  than 

Bulgaria  has  not  yet  defined  all  the  climate 
policy  measures  it  needs  to  reach  its  2030 
climate 
target  for  the  effort  sharing 
sectors (31).  Data  for  2021  on  greenhouse  gas 
emissions  in  these  sectors  are  expected  to  show 
its  annual 
the  country  generated 
emission  allocations (32).  Current  policies 
in 
Bulgaria  are  projected  to  keep  the  increase  of 
these  emissions  contained  at  11%  relative  to 
2005  levels  in  2030.  The  additional  measures 
tabled  would  contain  them  at  an  increase  of  6%. 
This still too high to comply with the effort sharing 
target  even  before  the  target  was  made  more 
ambitious  to  meet  the  EU’s  55%  objective,  let 
alone Bulgaria’s new target to reduce emissions by 
10% (33).  In  its  recovery  and  resilience  plan  (RRP), 
Bulgaria has allocated 58.9 % of its Recovery and 

(30)  The overview in this Annex is complemented by the 

information provided in Annex 7 on energy security and 
affordability, Annex 8 on the fair transition to climate 
neutrality and environmental sustainability, Annex 9 on 
resource productivity, efficiency and circularity, Annex 11 on 
innovation, and Annex 19 on taxation. 

(31)  Member States’ greenhouse gas emission targets for 2030 
(‘effort sharing targets’) were increased by Regulation (EU) 
2023/857 (the Effort Sharing Regulation) amending 
Regulation (EU) 2018/842, aligning the action in the 
concerned sectors with the objective to reach EU-level, 
economy-wide greenhouse gas emission reductions of at 
least 55% relative to 1990 levels. The Regulation sets 
national targets for sectors outside the current EU Emissions 
Trading System, notably: buildings (heating and cooling), road 
transport, agriculture, waste, and small industry. Emissions 
covered by the EU ETS and the Effort Sharing Regulation are 
complemented by net removals in the land use sector, 
regulated by Regulation (EU) 2018/841 (the Land Use, Land 
Use Change and Forestry (LULUCF) Regulation) amended by 
Regulation (EU) 2023/839.  

(32)  Bulgaria's annual emission allocations for 2021 were some 
27.1 Mt CO2eq, and its approximated 2021 emissions were 
at 25.5 Mt. See European Commission, Accelerating the 
transition to climate neutrality for Europe’s security and 
prosperity: EU Climate Action Progress Report 2022, 
SWD(2022)343). 

(33)  See the information on the distance to the 2030 climate 

policy target in Table A6.1. Existing and additional measures 
as at 15 March 2021.  

Resilience  Facility  grants  to  key  reforms  and 
to  attain  climate  objectives (34). 
investments 
Bulgaria’s  RRP 
targets  for 
reducing  carbon-dioxide  emissions  in  its  power 
sector by 40% by 2025 (35).  

includes  binding 

Graph A6.1: Thematic – greenhouse gas emissions 
from the effort sharing sectors in Mt CO2eq, 
2005-2021 

Source: European Environmental Agency. 

Bulgaria is not on track to meet its 2030 net 
carbon  removals  target  for  its  land  use 
sector.  Bulgaria’s  forests  achieve  a  major  share 
of  net  carbon  removals  through  land  use.  For 
2030,  Bulgaria’s  land  use,  land-use  change  and 
forestry (LULUCF) target implies to remove 9 718 
(see  Table  A6.1) (36).  However,  net 
kt CO2eq 
removals do not reach this level and have fallen in 
recent years. 

Fossil  fuels  still  play  a  major  role 
in 
Bulgaria’s  energy mix.  In  2021,  coal  accounted 
for 26% of Bulgaria’s energy mix, and natural gas 
for 14%, while 15% came from renewable sources 
(see  Graph  A6.2).  Bulgaria’s  electricity  mix  is 
dominated  by  nuclear  (35%)  and  coal  (36%). 
Renewables  come  in  third,  with  22%  in  2021. 

(34)  For example, investments and reforms are ongoing to 

develop the sustainable potential for the energy transition, 
low-emission mobility, and electricity generation. Few 
measures have been completed, including legislative reforms 
on renewable capacity and energy efficiency.  

(35)  Updating the plan is mandated by Regulation (EU) 

2018/1999 (the Governance Regulation). The measures in 
Bulgaria’s RRP will need to be reflected in the country’s 
updated national energy and climate plan at the end of 
2023, together with additional measures needed to meet the 
strengthened Fit for 55 ambition. See Annex 8 for further 
aspects of the just transition. 

(36)  This value is indicative and will be updated in 2025 (as 

mandated by Regulation (EU) 2023/839). 

34 

05101520253020052021Domestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
 
 
                                                 
        
                                                 
 
 
According to the national energy and climate plan 
in  2030,  the  share  of  renewable  energy  in 
Bulgaria’s  energy  mix  should  increase  to  27.09% 
of  gross  final  energy  consumption.  Bulgaria  will 
need  to  substantially  strengthen  its  renewable 
energy  target  in  the  updated  NECP,  to  reflect  the 
more  ambitious  EU  climate  and  energy  targets  in 
the Fit for 55 Package and in the REPowerEU Plan. 
Bulgaria  has  yet  to  commit  to  phasing  out  coal; 
however,  such  a  commitment  is  included  as  a 
reform under the RRP. 

Graph A6.2: Energy mix (top) and Electricity mix 
(bottom), 2021 

sources,  such  as  green  hydrogen,  geothermal  and 
biogas, and iii) building up large electricity storage 
capacities. Expanding renewable energy  and other 
low-carbon 
geothermal, 
particularly  for  power  generation,  will  also  reduce 
to 
import 
decarbonisation. 

dependency 

contribute 

sources 

such 

and 

as 

for 

call 

actions 

Planned 
swift 
implementation  and  further  acceleration  of 
energy  efficiency.  Bulgaria’s  NECP  targets  for 
primary  and  final  energy  consumption  (PEC  and 
low  and  very  low 
FEC)  were  considered  as 
ambition  respectively  in  the  2020  Commission 
assessment.  Based  on  the  energy  consumption 
trajectory for 2018-2021, Bulgaria is not expected 
to  be  on  track  to  meet  its  2030  targets  for  PEC 
and for FEC, as these were notified in its NECP. (37) 
Similar  to  renewables,  Bulgaria  will  also  need  to 
strengthen both targets in the upcoming update to 
the  NECP,  also  in  light  of  more  ambitious  EU 
targets  in  the  REPowerEU  plan  and  Fit  for  55 
Package.  Bulgaria  has  not  achieved  the  energy 
savings  obligation 
the  Energy 
Efficiency  Directive.  Together  with  reforms  aimed 
to 
at 
efficiency 
energy 
investments  and 
the  administrative 
reducing 
burden  linked  to  renovation,  the  Bulgarian  RRP 
envisages  over  EUR  1  billion  of  investments  in 
energy  efficiency  measures  intended  for  public 
and  private  building  stock  with  the  ambition  of 
achieving  savings  of  at  least  30%  in  primary 
energy demand. 

tackling  barriers 

target  under 

The  transition  to  sustainable  transport 
remains  a  significant  challenge,  and  air 
pollution  continues to  be  a  major  concern.  In 
2020,  road  transport  accounted  for  92%  of  all 
transport  emissions  in  Bulgaria,  and  24%  of  the 
country’s  greenhouse  gas  emissions  overall,  a 
28% increase since 2005 (38). The uptake of zero-
emission passenger cars is low, as is the density of 
public electric charging points; both are only slowly 
improving (39).  Delays  in  the  progress  of  the 
Bulgarian section of the Trans-European Transport 

(37)  After the conclusion of the negotiations for a recast EED, the 
ambition of both the EU and national targets as well as of 
the national measures for energy efficiency to meet these 
targets is expected to increase. 

(38)  EU transport in figures – Statistical Pocketbook 2022. 

(39)  The number of public charging points increased from 18 in 
2015 to 531 in 2021, but the density of public charging 
points is among the lowest in the EU (0.6 per 100 km2 of 
land area, far below the average of 13.5). 

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 

Renewable  energy  plays  a  key  role 
in 
decarbonising  Bulgaria’s  energy  system.    A 
large  share  of  the  investments  in  the  RRP  are 
targeted  at  i)  tripling  power  generation  from 
renewables  (adding  3.5  GW  additional  capacity), 
ii) accelerating  deployment  of  alternative  energy 

35 

26%14%23%22%15%Solid fossil fuels,peat and oil shaleGasOilNuclearRenewables36%6%1%22%35%Solid fossil fuelsNatural gasOilRenewablesNuclear 
   
                                                 
in 

Network, especially in its rail infrastructure, inhibit 
multimodality  and  limit  the  potential  to  improve 
transport (40). 
efficiency  and  sustainability 
Moreover, Bulgaria is among the worst-performing 
Member  States  on  pollution-related  deaths, 
number  of  years  of  life  lost  due  to  air  pollution, 
and  exposure  of  urban  population  to  micro-
particles (41).  Besides, 
further  measures  are 
urgently needed to reduce ammonia emissions (42). 
Bulgaria’s  RRP  aims  to  address  some  of  these 
issues via targeted measures on sustainable urban 
mobility, deploying alternative fuels infrastructure, 
rail development and digitalisation, allocating EUR 
666 million to decarbonising transport. 

Graph A6.3: Thematic – environmental investment 
needs and current investment, p.a. 2014-2020 

Source: European Commission. 

Bulgaria  would  benefit  from  investing  more 
in  meeting  environmental  objectives  and 
taking  more  action  to  protect  biodiversity 
and prevent and control pollution (43). Between 

(40)  Transport connectivity programme for Bulgaria for 2021-

2027. 

(41)  The latest available annual estimates (for 2020) by the 
European Environment Agency point to over 12 600  
premature deaths attributable to fine particulate matter 
(PM), nitrogen oxide, and other air pollutants. 

(42)  Ammonia emissions are mostly produced by agriculture and 
are a main precursor to the formation of particulate matter. 
Bulgaria does not comply with its commitments on ammonia 
under the National Emission Reduction Commitments 
Directive and is not expected to be compliant even by 2025 
(information as of August 2021). 

(43)  Environmental objectives include pollution prevention and 

control, water management and industries, circular economy 
and waste, biodiversity and ecosystems (European 
Commission, 2022, Environmental Implementation Review, 
country report Bulgaria) 

2014  and  2020,  environmental  investment  needs 
were  estimated  to  be  at  least  EUR  3  billion  while 
investment stood at about EUR 1.2 billion. This left 
a gap of at least EUR 1.8 billion overall (see Graph 
A6.3) (44).  The investment gap  for biodiversity and 
ecosystems  was  the  most  significant  (EUR  1 093 
million  –  59%  of  the  overall  investment  gap). 
Bulgaria  also  has  the  potential  to  rely  more  on 
environmental  taxes  to  promote  waste  reduction 
and further internalise the costs of air pollution (45) 
(see Annex 19). 

Bulgaria is particularly vulnerable to climate 
change-related  extreme  events  (droughts, 
heat waves, heavy rainfall, and floods). Such 
events are projected to increase in frequency and 
intensity.  The  most  vulnerable  sectors  are 
agriculture  and  the  urban  environment,  followed 
by  energy,  tourism,  transport,  and  health (46). 
Mortality  and  morbidity  are  also  projected  to  rise 
significantly (47).  Bulgaria’s  national  adaptation 
strategy  and  action  plan  have  specific  sectoral 
approaches.  The  underlying  risk  and  vulnerability 
assessments date back to 2014, which warrant an 
update.  Bulgaria’s  RRP  and  common  agricultural 
policy  strategic  plan  envisage  investments  in 
adaptive  capacities  in  agriculture,  and  measures 
for  urban  environments  and  water  management. 
Bulgaria  has  a  pronounced  gap  in  insurance 
protection 
in 
particular  for  floods,  which  could  pose  a  risk  to 
public  finances  if  the  insurance  penetration  rate 
remains low (48).  

risk  categories, 

for  different 

and 

fuel 

provides 

Bulgaria 
other 
fossil 
environmentally  harmful  subsidies  that  could  be 
considered  for  reform,  while  ensuring  food  and 
energy  security  and  mitigating  social  effects. 
Fossil fuel subsidies in Bulgaria accounted for EUR 
592  million  in  2020,  a  78%  increase  since  2015, 

(44)  When also accounting for needs estimated at EU level only 

(e.g., water protection, higher circularity, biodiversity 
strategy). 

(45)  European Commission, 2021, Green taxation and other 

economic instruments – Internalising environmental costs to 
make the polluter pay, Ensuring that polluters pay 
(europa.eu) 

(46)  European Environment Agency, Climate adapt website - 

Bulgaria. 

(47)  According to the 6th IPCC climate adaptation report, it is 
expected that extreme weather events will disrupt water 
supplies impacting morbidity, mortality and mental health. 

(48)  European Insurance and Occupational Pensions Authority 
(EIOPA) dashboard on insurance protection gap for natural 
catastrophes. 

36 

222401289214536826213541 307600.0200.0400.0600.0800.01000.01200.01400.0Pollutionprevention andcontrolWater (industries,excl. protection)Circular economy(incl. waste)Biodiversity andecosystemsR&I&D and otherEUR million (at current prices)Current investmentTotal need 
        
                                                 
                                                 
low-carbon  alternatives 

which  puts 
to  a 
disadvantage.  Environmentally  harmful  subsidies 
have  been  identified,  via  an  initial  assessment,  in 
the  agriculture,  forestry  and  fishing,  electricity, 
gas, steam and air conditioning, transportation and 
storage  and  mining  and  quarrying  sectors. 
Examples  of  such  subsidies  include  the  reduced 
VAT rate for fertilisers and pesticides or the excise 
tax  exemption  on  the  use  of  natural  gas (49).  A 
mapping  of  all  environmentally  harmful  subsidies 
by  Bulgaria  would  help  prioritise  candidates  for 
reform. 

(49)  Fossil fuel figures in EUR of 2021 from the 2022 State of 

the Energy Union report. Initial assessment of 
environmentally harmful subsidies done by the Commission 
in the 2022 toolbox for reforming environmentally harmful 
subsidies in Europe, using OECD definitions, and based on the 
following datasets: OECD Agriculture Policy Monitoring and 
Evaluations; OECD Policy Instruments for the Environment 
(PINE) Database; OECD Statistical Database for Fossil Fuels 
Support; IMF country-level energy subsidy estimates. Annex 4 
of the toolbox contains detailed examples of subsidies on 
the candidates for reform. 

37 

 
                                                 
Table A6.1: Indicators tracking progress on the European Green Deal from a macroeconomic perspective 

Sources: (1) Historical and projected emissions, as well as Member States’ climate policy targets and 2005 base year emissions 
under the Effort Sharing Decision (for 2020) are measured in global warming potential (GWP) values from the 4th Assessment 
Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC). Member States’ climate policy targets and 2005 base 
year emissions under the Effort Sharing Regulation (for 2030) are in GWP values from the 5th Assessment Report (AR5). The 
table above shows the base year emissions 2005 under the Effort Sharing Decision, using AR4 GWP values. Emissions for 2017-
2021 are expressed in percentage change from 2005 base year emissions, with AR4 GWP values. 2021 data are preliminary. The 
table shows the 2030 target under Regulation (EU) 2023/857 that aligns it with the EU’s 55% objective, in percentage change 
from 2005 base year emissions (AR5 GWP). Distance to target is the gap between Member States’ 2030 target (with AR5 GWP 
values) and projected emissions with existing measures (WEM) and with additional measures (WAM) (with AR4 GWP values), in 
percentage change from the 2005 base year emissions. Due to the difference in global warming potential values, the distance to 
target is only illustrative. The measures included reflect the state of play as of 15 March 2021.  
(2) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2023 
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 
amending Regulation (EU) 2018/841 (LULUCF Regulation) – Annex IIa, kilotons of CO2 equivalent, based on 2020 submissions. 
(3) Renewable energy and energy efficiency targets and national contributions are in line with the methodology established under 
Regulation (EU) 2018/1999 (Governance Regulation).  
(4) Percentage of total revenue from taxes and social contributions (excluding imputed social contributions). Revenue from the EU 
Emissions Trading System is included in environmental tax revenue.  
(5) Expenditure on gross fixed capital formation for the production of environmental protection services (abatement and 
prevention of pollution) covering government, industry, and specialised providers.  
(6) European Commission, Study on energy subsidies and other government interventions in the European Union, 2022 edition.  
(7) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters. This 
indicator is based on modelling of the current risk from floods, wildfires and windstorms as well as earthquakes, and an 
estimation of the current insurance penetration rate. The indicator does not provide information on the split between the 
private/public costs of climate-related disasters. A score of 0 means no protection gap, while a score of 4 corresponds to a very 
high gap (EIOPA, 2022).  
(8) Sulphur oxides (SO2 equivalent), ammonia, particulates < 10 µm, nitrogen oxides in total economy (divided by GDP).  
(9) Battery electric vehicles (BEV) and fuel cell electric vehicles (FCEV). 

38 

2030200520172018201920202021target/valueWEMWAMGreenhouse gas emission reductions in effort sharing sectors (1)Mt CO2eq; %; pp22.1220%19%17%16%--10-21-16Net carbon removals from LULUCF (2)kt CO2eq-16,460-9,426-9,564-9,366-9,406-9,144-9718(cid:10)n/an/a200520172018201920202021Share of energy from renewable sources in gross final consumption of energy (3)%9%19%21%22%23%17%27.0Energy efficiency: primary energy consumption (3)Mtoe19.218.318.418.217.218.617.5Energy efficiency: final energy consumption (3)Mtoe10.19.99.99.89.510.310.3201620172018201920202021201920202021Environmental taxes (% of GDP)% of GDP2.982.802.622.993.032.782.42.22.2Environmental taxes (% of total taxation)(4)% of taxation 10.209.388.819.859.899.065.95.65.5Government expenditure on environmental protection% of total exp.1.901.931.891.901.751.901.71.61.6Investment in environmental protection (5) % of GDP0.60.40.50.4--0.40.40.4Fossil fuel subsidies (6)EUR2021bn0.50.50.50.60.6-53.050.0-Climate protection gap (7) score 1-42.02.01.5Net greenhouse gas emissions1990 = 10057.061.058.056.052.055.076.069.072.0Greenhouse gas emission intensity of the economykg/EUR'101.441.451.331.251.20-0.310.300.26Energy intensity of the economykgoe/EUR'100.430.430.420.400.40-0.110.11-Final energy consumption (FEC)2015=100101.7104.3104.5103.7100.5108.3102.994.6101.1FEC in residential building sector2015=100102.7105.7101.798.6108.6109.6101.3101.3106.8FEC in services building sector2015=100107.3108.2114.1117.5100.1120.6100.194.3100.7Smog-precursor emission intensity (to GDP) (8)tonne/EUR'103.833.533.252.962.87-0.930.86-Years of life lost due to air pollution by PM2.5per 100.000 inh.2027.11961.41836.01523.91553.6-581.6544.5-Years of life lost due to air pollution by NO2per 100.000 inh.281.1291.4287.7280.1245.3-309.6218.8-Nitrates in ground watermg NO3/litre32.829.729.829.530.5-21.020.8-Land protected areas% of total34.340.5-41.041.041.026.226.426.4Marine protected areas% of total8.1--8.1-8.010.7-12.1Organic farming% of total utilised agricultural area3.22.72.62.32.31.78.59.1-201720182019202020212022202020212022Share of zero-emission vehicles (9)% in new registrations0.20.40.51.22.23.15.48.910.7Number of AC/DC recharging points (AFIR categorisation)---195664955188626330028432518Share of electrified railways%71.271.271.271.271.271.356.6n/a56.6Hours of congestion per commuting driver per year34.135.836.237.3n/an/a28.7n/an/aMobilityFiscal and financialindicatorsEnergyPollutionBiodiversityClimate'Fit for 55'DistanceProgress to policy targetsNational contribution to 2030 EU targetBULGARIAEU 
 
  
 
ANNEX 7: ENERGY SECURITY AND AFFORDABILITY 

Following  Russia´s 
invasion  of  Ukraine, 
its  gas  suppliers, 
Bulgaria  diversified 
however  it  continues  to  depend  heavily  on 
fossil fuels. From a country highly dependent on 
Russian  gas,  Bulgaria  had  its  gas  supplies  from 
Russia  cut  and  now  receives  gas  via  a  pipeline 
from  Azerbaijan  and  the  remainder  via  liquefied 
natural  gas  (LNG).  As  an  economy  still  highly 
dependent  on  fossil  fuels,  even  though  the  share 
of  natural  gas  in  the  energy  mix  is  limited,  the 
impact  of  global  price  developments  was 
significant  in  the  country.  This  Annex (50)  sets  out 
actions  carried  out  by  Bulgaria  to  achieve  the 
REPowerEU  objectives, 
the 
implementation of its recovery and resilience plan, 
in  order 
improve  energy  security  and 
affordability  while  accelerating  the  clean  energy 
transition,  and  contributing  to  enhancing  the  EU’s 
competitiveness in the clean energy sector (51).  

including 

through 

to 

Bulgaria  showed  a  high  level  of  security  of 
gas  supply 
in  the  face  of  challenging 
circumstances,  in  particular  its  gas  supplies 
being  cut  after  the  national  company 
Bulgargas refused to pay Gazprom in roubles. 
Its  natural  gas  infrastructure  contributes  to  the 
security  of  supply  of  south-eastern  Europe. 
Bulgaria  fulfilled  its  gas  storage  obligations  last 
winter,  reaching  91.53%  by  1  November  2022 
(more  than  10  percentage  points  above  its  legal 
obligation),  and  ended  the  heating  season  with  a 
filling  gas  storage  at  77.54%  by  15  April (52). 
Bulgaria operates one underground storage facility 
with  a  total  capacity  of  0.59  billion  cubic  metres 
(bcm), representing around 23 % of its total yearly 
demand. Gazprom, the main single gas supplier to 
incumbent  Bulgargaz,  stopped 
the  national 

(50)  It is complemented by Annex 6 as the European Green Deal 
focuses on the clean energy transition, by Annex 8 on the 
actions taken to mitigate energy poverty and protect the 
most vulnerable ones, by Annex 9 as the transition to a 
circular economy will unlock significant energy and resource 
savings, further strengthening energy security and 
affordability, and by Annex 12 on industry and single market 
complementing ongoing efforts under the European Green 
Deal and REPowerEU. 

(51)  In line with the Green Deal Industrial Plan COM(2023) 62 
final, and the proposed Net-Zero Industry Act COM(2023) 
161 final 

(52)  Regulation of the European Parliament and of the Council 
amending Regulations (EU) 2017/1938 and (EC) No 
715/2009 with regard to gas storage and Implementing 
Regulation (EU) 2022/2301 of 23 November 2022 setting 
the filling trajectory with intermediary targets for 2023 for 
each Member State with underground gas storage facilities 
on its territory and directly interconnected to its market area. 

39 

supplying  gas  in  April  2022.  Given  the  lack  of 
immediate alternatives of gas supplies, this abrupt 
cut-off  was  substituted  by  short-term  contracts 
for  LNG  deliveries  via  the  Revythousa  LNG 
terminal 
interconnector 
in  Greece.  The  gas 
(IGB)  started 
between  Greece  and  Bulgaria 
operations in October 2022. This enabled Bulgaria 
to receive the full volumes of contracted supplies 
from  Azerbaijan  (1  bcm/year,  covering  roughly 
30%  of  domestic  consumption).  On  1  February 
2023, Bulgaria and Serbia announced the start of 
construction  works  on  the  natural  gas  pipeline 
connecting  Bulgariaand  Serbia  in  Kostinbrod,  with 
a  capacity  of  1.8  bcm/year  expected  to  be 
operational by mid-2023. 

Graph A7.1: Underground gas storage levels in 
Bulgaria 

Source: JRC calculation based on AGSI+ Transparency 
Platform, 2022 (Last update 2 May 2023) 

The  nuclear  fuel  diversification  process  is 
well  advanced.  The  two  operating  VVER-1000 
nuclear  reactors  are  dependent  on  a  Russian  fuel 
supply, with fuel in stock for a minimum of 1 year. 
Bulgaria  has  recently  signed  a  contract  with 
Westinghouse Sweden for an alternative supply of 
nuclear  fuel  for  Kozloduy Unit  5,  which  should be 
in  use  as  of  mid-2024.  Another  recent  contract 
with  Framatome  envisages  delivery  of  Russian-
designed fuel by TVEL to Unit 6 as of 2025. This is 
manufactured  in  the  EU  based  on  a  joint  venture 
between Framatome and TVEL. 

Electricity  security  in  Bulgaria  does  not  rely 
on  natural  gas.  Bulgaria  is  a  net  electricity 
exporter  (around  7.5  TWh  on  average  per  year 
between  2010  and  2020,  of  which  3.4  TWh  in 
2020,  the  lowest  level  since  2010).  Net  exports 
increased  to  8.8  TWh  in  2021.  Over  the  period 
August  2022  –  March  2023,  22%  of  gas 
consumption has been saved in Bulgaria compared 
to the previous 5-years average. 

 
 
                                                 
 
 
 
Graph A7.2: Gas consumption in Bulgaria, 2021 

Graph A7.4: Bulgaria´s retail energy prices for 
industry (top) and households (bottom) 

Source: Eurostat 

Graph A7.3: Gas consumption per industry, in 
thousands of terajoules – 2021 

(1) On electricity, the band consumption is DC for households 
and ID for industry 
(2) On gas, the band consumption is D2 for households and I4 
for industry  
Source: Eurostat 

Despite the mechanisms introduced by Bulgaria to 
mitigate  soaring  energy  prices  for  non-household 
consumers, the impact is severe. Regulated tariffs 
are  used  in  Bulgaria  to  charge  households  for 
electricity  and  district  heating.  These  tariffs  were 
changed once in 2022, with an increase of 3% for 
electricity  and  39%  for  district  heating,  showing 
minor  price  increase  compared  to  the  EU (53). 
Nevertheless,  an  estimated  share  of  almost 
23.7 %  of  the  population  is  at  risk  of  energy 
poverty (54).  However,  the  surge  in  energy  prices 
has  had  a  considerable  impact  on  Bulgarian 
industry,  which  accounted  for  two-thirds  of  gas 
consumption  in  the  country  in  2021  (see  Graph 
A7.2).  Sectors 
fertilisers,  metals, 
chemicals and glass are highly exposed to energy 
shocks  and  are  experiencing  growing  pressure  to 
either  raise  their  prices  to  safeguard  margins  or 
reduce production due to the high share of energy 
consumption. 

involving 

(53)  Annex 8 looks at the impact of soaring energy prices on the 

most vulnerable households. 

(54)  The Energy Poverty Advisory Hub – National indicators 

(europa.eu) 

Source: Eurostat 

Bulgaria  is  upgrading  its  grid  infrastructure,  but 
further  infrastructure  investments  are  needed  to 
accommodate  a  higher  share  of 
renewable 
electricity.  As  part  of  its  recovery  and  resilience 
plan,  Bulgaria  will  carry  out 
investments  to 
digitalise  the  electricity  transmission  grid  to 
increase the  integration  of  new  renewable  energy 
sources  with  capacity  of  4  500 MW  and  the 
interconnection  with  the  neighbouring  Member 
states  by  2  500 MW.  In  addition,  Bulgaria  plans 
massive investment in energy storage to ease the 
integration  of  renewable  energy  sources.  The 
electricity  cross-border  interconnection  level  of 
23.51%  in  2022  is  still  significantly  above  the 
interconnection target of 10% for 2020 and 15% 
for  2030.  Progress  on  Projects  of  Common 
Interest, including the Bulgaria–Serbia gas pipeline 
and  expansion  of  the  Chiren  gas  storage  facility 
(with  completion  and  commissioning  dates  in 
2024-2025), is important to significantly increase 
interconnection  levels  with  neighbouring  countries 
and  contribute  to  the  security  of  gas  supplies  to 
Bulgaria and the region.  

40 

44.7%42.0%5.1%3.8%4.0%0.4%EnergyIndustryTransportServices and public sectorHouseholdsAgriculture, forestry andfishery0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%Iron and steelChemical and petrochemicalNon-ferrous metalsNon-metallic mineralsTransport equipmentMachineryMining and quarryingFood, beverages and tobaccoPaper, pulp and printingWood and wood productsConstructionTextile and leather050100150200250€/MWhGas BulgariaGas EUElectricity BulgariaElectricity EU050100150200250300€/MWhGas BulgariaGas EUElectricity BulgariaElectricity EU 
      
 
   
      
                                                 
Bulgaria  has  huge  potential  to  transform  its 
energy  system  and  decarbonise  the  economy, 
which is currently the most carbon intensive in the 
EU.  Bulgaria’s  installed  capacity  of  renewable 
energy  reached  a  total  of  5 205  MW  in  2022, 
increasing  by  14.8%  compared  to  2021 (55).  Most 
of  this  growth  was  in  solar  (+52.8%  in  2022), 
following the trend of the last decade (1 948 MW 
in  2022  against  25  MW  in  2010).  The  recovery 
includes  measures  on 
and 
resilience  plan 
renewable  energy 
permitting  procedures 
for 
sources 
for 
shorten 
to 
administration  and  system  operators,  as  well  as 
define go-to areas. In January 2023, the Bulgarian 
Parliament  adopted  legislative  amendments  that 
simplify  and  streamline  the  process  of  setting  up 
small-scale rooftop solar installations by excluding 
the  need  for  construction  permits.  There  is  still 
potential  to  further  explore  key  sectors  to  meet 
the 
renewables  penetration  and 
decarbonisation  targets,  for  example  in  heating 
and cooling and in buildings.  

country´s 

deadlines 

the 

from 

to  benefit 

approximately 

boilers  with 

Bulgaria  is  also  continuing  its  programme  on 
renovating  and  promoting  energy  efficiency 
measures  in  private  and  public  buildings  (e.g. 
subsidies for households to install solar panels  or 
solar 
10 000 
the  measure). 
households 
However, the share of Bulgarian households below 
poverty and social exclusion threshold that cannot 
properly  warm  their  homes  is  the  highest  at  EU 
level,  about  43%  in  2021.  Energy  renovation  can 
deliver  a  structural  answer  to  this  issue.  Single-
family  buildings  which  represent  the  biggest  part 
of  the  residential  building  stock  are  insufficiently 
addressed.  Development  of  one  stop  shops  and 
wider  promotion  campaigns  will  facilitate  and 
the  country. 
enhance  energy 
renovation 
for  energy 
Furthermore, 
renovation  are  not  sufficiently  developed  in  order 
to  support  the  transition  to  more  market-based 
renovations.  Additional  training  and  education 
renovation  and 
to  energy 
activities 
renewable  energy  integration  in  buildings  are 
needed in order to trigger job creation and secure 
a  proper 
implementation  of  measures,  while 
avoiding lock-in effects due to improper execution 
of  works (56).  Bulgaria  is  carrying  out  a  very  low 

in 
schemes 

financial 

related 

(55)  IRENA, Renewable capacity statistics 2023 

(56)  After the conclusion of the negotiations for a recast Energy 

Efficiency Directive, the ambition of both the EU and national 
targets as well as of the national measures for energy 
efficiency to meet these targets is expected to increase. 

41 

number  of  checks  on  products  covered  by 
ecodesing  and  energy  labelling.  This  generates 
serious  concerns  with  respect  to  the  level  playing 
field  among  economic  operators  and  uncertainty 
as  to  the  compliance  levels  of  the  concerned 
products,  and  therefore  possible  missed  energy 
and CO2 savings (57). 

Bulgaria  has  not  yet  tapped 
into  potential 
consumer  empowerment,  whether  individually  as 
prosumers  or  jointly  through  energy  communities 
or  energy  sharing  arrangements.  Consumer 
empowerment can help achieve public acceptance 
of  the  energy  transition,  mobilise  private  capital 
investment  in  renewables,  bring  about  flexibility, 
as  well  as  ensure  consumer  access  to  low-cost 
renewables. The growth of individual and collective 
consumer  action  is  expected  as  a  result  of  an 
improved 
(Renewable 
Energy  Act),  which  is  envisaged  in  the  national 
recovery and resilience plan. 

framework 

regulatory 

(coal 

Bulgaria  could  benefit  from  supporting  research 
and  innovation  with  a  focus  on  manufacturing 
low-carbon  technologies  and  components.  The 
number  of  patent  families 
in  Energy  Union 
priorities  per  million  of  inhabitants  is  the  lowest 
among  all  Member  States  and  has  shown  no 
progress  in  the  last  decade.  The  potential  for 
producing clean energy technologies, such as solar 
power equipment, in particular in areas with a high 
concentration  of  experts 
regions  and 
industrial zones) needs to be explored. Private R&I 
investments in the EU Energy Priorities (58) remain 
low (3.1 M EUR in 2019 compared to 6.5 M EUR in 
2018).  Bulgaria  is  listed  as  one  of  the  EU 
emerging  innovators  according  to  the  European 
innovation  Scoreboard  2022,  with  a  mixed 
performance on climate change related indicators, 
energy 
with  GHG 
consumption  above  the  EU  average (59).  The 
Cleantech  Bulgaria (60)  -  partner  of  the  EIT 
Climate-KIC, 
EIT 
manufacturing  -  aims  at  increasing  the  potential 
for innovation and sustainable economic growth in 
the  fields  of  clean  technologies,  bio-technology 

intensity  of 

InnoEnergy 

emissions 

and 

EIT 

(57)  The internet-supported information and communication 
system for the pan-European market surveillance 

(58)  Renewables, smart systems, efficient systems, sustainable 

transport, carbon capture, utilisation and storage, and nuclear 
safety, COM(2015) 80 final (Energy Union Package).  

(59)  https://ec.europa.eu/assets/rtd/eis/2022/ec_rtd_eis-country-

profile-bg.pdf  

(60)  https://cleantech.bg/en/about-us/  

 
                                                 
                                                 
of 

and  environmental 
innovation,  to  foster  the 
innovation 
development 
the  Bulgarian 
ecosystem.    Regarding  the  labour  market,  despite 
2021 was a difficult year, and the skill shortages 
currently  experienced  in  the  market  will  likely 
increase,  the  green  transition  and  the  measures 
included  in  the  National  Recovery  and  Resilience 
Plan  will  also  trigger  a  demand  for  new  skills  in 
the  labour  market (61).  In  2021,  out  of  the  22.3 
thousand  jobs  in  the  Renewable  Energy  Sector  in 
Bulgaria, the Solid Biomass sector ranked first with 
9.7  thousand  jobs,  followed  by  Hydropower  (5.5  
thousand  jobs)  and  liquid  biofuels  (2.4  thousand 
jobs).  

(61)  Labour market information: Bulgaria (europa.eu) 

42 

 
                                                 
Table A7.1: Key Energy Indicators 

(1) The ranking of the main supliers is based on the latest available figures (for 2021) 
(2) FSRU included 
Source:  Eurostat, Gas Infrastructure Europe (Storage and LNG Transparency Platform), JRC SETIS (2022), JRC elaboration based 
on PitchBook data (06/2022) 

43 

EU20182019202020212018201920202021Import Dependency [%] 36%38%38%36%58%61%57%56%of Solid fossil fuels 10%7%9%10%44%44%36%37%of Oil and petroleum products 96%103%98%97%95%97%97%92%of Natural Gas 99%100%96%96%83%90%84%83%Dependency from Russian Fossil Fuels [%]of Hard Coal79%100%85%88%40%44%49%47%of Crude Oil 64%63%0%0%30%27%26%25%of Natural Gas 100%79%75%80%40%40%38%41%20152016201720182019202020212022Gross Electricity Production (GWh)49227452794561346838442774075447568-Combustible Fuels24840220882363322606215731782723079-Nuclear15383157761554516125165551662616487-Hydro6147456834935423338333205067-Wind1452142515041318131714771434-Solar 1382138814031343141714691467-Geothermal 0000000-Other Sources23343422313635-Net Imports of Electricity (GWh)-10575-6372-5480-7807-5810-3408-8778-   As a % of electricity available for final consumption -36%-21%-17%-25%-19%-11%-28%-Electricity Interconnection (%)--7.10%9.31%9.20%11.30%14.68%23.51%20152016201720182019202020212022*Gas Consumption (in bcm)33.13.232.933.42.7Gas Imports - by type (in bcm)3.03.13.33.12.92.93.3n.a.Gas imports - pipeline3.03.13.33.12.92.93.3n.a.Gas imports - LNG0.00.00.00.00.00.00.0n.a.Gas Imports - by main source supplier (in bcm) (1)Russia3.03.13.33.12.32.22.6n.a.Greece0.00.00.00.00.60.60.4n.a.Azerbaijan0.00.00.00.00.00.00.3n.a.Romania0.00.00.00.00.00.10.0n.a.2019202020212022LNG TerminalsNumber of LNG Terminals (2)0000LNG Storage capacity (m3 LNG)0000Underground StorageNumber of storage facilities1111Operational Storage Capacity (bcm)0.60.60.60.62019202020212022VC investments in climate tech start-ups and scale-ups (EUR Mln)n.a.n.a.n.a.n.a.as a % of total VC investments in Bulgarian.a.n.a.n.a.n.a.Research & Innovation spending in Energy Union R&i prioritesPublic R&I (EUR mln)n.a.n.a.n.a.n.a.Public R&I (% GDP)n.a.n.a.n.a.n.a.Private R&I (EUR mln)3.1n.a.n.a.n.a.Private R&I (% GDP)0.01%n.a.n.a.n.a.BULGARIAENERGY DEPENDENCECLEAN ENERGYDIVERSIFICATION OF GAS SUPPLIESELECTRICITY 
 
     
 
ANNEX 8: FAIR TRANSITION TO CLIMATE NEUTRALITY 

This  Annex  monitors  Bulgaria’s  progress  in 
ensuring  a  fair  transition  towards  climate 
neutrality  and  environmental  sustainability, 
notably  for  workers  and  households 
in 
vulnerable situations. The provision of upskilling 
and reskilling relevant for the green transition will 
contribute  to  the  effective  implementation  of 
REPowerEU  and  the  Council  Recommendation. (62) 
Bulgaria’s  recovery  and  resilience  plan  (RRP) 
envisages reforms and investment for a fair green 
transition,  complemented  by  measures  under  the 
European Social Fund Plus (ESF+) (see Annex 4).  

The  green  economy  is  on  a  growing  trend  in 
Bulgaria.  The  greenhouse  gas  (GHG)  emissions 
per person employed declined from 16.9 tonnes in 
2015 to 15 in 2021 and are slightly above the EU 
average of 13.7 tonnes (see Table A8.1). Bulgaria’s 
energy-intensive industries (EII) represent 2.7% of 
total  employment  in  2020,  compared  to  3.0%  in 
the  EU.  Total  employment  in  the  environmental 
goods  and  services  sector  (EGSS)  increased  from 
38 150  in  2015  to  50 115  in  2018  (by  33%).  In 
2019,  there  were  82 000  workers  in  EGSS,  which 
represented 2.3% of total employment, in line with 
the  EU  average  (2.2%). (63)  Employment  in mining 
and  quarrying  declined  by  17.3%  between  2015 
and 2018. In 2020, 20 500 people were employed 
in that sector. (64) (see Annex 9). 

Upskilling  and  reskilling  are  key  for  smooth 
labour market transitions and promoting jobs 
in  transforming  sectors.  In  Bulgaria,  50%  of 
citizens  believe  they  do  not  have  the  necessary 
skills to contribute to the green transition, which is 
well  above  the  EU  average  of  38%. (65)  28.8%  of 
all  surveyed  industrial  employers  reported  labour 
shortages in December 2022. (66) The ESF+ makes 
available EUR 152 million for measures promoting 
green  skills  and  jobs  (see  Annex  14).  In  Bulgaria, 

(62)  Council Recommendation of 16 June 2022 on ensuring a fair 
transition towards climate neutrality (2022/C 243/04) covers 
employment, skills, tax/benefit and social protection systems, 
essential services, and housing. 

(63)  Eurostat, online code [env_ac_egss1]. Some of the increase 

between 2018 and 2019 may be attributable to a 
methodological change in calculating EGSS employment. 

(64)  Eurostat, online code 

[https://ec.europa.eu/eurostat/web/products-
datasets/product?code=nama_10_a64]. 

(65)  Special Eurobarometer 527. Fairness perceptions of the 

green transition, May – June 2022. 

(66)  National Statistical Institute, Monitoring Business Tendencies 

in the Industrial Sector, December 2022. 

an  ESF+  project  called  ‘Student  Practices’  helped 
over  44 000  university  students  improve  their 
professional  skills  by  facilitating  practical  training 
and internships, including in fields relevant for the 
green transition. 

Graph A8.1: Fair transition challenges in Bulgaria 

Source: Eurostat, EMPL-JRC GD-AMEDI/AMEDI+ projects and 
World Inequality Database (see Table A8.1). 

Energy  poverty 
improved,  but 
indicators 
Bulgaria  still  faces  significant  challenges 
and  rising  energy  prices  may  worsen  the 
situation.  The  share  of  the  population  unable  to 
keep their homes adequately warm declined from 
39.2% in 2015 to 23.7% in 2021, remaining well 
above  the  EU  average  (6.9%  in  2021) (67).  All 
income  groups  are  affected,  with  42.6%  of  those 
below  the  at-risk-of-poverty  threshold  and  22.6% 
of  lower-middle-income  households  (in  deciles  4-
5)  in  2021  (EU:  8.2%).  Before  the  energy  price 
hikes, 64.4% of the total population and 87.5% of 
the  (expenditure-based)  at-risk-of-poverty  (AROP) 
population  spent  above  10%  of  their  household 
budgets  on  electricity,  gas,  and  other  fuels,  well 
above  the  EU  average 
(26.9%  and  48.2%, 
respectively). (68) Bulgaria is working on an official 
definition  of  energy  poverty,  which  will  be  tied  to 
the  provision  of  targeted  support  to  identified 
vulnerable households. 

The  increased  energy  prices  in  2021-2023 
negatively  affect  households’  budgets.  As  a 
result  of  price  changes  during  August  2021  to 
January  2023  period  relative  to  the  18  months 

(67)  Energy poverty is a multi-dimensional concept. The indicator 
used focuses on an outcome of energy poverty. Further 
indicators are available at the Energy Poverty Advisory Hub.   

(68)  Products defined according to the European Classification of 
Individual Consumption according to Purpose (ECOICOP): 
CP045. 

44 

0123456GHG per workerEmployment EIIEnergy povertyTransportpoverty(proxy)CarboninequalityEU LatestBG Latest (vs EU Latest)BG 2015 (vs EU Latest) 
 
                                                 
   
                                                 
 
Table A8.1: Key indicators for a fair transition in Bulgaria 

Source: Eurostat (env_ac_ainah_r2, nama_10_a64_e, ilc_mdes01), EU Labour Force Survey (break in time series in 2021), EMPL-
JRC GD-AMEDI/AMEDI+ projects and World Inequality Database (WID). 

times  higher  than  that  of  the  bottom  50%,  while 
the  EU  average  is  5.0  times  higher  (see  Table 
A8.1).  In  Bulgaria,  the  average  levels  of  air 
pollution in 2020 stood above the EU average (17 
vs  11.2  µg/m  PM2.5),  with  all  regions  exposed  to 
leading  to 
critical 
significant  health 
in  particular  on 
impacts, 
vulnerable  groups,  and  10 630  premature  deaths 
annually (71). 

levels  of  air  pollution (70), 

Graph A8.2: Distributional impacts of energy prices 
due to rising energy expenditure (2021-2023) 

the 

prior (cf. Annex 7), in the absence of policy support 
and  behavioural 
share  of 
responses, 
individuals living in households which spend more 
than  10%  of  their  budget  on  energy  would  have 
increased  by  7.3 percentage  points  (pps)  for  the 
whole  population,  below 
the  EU  average 
(16.4 pps),  and  by  2.0  pps  for  the  (expenditure-
(EU  average:  19.1 
based)  AROP  population 
pps). (69)  Among  the  (expenditure-based)  AROP 
population,  the  share  of  individuals  living  in 
households  with  budget  shares 
for  private 
transport fuels above 6% would have increased by 
3.2 pps (vs 5.3 pps in the EU) to 12.2% in January 
2023  due  to the increase  in  transport  fuel  prices. 
The  RRP  includes  a  specific  investment  of  more 
than EUR 600 million to support the renovation of 
the  residential  building  stock,  aiming  to  improve 
energy  efficiency  and  thereby  tackle  energy 
poverty. 

to  have 

regressive 

increases  are 
Residential  energy  price 
estimated 
impacts. 
Expenditure  shares  of  low-  and  lower-middle-
income groups would have increased the most for 
electricity, in contrast to gas, for which expenditure 
increases relatively more in mid- and high-income 
groups,  as  shown  in  Graph  A8.2.  Conversely,  the 
impact  of  transport  fuel  price  increases  would  be 
progressive  in  Bulgaria,  affecting  particularly  the 
higher-income households, which spent over 7% of 
their yearly income on transport-related costs (NSI, 
2021). 

Mean change of energy expenditure as a percentage (%) of 
total expenditure per income decile (D) due to observed price 
changes (August 2021 – January 2023 relative to the 18 
months prior), excl. policy support and behavioural responses. 
Source: EMPL-JRC GD-AMEDI/AMEDI+ projects, based on 
Household Budget Survey 2015 and Eurostat inflation data 
for CP0451 and CP0452. 

Access to public transport displays an urban-
rural  divide.  Bulgarian  citizens  perceive  public 
transport to be relatively available (53% vs 55% in 
the EU), affordable (53% vs 54% in the EU) and of 
rather  good  quality  (53%  vs  60%  in  the  EU). 
However,  rural  areas  in  Bulgaria  perform  below 
the EU average on these perceptions, while  urban 
and  suburban  areas  outperform  the  EU  average. 
The  average  carbon  footprint  of  the  top  10%  of 
emitters  among  the  population  in  Bulgaria  is  5.7 

(69)  EMPL-JRC GD-AMEDI/AMEDI+ ; see details in the related 

(70)  Two times higher than the recommendations in the WHO Air 

Quality Guidelines 

technical brief. 

(71)  EEA- Air Quality Health Risk Assessment 

45 

0.0%0.5%1.0%1.5%2.0%2.5%3.0%ElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasD1D2D3D4D5D6D7D8D9D10BG GasBG ElectricityEU GasEU ElectricityIndicatorDescriptionBG 2015BG LatestEU LatestGHG per workerGreenhouse gas emissions per worker - CO2 equivalent tonnes16.915 (2021)13.7 (2021)Employment EIIEmployment share in energy-intensive industries, including mining and quarrying (NACE B), chemicals (C20), minerals (C23), metals (C24), automotive (C29) - %2.72.7 (2020)3 (2020)Energy povertyShare of the total population living in a household unable to keep its home adequately warm - %39.223.7 (2021)6.9 (2021)Transport poverty (proxy)Estimated share of the AROP population that spends over 6% of expenditure on fuels for personal transport - %9.112.2 (2023)37.1 (2023)Carbon inequalityAverage emissions per capita of top 10% of emitters vs bottom 50% of emitters5.25.7 (2020)5 (2020) 
                                                 
   
                                                 
 
   
 
PRODUCTIVITY 
ANNEX 9: RESOURCE PRODUCTIVITY, EFFICIENCY AND CIRCULARITY 

raw materials indicate that Bulgaria is only at the 
start of the transition to a circular economy. With 
EUR 0.33 generated per kg of material  consumed 
in 
in  2021 
Bulgaria is below the EU average of EUR 2.09 per 
kg.  Bulgaria  is  the  biggest  producer  of  hazardous 
waste in the EU, with 2012 kg/capita in 2020.  

resource  productivity 

(Eurostat), 

Graph A9.1: Trend in material use 

Source: Eurostat 

Bulgaria’s  treatment  of  municipal  waste 
needs  to  be  considerably  improved.  Despite 
having  one  of  the  lowest  levels  of  generation  of 
municipal  waste,  Bulgaria  remains  one  of  the 
Member  States  with  the  highest  landfilling  rates 
and  lowest  recycling  performance.  Yet,  Bulgaria 
did  not  meet  the  2020  recycling  target  for 
municipal waste and is assessed to be at high risk 
of  not  meeting  the  2025  recycling  targets  for 
municipal  and  packaging  waste  (Eurostat,  2020). 
In  2020  landfilling  represented  61.7%  of  the 
waste  generated (compared  to the EU average of 
23%).  On  construction  and  demolition  waste, 
Bulgaria has the “Program for meeting the targets 
for  recycling  and  recovery  of  construction  waste 
and  waste  from  demolition  of  buildings”,  which is 
a  part  of  the  National  Waste  Management  Plan 
2021-2028.  The  Strategy  and  Action  Plan  for 
Transition to the Circular Economy,  2022 plans to 
implement  21  measures  aimed  at  sustainable 
plastic  waste  management,  product  design, 
innovation in production processes, and upgrading 
the separate waste collection systems.  

The  circular  economy  transition  is  key  to 
climate  and 
delivering  on 
the  EU’s 
environmental  goals  and  provides 
large 
circularity 
benefits.  
socio-economic 
transition  of  industry,  the  built  environment  and 
agri-food  can  generate  significant  environmental 
improvements (see Annex 6), as they rank among 
the most resource-intensive systems. 

The 

Bulgaria’s  circular  economy  transition 
is 
insufficient  and  needs  accelerating  to  meet 
the  EU’s  circular  economy  goals.  The  EU’s 
2020 circular economy action plan (CEAP) aims to 
double  the  circular  material  use  rate  between 
2020  and  2030.  Bulgaria’s  use  of  circular 
materials  fluctuated,  reaching  4.9%  in  2021  and 
showing  a  steady  decline  in  secondary  material 
usage  in  recent  years.  The  rate  is  well  below  the 
EU 2020 average of 11.7%. The CEAP also aims to 
significantly  decrease  the  EU’s  material  footprint. 
Bulgaria’s  material  footprint  is  above  the  EU 
average,  with  a  tendency  to  increase  the  gap 
further  (see graph  A9.1).  Fatal  accidents  in  waste 
management  and  materials  recovery  are  above 
the EU average in Bulgaria (72). 

Bulgaria  recently  undertook  initial  steps  to 
develop  an  overarching  circular  economy 
policy  programme.  A  2021-2027  strategy  and 
action plan for transition to a circular economy in 
Bulgaria  was  adopted  in  October  2022.  The 
Strategy  is  focused  on  three  strategic  objectives: 
1) Green and competitive economy; 2) Less waste, 
more resources; and 3) Economy for the benefit of 
consumers. The action plan consists of short-term, 
mid-term  and  long-term  measures.  Some  of  the 
short-term  measures  such  as  drafting  and 
adoption of sectoral legal acts to cover single-use 
plastics,  the  recycling  of  packaging  waste  and 
green  procurement  have  been  already  done. 
Bulgaria  adopted  in  2021  and  amended  in  2022 
Ordinance on reducing the impact of certain plastic 
products  on  the  environment  focused  on  single-
use plastics and the recycling of packaging waste. 

Bulgaria  has  yet  to  adopt  a  strategic 
approach  to  the  circular  economy  transition. 
The  large  amounts  of  resources  used  and  waste 
generated  and  the  rather  low  share  of  secondary 

(72)  Eurostat [HSW_N2_02] for NACE Rev. 2 sector E38; 16.04 
fatal accidents p. 100 000 employed in 2018-2020 vs 3.4 
for all sectors in BG; 6.33 in the EU-27 for sector E38 

46 

0.020.040.060.080.0100.0120.00.05.010.015.020.025.0201620172018201920202021kg/capitatonnes/capitaMaterial footprint Bulgaria (tonnes/capita)Material footprint EU-27 (tonnes/capita)Trade in recyclable raw materials Bulgaria (imports extra EU, kg/capita)Trade in recyclable raw materials EU-27 (imports extra EU, kg/capita) 
 
 
                                                 
                  
 
Graph A9.2: Treatment of municipal waste 

Source: Eurostat 

built 

continues 

environment 

The 
to 
exacerbate  the  depletion  of  resources, 
despite recent improvements. Bulgaria plans to 
improve the energy performance of at least 5% of 
total gross floor area of heated and cooled state-
owned  buildings.  The  2020-2050  strategy  for 
renovation  of  national  building  stock  suggests 
Bulgaria will renovate 60% of residential buildings 
and 17% of non-residential buildings by 2050.  

The  agri-food  system  has  yet  to  design  out 
food  waste.  The  low  composting  and  digesting 
rate  are  considered  key  reasons  for  low  biowaste 
recycling rates. Regarding biowaste, Bulgaria does 
not  have  enough  capacity  for  separate  collection 
and  adequate  treatment  of  about  0.8  million 
tonnes.  The  country  has  legally  binding  national 
compost 
quality 
management  system  for  compost  produced  from 
separately collected biowaste, which are regulated 
by  the  Ordinance  on  separate  collection  of  bio-
waste and treatment of biodegradable waste.  

standards 

quality 

and 

There remains a financing gap in the circular 
economy, 
including  waste  management.  
Additional  investments  will  be  required  to 
address  growing  needs.  The  financing  gap  was 
estimated  at  EUR  65  million  per  year  between 
2014  and  2020.  Over  this  period,  investment 
needs  were  estimated  to  be  at  least  EUR  354 
million  per  year,  while  investment  baselines  were 
EUR  289  million  per  year 
(see  Annex  6). 
Investment areas such as eco-design, repair, reuse 
and remanufacturing as well as the uptake of new 
business  models  will  be  necessary  to  reach  the 
EU’s  circular  economy  objectives.  Additional 
investments  are  necessary  in  improving  separate 
waste  collection  and  treatment  infrastructure  to 
divert waste from landfilling and incineration with 
focus on plastic and biowaste.  

Table A9.1: Overall and systemic indicators on circularity 

(1) Persons employed in the circular economy only tracks direct jobs in selected sub-sectors of NACE codes E, C, G and S; (2) the 
circular material use rate measures the share of material recovered and fed back into the economy in overall material use, 
including composting and digestion;  (3) the recovery rate of construction and demolition waste includes waste which is prepared 
for reuse, recycled or subject to material recovery, including through backfilling operations; (4) soil sealing: 2016 column refers to 
2015 data; (5) food waste includes primary production, processing and manufacturing, retail and distribution, restaurants and 
food services, and households. 
Source: Eurostat, European Environment Agency 

47 

404435407442010020030040050060020162017201820192020Kg per capita Difference waste generated/treatmentLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU-27AREA201620172018201920202021EU-27 Latest year EU-27Overall state of the circular economyMaterial footprint (tonnes/capita)17.518.321.221.720.7-13.72020YoY growth in persons employed in the circular economy (%)12.3-2.30.61.2--2.92019Water exploitation index plus (WEI+) (%)1.51.81.41.6--3.62019IndustryResource productivity (purchasing power standard (PPS) per kilogram)0.70.70.80.80.80.82.32021Circular material use rate (%)24.43.52.52.35.94.911.72021Recycling rate (% of municipal waste)31.834.631.534.635.2-49.62021Built environmentRecovery rate from construction and demolition waste (%)390.0-24.0-96.0-89.02020Soil sealing index (base year = 2006)4104.5-106.9---108.32018Agri-foodFood waste (kg per capita)5----86.0-131.02020Composting and digestion (kg per capita)37.034.07.034.013.0-100.02021 
          
 
          
 
lowest  in  the  EU,  although  the  proportion  of 
female  ICT  specialists  is  the  highest.  The  country 
has  already  implemented  some  RRP  measures  to 
target  digital  skills  including  higher  education 
reform  to  promote  specialised  ICT  training  in 
secondary education. 

Bulgaria has a mixed performance on digital 
infrastructure/connectivity.  The  country  is  well 
above the EU average in its coverage by fixed very 
high capacity (VHCN) networks but is below the EU 
average  on  mobile  broadband  coverage  and  the 
assignment  of  5G  spectrum  (63%  vs  68%).  In 
addition, Bulgaria performs below the EU average 
on overall 5G coverage as well as 5G coverage on 
the 3.4-3.8 GHz spectrum band which is essential 
for enabling advanced applications requiring large 
spectrum  bandwidth.  In  accordance  with  its  RRP, 
Bulgaria  has  already  implemented  measures  to 
improve  its  connectivity,  for  example  a  reform  to 
reduce the spectrum fees. 

Bulgaria scores very low on the digitalisation 
of businesses. One key 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 computing services and artificial 
intelligence) is also very low. 

Bulgaria has a very low level of performance 
in  relation  to  the  digitalisation  of  public 
services.  It  scores  far  below  the  EU  average  for 
digital  public  services  for  citizens  (60  vs  77),  but 
near  the  EU  average  for  businesses  (81  vs  84). 
The  percentage  of  e-government  users  has  also 
stagnated in recent years, at 32% compared to the 
EU average of 74%.The country has one electronic 
identification (eID) scheme, which has been notifed 
under the eIDAS Regulation. 

ANNEX 10: DIGITAL TRANSFORMATION 

transformation  by  2030, 

Digital  transformation  is  key  to  ensuring  a 
resilient and competitive economy. In line with 
the  Digital  Decade  Policy  Programme,  and  in 
particular  with  the  targets  in  that  Programme  for 
digital 
this  Annex 
describes  Bulgaria’s  performance  on  digital  skills, 
digital 
the 
digitalisation  of  businesses  and  public  services. 
Where relevant, it makes reference to progress on 
implementing  the  Recovery  and  Resilience  Plan 
(RRP).  Bulgaria  allocates  26%  of  its  total  RRP 
budget to digital (EUR 1.6 billion) (73). 

infrastructure/connectivity 

and 

The  Digital  Decade  Policy  Programme  sets 
out a pathway for Europe’s successful digital 
transformation  by  2030.  The  Programme 
provides  a  framework  for  assessing  the  EU’s  and 
Member States’ digital transformation, notably via 
the  Digital  Economy  and  Society  Index  (DESI).  It 
also  provides  a  way  for  the  EU  and  its  Member 
States  to  work  together,  including  via  multi-
country  projects,  to  accelerate  progress  towards 
the  Digital  Decade  digital  targets  and  general 
objectives (74).  More  generally,  several  aspects  of 
digital  transformation  are  particularly  relevant  in 
the current context. In 2023, the European Year of 
Skills, building the appropriate skillset to make full 
use of the opportunities that digital transformation 
offers  is  a  priority.  A  digitally  skilled  population 
increases the development and adoption of digital 
technologies  and  leads  to  productivity  gains (75). 
Digital  technologies,  infrastructure  and  tools  all 
play  a  role  in  the  fundamental  transformation 
needed to adapt the energy system to the current 
structural challenges (76). 

Bulgaria  scores  low  in  relation  to  digital 
skills. 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 

(73)  The share of financial allocations that contribute to digital 
objectives has been calculated using Annex VII of the RRF 
Regulation. 

(74)  The Digital Decade targets as measured by DESI indicators 
and complementary data sources are integrated to the 
extent currently available and/or considered particularly 
relevant in the MS-specific context.  

(75)  See for example OECD (2019): OECD Economic Outlook, 

Digitalisation and productivity: A story of complementarities, 
OECD Economic Outlook, Volume 2019 Issue 1 | OECD 
iLibrary (oecd-ilibrary.org). 

(76)  The need and possible actions for a digitalisation of the 
energy system are laid out in the Communication 
‘Digitalisation the energy system – EU action plan’ 
(COM(2022)552. 

48 

 
 
                                                 
 
Table A10.1: Key Digital Decade targets monitored by DESI indicators 

(1) The 20 million target represents about 10% of total employment. 
(2) The Fibre to the Premises coverage indicator is included separately as its evaluation will also be monitored separately and 
taken into consideration when interpreting VHCN coverage data in the Digital Decade. 
(3) At least 75 % of Union enterprises have taken up one or more of the following, in line with their business operations: (i) cloud 
computing services; (ii) big data; (iii) artificial intelligence.   

Source: Digital Economy and Society Index 

49 

EUDigital Decade target by 2030 DESI 2021DESI 2022DESI 2023DESI 2023(EU)Digital skillsAt least basic digital skillsNA31%31%54%80%% individuals2021202120212030ICT specialists (1)3.3%3.5%3.5%4.5%20 million% individuals in employment aged 15-7420202021202120212030Digital infrastructure/connectivityFixed Very High Capacity Network (VHCN) coverage75%81%86%73%100%% households20202021202220222030Fibre to the Premises (FTTP) coverage (2)75%81%86%56%-% households20202021202220222030Overall 5G coverage0%40%67%81%100%% populated areas202020212022202220305G coverage on the 3.4-3.8 GHz spectrum bandNANA37%41%-% populated areas202220222030Digitalisation of businessesSMEs with at least a basic level of digital intensityNANA47%69%90%% SMEs202220222030Big data (3)6%6%6%14%75%% enterprises20202020202020202030Cloud (3)NA10%10%34%75%% enterprises2021202120212030Artificial Intelligence (3)NA3%3%8%75%% enterprises2021202120212030Digitalisation of public servicesDigital public services for citizensNA596077100Score (0 to 100)2021202220222030Digital public services for businessesNA768184100Score (0 to 100)2021202220222030Access to e-health recordsNANANA71100Score (0 to 100)202320232030Bulgaria 
 
 
 
 
  
 
 
 
 
 
 
 
ANNEX 11: INNOVATION 

This  Annex  provides  a  general  overview  of  the 
performance of Bulgaria’s research and innovation 
system,  which  is  essential  for  delivering  the  twin 
green and digital transition. 

Bulgaria  is  still  an  ‘emerging  innovation 
performer’; the gap between its performance 
and  the  EU  average  continues  to  widen. 
According  to  the  2022  edition  of  the  European 
Innovation  Scoreboard (77),  while  the  country’s 
innovation  performance  has  slightly 
improved 
compared  to  2021,  it  is  still  well  below  the  EU 
average  (45.2%  of  the  EU  performance)  and  the 
gap  between  Bulgaria  and  the  EU  average  is 
growing.  The  performance  increase  in  2022  (3.0 
percentage  points)  is  due  to  small  and  medium-
sized  enterprises'  (SMEs’)  improved  performance 
with  business  process  innovations  and  innovative 
SMEs collaborating with others. 

Graph A11.1: Innovation performance 2015-2022 

Source: European Innovation Scoreboard, 2022 

Public  and  private  R&D  investments  remain 
critically  low.  R&D  intensity (78)  was  0.77%  in 
2021, a decrease from 2020 and still far from the 
(2.26%) (79).  While  R&D 
European  average 
investment  has  been  slowly  increasing  in  recent 
years,  in  2021  both  public  expenditure  on  R&D 
(0.26%  of  GDP)  and  business  enterprise 
expenditure  on  R&D  (0.51%  of  GDP)  decreased, 
with  both  indicators  remaining  significantly  below 
the EU averages of 0.76% and 1.49% respectively. 
Due  to  the  low  level  of  public  R&D  investment  in 

(77)  2022 European Innovation Scoreboard, Country profile: 

Bulgaria https://ec.europa.eu/assets/rtd/eis/2022/ec_rtd_eis-
country-profile-bg.pdf. The EIS provides a comparative 
analysis of innovation performance in EU countries, including 
the relative strengths and weaknesses of their national 
innovation systems (also compared to the EU average). 

(78)  Defined as gross domestic expenditure on R&D as a 

percentage of GDP 

(79)  European benchmark target for R&D intensity: 3%. 

investment 

the  public  science  base,  Bulgaria’s  scientific  and 
technological potential continues to remain largely 
untapped.  To  overcome 
this  key  challenge, 
Bulgaria has introduced targeted investments in its 
recovery  and  resilience  plan  (RRP),  aimed  at 
in 
stimulating  public  and  private 
research  and  innovation  (R&I),  optimising  and 
enhancing  the  transfer  of  research  results  and 
technologies.  In  addition,  the  investments  also 
support  innovative  SMEs.  Finally,  the  introduction 
of a network of higher education institutions under 
the  RRP  is  expected  to  help  speed  up  the 
development of distinguished research universities 
into  fully-fledged  participants  in  the  research  and 
innovation  ecosystem.  Notwithstanding,  sustained 
budget  commitments  for  R&D  funding  would  be 
needed for Bulgaria to achieve its goal of 2% R&D 
intensity by 2025 (80).  

public 

research 

The 
system’s  weak 
performance,  resulting  notably  from  the 
fragmentation  of  research  capabilities,  is  a 
major bottleneck. The Bulgarian research system 
continues  to  produce  research  outputs  of  low 
quality, as evidenced by the share of the country’s 
scientific  publications  among  the  top  10%  most 
cited  scientific  publications  worldwide  (2.7%  in 
2019),  which  remains  the  lowest  in  the  EU.  The 
low  level  of  international  co-publications  as  a 
percentage  of  the  total  number  of  publications 
(40% in 2021 compared to 55.4% as EU average) 
also  reflects  the  weak  internationalisation  of  the 
Bulgarian research system. This weak performance 
is  mainly  the  result  of  a  high  degree  of 
fragmentation  in  the  research  system  and  the 
absence  of  critical  mass.  Bulgaria  continues  to 
have  a  fragmented  research  system,  comprising 
91 public  research  organisations (81)  (PROs)  and  a 
higher  education  system  comprising  51 higher 
education  institutions  (HEIs) (82).  This  limits  the 
capacity  for  focus  and  for  generating  new 
knowledge  and 
the 
innovation. 
separation  between  HEIs  and  PROs  hampers  the 
transition  from  basic  research  to  the  market  and 
the  setting-up  of  an  effective  funding  system 
based on performance.  

In  addition, 

(80)

https://www.strategy.bg/StrategicDocuments/View.aspx

?lang=bg-BG&Id=1231  

(81)  https://documents.worldbank.org/en/publication/documents-
reports/documentdetail/501911605783029938/enhancing-
the-contribution-of-bulgaria-s-public-research-to-innovation-
a-survey-based-diagnostic  

(82)  https://openknowledge.worldbank.org/handle/10986/34790  

50 

40506070809010011020152016201720182019202020212022EUBG 
 
   
                                                 
                                                 
 
 
a 

to 

be 

serious 

obstacle 
research 

Limited academia-business linkages continue 
the 
to 
commercialisation 
results. 
of 
Science-business  cooperation,  as  reflected  in  the 
share  of  public-private  scientific  co-publications, 
remains  at  the  low  end  of  the  scale,  5.1% 
compared to the EU average of 7.1%. The business 
investment  in  public  R&D  is  persistently  low 
(0.028%  in  2019  compared  to  an  EU  average  of 
0.054%),  which 
Bulgarian 
suggests 
businesses  are  not  inclined  to  look  to  public 
research 
institutions  for  knowledge  for  their 
innovation  activities.  A  further  factor  in  the  weak 
impact of research is low patent activity, with 0.5 
patent applications per billion of GDP compared to 
an EU average of 3.5. 

that 

population  is  low,  at  2.6  compared  to  an  EU 
average  of  4%.  In  addition,  the  share  of  new 
graduates  in  science  &  engineering  per  thousand 
population  aged  25-34  is  showing  a  worrying 
downward trend - 8% in 2020, down from 11.4% 
in  2010,  and  below  the  EU  average  of  16%.  This 
suggests  that  Bulgaria  is  at  risk  of  a  skills 
shortage,  which  could  further  hinder  its  ability  to 
mobilise its R&I system to meet the challenges of 
the twin transition. 

The  lack  of  a  critical  mass  in  human  capital 
continues to be a drag on Bulgaria’s research 
and  innovation  capabilities.  The  number  of 
public  sector  researchers  per  thousand  of  active 

Table A11.1: Key innovation indicators 

(1) EU average for the latest available year or the year with the highest number of country data 
Source: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 

51 

R&D Intensity (GERD as % of GDP)0.560.950.830.850.772.26Public expenditure on R&D as % of GDP0.280.250.270.270.260.76Business enterprise expenditure on R&D (BERD) as % of GDP0.280.700.560.570.511.49Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 3.12.52.7::9.8Patent Cooperation Treaty patent applications per billion GDP (in PPS)0.40.60.5::3.3Public-private scientific co-publications as % of total publications4.25.84.94.35.17.1Public expenditure on R&D financed by business enterprise (national) as % of GDP0.0160.0170.028::0.054New graduates in science & engineering per thousand pop. aged 25-3411.411.49.08.0:16.0Total public sector support for BERD as % of GDP:0.0250.018::0.194Business enterprise expenditure on R&D (BERD) financed by the public sector (national and abroad) as % of GDP:0.0250.0180.16:0.104Share of environment-related patents in total patent applications filed under the Patent Cooperation Treaty (%)10.228.712.9::13.3Venture capital (market statistics) as % of GDP0.0150.0110.0090.0100.0200.074Employment in fast-growing enterprises in 50% most innovative sectors6.26.66.6::5.5EU average (1)2021Finance for innovation and economic renewal2020Bulgaria201020152019Public support for business enterprise expenditure on R&D (BERD)Human capital and skills availabilityAcademia-business cooperationQuality of the R&I systemKey indicators Green innovation  
 
  
 
ANNEX 12: INDUSTRY AND SINGLE MARKET 

especially  in  project  planning,  procurement  and 
follow-up audits. 

Graph A12.2: Government investment 

in 

Private 

non-residential 

competitiveness. 

Bulgaria’s  unstable  and  uncertain  political 
situation as well as the energy crisis impose 
challenges  for  firms’  productivity  potential 
investment, 
and 
construction, 
especially 
machinery,  and  equipment,  has  been  falling  since 
2021,  partly  due 
to  heightened  political 
uncertainty  and infrastructure  needs.  Despite  this, 
overall  real  labour  productivity  shows  a  stable 
increasing  since  2012,  which  is  driven  mainly  by 
the  manufacturing  sector  (see  Graph  A12.1). 
However,  according  to  Eurostat  nominal  labour 
productivity  per  hour  worked  only  reaches  53.4% 
of  the  2022  EU  level  (in  purchasing  power 
standards).  At  the  same  time,  labour  shortages, 
especially in services, but also inflation indexation 
of  some  nominal  wages  put  upward  pressure  on 
wages  and  unit 
labour  costs.  The  country 
experienced  among  the  highest  increases  in  unit 
labour costs within the last five years in the EU.  

Graph A12.1: Labour productivity per person by 
sector 

(*) Forecast 
Source: European Commission. 

While high energy prices increase production 
costs  for  Bulgarian  firms,  lignite  production 
became  profitable  for  a  short  period.  The 
annual  average  of  producer  prices  in  industry 
increased  considerably  in 2022  (37.8% vs.  15.3% 
in 2021) – annual prices for energy goods soared 
i.e.  by  135%  in  September  2022.  Combined  with 
considerable material and labour shortages, these 
the 
price  developments  weigh  heavily  on 
production  capacities  of  Bulgarian  firms.  Global 
supply  chain  disruptions,  also  due  to  the  war  in 
Ukraine,  and  expectations  of 
further  price 
increases,  have  led  to  the  accumulation  and 
stockpiling  of  raw  materials,  commodities  and 
finished  products,  and  therefore  partially  explain 
the  elevated  contribution  of  inventories  to  annual 
GDP growth, especially in the first half of 2022. In 
contrast, due to the high energy prices and oil/gas 
supply  difficulties,  Bulgaria’s  polluting 
lignite 
profitable 
power 
temporarily and a possible way of securing energy 
supply. This, however, counteracts the incentive of 
investing 
renewable  energy  sources  and 
reducing  the  country’s  relatively  high  greenhouse 
gas emissions. (see Annex 6)  

plants  were 

becoming 

in 

Bulgarian  firms  are  increasingly  concerned 
about  the  uncertain  economic  environment 
and shortage of labour force. According to the 
short-term  business  indicators  published  by  the 
European  Commission  and  the  Bulgarian  National 

52 

Source: European Commission. 

Public  investment  shows  a  weak  trend.  This 
in 
could  be  partially  explained  by  delays 
implementing 
to 
infrastructure  projects  due 
political  uncertainty.  Although  growth  in  public 
investment  is  on  average  higher  than  the  EU 
average over the last five years (1.2% vs. 0.5% of 
GDP), it is largely driven by EU funding. There is a 
considerable  gap  when  comparing  government 
investment  with  peer  countries  such  as  Romania 
and  Croatia  (see  Graph  A12.2)  According  to  the 
IMF  Public  Investment  Management  Assessment 
(PIMA) (83),  there  is  a  considerable  efficiency  gap, 

(83)  Hallaert, J.J. and Primus, K. (2022), “Strengthening Public 
Expenditure efficiency: Investment and Social Spending in 
Bulgaria,” IMF WP/22/100. 

6080100120140160180200220240030507091113151719212003=100Market services (G_N)Manufacturing (C)Construction (F)Tradable (A_E, G_J)Non tradable (F, K_U)0.01.02.03.04.05.06.07.00910111213141516171819202122*23*24*BGHRROEU27 
 
  
                                                 
       
 
 
significant  barriers 

Statistical  Institute,  shortage  of  (skilled)  labour 
and uncertain economic development were among 
the  most  cited  factors  hampering  economic 
activities  and  are 
to 
productivity growth. The availability of skilled staff 
represents  a  long-term  barrier  to  investment  for 
88%  of  firms  in  the  EIB  investment  survey. (84) 
Finding skilled staff and experienced managers as 
well  as  finding  customers  are  the  main  problems 
for Bulgarian SMEs - respectively 23% and 16% of 
SMEs report these specific difficulties according to 
the SAFE survey (85).  

as 

and 

transposition 

in  goods,  Bulgaria 

Regarding  trade 
is 
relatively  well  integrated  into  the  single 
market but trade integration for services, as 
correct 
well 
implementation  of  EU  rules  are  lagging 
behind.  After  Bulgarian  goods  and  services  trade 
with  EU  countries  reached  about  61.9%  of 
Bulgaria’s  overall  trade  in  2020,  it  declined  to  a 
share  of  57.9  in  2022.  Germany,  Italy,  and 
Romania are the main EU export partners. Bulgaria 
could  increase  its  export  market  share  in  food 
products, base metals and stone, cement, ceramic, 
and glass products. Only 18% (13%) of Bulgaria’s 
total  EU  exports  (imports)  are  in  services  (mainly 
travel  &  transport  services)  and  trade  integration 
for services is, with a share of 6% low, compared 
to  the  EU  average  of  14.5%. 
In  terms  of 
implementing  EU 
law,  Bulgaria’s  transposition 
deficit (percentage of all directives not transposed 
into national law) reached its highest ever reported 
level  of  2.2%  (1.6%  in  2020).  Additionally,  the 
conformity  deficit  (percentage  of  all  directives 
transposed  incorrectly),  has  also  increased  in  the 
last three years, reaching 2.1%, which is Bulgaria’s 
highest  deficit  ever  and  the  third  highest  among 
Member States.  

Administrative  burdens  prevail  in  the  areas 
of  business  regulation,  restrictiveness  of 
regulated  professions,  and  permitting  for 
installing  renewable  energy  sources  (RES). 
Business  regulations  and  administrative  barriers 
are  hampering  49%  of  firms 
long-term 
investment  (EIB  2022),  while  9%  of  SMEs  cite 
“regulation”  as  one  of  the  most  urgent  problems 
(SAFE  2022).  53%  out  of  surveyed  investors (86) 

in 

(84)  EIB Investment Survey 2022: European Union overview. 

(85)  European Commission (2022). Survey on access to finance 

for enterprises (SAFE), Analytical Report 2022.  

(86)  EU Justice Scoreboard. 

53 

that 

confident 

furthermore  not 

are 
their 
investments are being protected by law and courts 
in  Bulgaria.  Half  of  them  give  as  one  of  the 
reasons  for  their  concerns  'unpredictable,  non-
transparent  administrative  conduct,  and  difficulty 
to challenge administrative decisions in court’. 

in  Bulgaria 

Regulatory  restrictiveness 
is 
higher  than  the  EU  average  for  a  number  of 
regulated  professions,  especially  lawyers, 
architects, civil engineers and tourist guides. 
This impedes their competitiveness and integration 
into the single market. (87) Lawyers in Bulgaria are 
subject  to  specific  requirements,  incompatibility 
rules  and  multidisciplinary  restrictions,  as  well  as 
bans  on  commercial  communication.  This  could 
affect the potential of this sector to innovate and 
roll out digital solutions and new business models.  

Another  area  of  administrative  burden 
concerns  permitting  for  renewable  energy 
sources  (RES).  According  to  the  interim  report 
“RES  Simplify” (88),  several  areas  of  improvement 
were 
identified,  among  them  process-related 
issues,  third  party/stakeholder  issues  and  grid 
issues.  As  a  follow-up,  the  SMET  initiative  (single 
market  enforcement  taskforce)  aims  to  remove 
process-related  barriers,  in  order  to  increase  the 
installed renewables capacity for electricity, which 
is  below  the  EU  average  (see  table  A12.1). 
However,  all  identified  obstacles  presented  by 
SMET  were  considered  to  be  not  relevant  by  the 
Bulgarian national authorities. 

The  Bulgarian  public  procurement  system 
remains  a  concern,  despite  some  progress 
and  efforts  in  reforming  the  regulatory 
framework.  The 
level  of  public 
current 
procurement  competitiveness  remains  low,  which 
is  shown  by  several  indicators.  The  rate  of  single 
bids is 34%, meaning that for one third of tenders, 
only  one  offer  was  submitted.  Additionally,  one 
fourth of all procedures are unsuccessful, since no 
offer  was  submitted  and  23%  of  the  contracts 
were  awarded  without  competition,  i.e.  on  the 

(87)  European Commission (2021). Communication on updating 
the reform recommendations for regulation in professional 
services, COM(2021)385. 9/7/2021 

(88)  European Commission, Directorate-General for Energy, 

Tallat-Kelpšaitė, J., Brückmann, R., Banasiak, J., et al. (2022) 
Technical support for renewables policy development and 
implementation : simplification of permission and 
administrative procedures for renewables installations (RES 
simplify): interim report. Publications Office of the European 
Union. 

 
                                                 
                                                 
basis  of  a  negotiated  procedure  without 
public 
general, 
publication. 
procurement  law  remains  complex  and  relatively 
unstable.  

Bulgarian 

In 

While late payments concern a lower number 
of Bulgarian SMEs than the EU average, most 
firms  worry  about  the  impact  of  regulation 
and  the  general  economic  development  on 
their  and  their  customers’  payments.  A 
decreasing  number  of  Bulgarian  SMEs  reported 
late  payments  as  problematic  (25%  in  2022  vs. 
33%  in  2021),  which  is  much  less  than  43%  on 
average  in  the  EU (89).  However,  firms  consider 
regulation (66%), rising inflation (62%) and supply 
chain disruptions (58%) to be the main barriers to 
their customers paying their debt on time. For 74% 
and  64%  of  firms,  credit  losses  and  customer 
bankruptcy  respectively  are  problematic. (90)  The 
increasing number of business bankruptcies, driven 
the 
mainly  by  bankruptcy  declarations 
wholesale and retail  trade sectors (91), point to an 
emerging problem. 

in 

Graph A12.3: Business environment and 
productivity drivers 

Source: 1) % of GDP, 2021 Eurostat;  
2) composite indicator, 2021 European Investment Fund 
access to finance index;  
3) average payment delay in number of days, 2022 Intrum;  
4) % of firms in manufacturing facing constraints, 2022 
European Commission business consumer survey;  
5) proportion of contracts awarded with a single bidder, 2022 
Single Market Scoreboard. 

(89)  SAFE Survey (2022). 

(90)  INTRUM (2022). European Payment Report. 

(91)  Eurostat (2022). [STS_RB_Q]. 

54 

2) EIF access tofinance index3) Payment gap- G2B3) Payment gap- B2B4) Materialshortage4) Labourshortage5) Single bidsEuropean UnionBulgaria 
       
 
                                                 
Table A12.1: Industry and the Single Market 

(*) last available year 
Source: (1) AMECO, (2) Eurostat: NAMA_10_LP_A21, (3) ECFIN BCS, (4) Eurostat: jvs_a_rate_r2, (5) COMEXT, (6) Eurostat: 
nrg_inf_epc, (7) Eurostat: BOP_C6_A, (8) OECD, (9) Single Market Scoreboard, (10) EIB survey, (11) Eurostat: sts_rb_a, (12) Intrum, 
(13) SAFE Survey, (14) EIF SME Access to Finance Index. 

55 

POLICY AREAINDICATOR NAME20182019202020212022EU27 average (*)Net private investment, level of private capital stock, net of depreciation, % GDP (1)4.64.54.631.13.7Net public investment, level of public capital stock, net of depreciation, % GDP (1)0.40.80.60.110.4Real labour productivity per person in industry (% yoy)(2)-0.80.1-5.44.7151.4Cost competitive-nessNominal unit labour cost in industry (% yoy)(2)95.913.1514.52.9Materials shortage (industry), firms facing constraints, % (3)53471247Labour shortage using survey data (industry), firms facing constraints, % (3)444230303528Vacancy rate (business economy)(4)0.70.70.60.70.83.1Concentration in selected raw materials, Import concentration index based on a basket of critical raw materials (5)0.160.150.150.150.150.18Installed renewables electricity capacity, % of total electricity produced (6)4646.347.848.5n.a.50.9Single Market integrationEU trade integration, % (7)39.537.734.237.939.445.8RestrictionsEEA Services Trade Restrictiveness Index (8)n.a.n.a.n.a.n.a.n.a.0.05Public procurement Single bids, % of total contractors (9)232726323429Investment obstaclesImpact of regulation on long-term investment, % of firms reporting business regulation as major obstacle (10)27.928.120.624.925.429.6Bankruptcies, Index (2015=100)(11)118129.3107.9116131.986.8Business registrations, Index (2015=100) (11)100.393.670.679.780.3121.2Payment gap - corporates B2B, difference in days between offered and actual payment (12)-4017151413Payment gap - public sector, difference in days between offered and actual payment (12)0422101515Share of SMEs experiencing late payments in past 6 months, % (13)n.a.34.530.332.425.143EIF Access to finance index - Loan, Composite: SME external financing over last 6 months, index values between 0 and 1 (14)0.270.340.380.4n.a.0.46EIF Access to finance index - Equity, Composite: VC/GDP, IPO/GDP, SMEs using equity, index values between 0 and 1 (14)0.10.050.060.05n.a.0.23BUSINESS ENVIRONMENT - SMEsBusiness demographyLate paymentsAccess to financeHEADLINE INDICATORSEconomic StructureRESILIENCEShortagesStrategic dependenciesSINGLE MARKET 
 
       
 
ANNEX 13: PUBLIC ADMINISTRATION 

This  Annex  outlines  the  performance  of 
Bulgaria’s  public  administration,  which  is 
essential for providing services and carrying 
out reforms. Overall administrative effectiveness 
remains  significantly  below  the  EU  average (92). 
The  short  political  cycles  in  recent  years  have 
hindered  the  design  and 
implementation  of 
reforms,  including  measures  for  administrative 
simplification,  digitalisation  and  the  upskilling  of 
civil servants.  

and 

Bulgaria  is  making  slow  progress  with  the 
digital  transformation  of  its  administration. 
Although  this  is  a  main  area  of  reform  and 
investment,  Bulgaria  performs  below  the  EU 
average  on  all  e-government  indicators  (Table 
A13.1  and  Annex  10).  Under  the  Bulgarian 
legislative 
recovery 
amendments  have  been  drafted 
the 
for 
digitalisation of the real estate register. To further 
facilitate  the  digital  exchange  of  information  and 
improve  security 
the 
government  has  proposed  amendments  to  the  E-
Government  Act.  It  is  planned  to  bundle  key 
services  for  citizens  and  business  into  ten  life 
events.  

the  administration, 

resilience 

plan, 

in 

of 

the 

establishment 

implementation  remain 
Policymaking  and 
weak, although regulatory governance scores 
are  around  the  EU  average.  The  main 
challenges  are  limited  coordination  and  a  lack  of 
policy  coherence (93).  Changes  in  the  institutional 
set-up, 
professional 
networks,  and  other  measures,  are  aimed  at 
addressing  weaknesses  in  the  performance  of 
impact  assessments  and  ex  post  evaluations.  The 
transparency of public consultations by Parliament 
is  unsatisfactory,  despite  changes  to  the  rules  of 
procedure.  This  negatively  affects  the  quality  of 
legislation,  especially  given  the  steep  increase  in 
the  number  of  legislative  initiatives (94).  Further 
measures  under  the  recovery  and  resilience  plan 
are intended to improve strategic planning. 

(92)  Worldwide Governance Indicators, 2021 data 
(http://info.worldbank.org/governance/wgi/). 

(93)  OECD (2022), "Centre of government scan of Bulgaria: 

Strengthening strategic decision-making at the centre of 
government", OECD Public Governance Policy Papers, No. 19, 
OECD Publishing, Paris, https://doi.org/10.1787/464a42b5-
en.  

The  quality  of  the  justice  system  faces 
several  challenges.  The  digitalisation  of  justice 
is lagging behind. Investments under the recovery 
and resilience plan are ongoing and the possibility 
to apply online for legal aid has been introduced. A 
new  law  on  legal  assistance  was  also  introduced, 
which  extends  the  range of  people  who  would  be 
eligible  to  receive  legal  aid.  The  administrative 
courts remain among the most efficient in the EU 
(125  days  on  average  to  resolve  cases  at  first 
instance,  61  days  for  second  instance  and  103 
days for third instance). However, the lack of data 
on the length of litigious and non-litigious civil and 
commercial  cases  (in  first  and  second  instance 
courts)  means  it  is  not  possible  to  properly 
evaluate  the  overall  efficiency  of  the  judicial 
independence 
system.  Concerns  about 
persist (95).  

judicial 

Graph A13.1: Bulgaria. Participation rate of 25-64 
year-olds in adult learning (%) by sector and 
occupation 

(1) 2022 data 
Source: European Commission, based on the Labour Force 
Survey 

There are difficulties with ensuring sufficient 
capacity and skills. The share of employees with 
higher  education  in  the  public  administration 
(57.5%) is above the EU average (52%). However, 
there  is  a  visible  gap  in  the  participation  of  civil 
servants in adult learning: 2.2% in Bulgaria vs the 
EU  average  of  16.9%  (Graph  A13.1).  The  ratio  of 
25-49 to 50-64 years olds dropped visibly in 2022 
(Table  A13.1).  While  national  staff  surveys 

(94)  Национален център за парламентарни изследвания 

(2023), Изследване на законодателната дейност на 48-
то Народно събрание. Available at: 
https://www.parliament.bg/bg/ncpi   

(95)  For a more detailed analysis of the performance of the 
justice system in Bulgaria, see the 2023 EU Justice 
Scoreboard (forthcoming) and the country chapter for 
Bulgaria in the 2023 Rule of Law Report (forthcoming). 

56 

0510152025BGEU27BGEU27BGEU27BGEU27Public admin,defence andsocial securityEducationHealthcareTotal economyHigh-skilled occupationsMedium-skilled occupationsUnskilled occupationsArmed forces 
 
                                                 
  
                                                 
 
Table A13.1: Public administration indicators 

(1) High values denote a good performance, except for indicator # 6. (2) 2022 value. If not available, the 2021 value is shown. 
(3) 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. (4) Defined as the absolute value of the difference between the 
percentage of men and women in senior civil service positions. 
Flags: (b) break in time series; (d) definition differs; (u) low reliability. 
Source: ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Labour Force 
Survey, Eurostat (# 4, 5, 7), European Institute for Gender Equality (# 6); Fiscal Governance Database (# 8, 9); OECD Indicators of 
Regulatory Policy and Governance (# 10).  

low  attractiveness  of 

demonstrate 
that  civil  servants  are  highly 
motivated (96),  the  number  of  unfilled  vacancies 
indicates 
the  public 
administration  as  an  employer.  To  address  the 
staff shortage, the government has introduced an 
internship  programme  for  young  professionals. 
Gender parity in senior positions is high but shows 
a declining trend.  

(96)  Institute of Public Administration, 2022, ENGAGEMENT 

BAROMETER: Fourth national survey on the attitudes of civil 
servants. Available at: 
https://www.ipa.government.bg/sites/default/files/barometere
ngagement_2022_en.pdf  

57 

BG201720182019202020212022EU-27(2)131.433.036.036.334.0n/a64.82n/an/an/a59.861.462.672.93n/a0.70.60.80.80.80.8455.355.055.855.656.3 (b)57.552.051.7 (u)1.8 (u)1.8 (u): (u)1.7 (bu)2.2 (u)16.960.43.48.28.819.011.011.072.31.81.92.01.9 (b)1.61.580.70.70.70.70.7n/a0.792.72.72.72.82.8n/a1.5101.75n/an/an/a1.83n/a1.7Medium term budgetary framework indexIndicator (1)E-government and open government dataShare of individuals who used the internet within the last year to interact with public authorities (%)E-government benchmark overall score (3) Open data and portal maturity indexEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with tertiary education (levels 5-8, %)Participation rate of public administration employees in adult learning (%)Gender parity in senior civil service positions (4)Ratio of 25-49 to 50-64 year olds in NACE sector OPublic financial management Strength of fiscal rules indexEvidence-based policy makingRegulatory governance 
                                                 
 
   
 
FAIRNESS 
ANNEX 14: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The  European  Pillar  of  Social  Rights  is  the 
compass  for  upward  convergence  towards 
better  working  and  living  conditions  in  the 
EU. This Annex provides an overview of Bulgaria’s 
progress in implementing the Pillar’s 20 principles 
and EU headline and national targets for 2030 on 
employment, skills and poverty reduction. 

Table A14.1: Social Scoreboard for Bulgaria 

persons with disabilities also continued its upward 
trend,  reducing  the  gap  with  persons  without 
disabilities  from  33 pps  in  2020  to  22.1 pps  in 
2021,  slightly  below  the  EU  average  (23.1 pps). 
However, the employment rate (20-64 age group) 
for low-skilled people (ISCED 0-2) stood at 50.2% 
in  2022,  below  the  EU  average  (57.2%),  and  is 
39.7 pps  lower  than  the  rate  for  high-skilled 
people (89.9% for ISCED 5-8). The unemployment 
rate fell to a historic low of 4.3% in 2022. At the 
same  time,  the  share  of  young  people  (aged  15-
29) NEET remained high (15.1% in 2022 vs 11.7% 
in the EU). Only 47% of the Roma population was 
engaged  in  any  form  of  paid  work  in  2021 (97). 
There  are  still  major  regional  disparities  with  a 
15.0 pps  employment  gap  in  2022  between  the 
north-west and south-west regions (see Annex 17). 

Negative  demographic  trends  are  a  major 
challenge  for  Bulgaria  and  risk  further 
aggravating  labour  shortages.  The  working-
age  population  (15-64  years  old)  decreased  by 
958 501  (19.1%)  between  2011  and  2021 (98). 
The  inactive  population  stood  at  21.0%  in  2022, 
slightly  above  the  EU  average  (20.6%).  The 
combination  of  strong  and  steady  adverse 
demographics  and  high  inactivity  rates  for  some 
groups  highlight  the  need  for  public  employment 
and  social  services  to  support  the  activation  and 
employability  of  vulnerable  and  underrepresented 
groups.  The  overall  job  vacancy  rate  is  relatively 
low  in  Bulgaria  (0.8%  vs  2.9%  in  the  EU  in  Q4-
report 
2022).  However,  many 
difficulties 
employees, 
in 
especially  in  the  construction,  education,  and 
health sectors; in 2023, there is an estimated total 
need  of  200 000  additional  workers (99).  With  the 
support  of  the  European  Social  Fund  Plus  (ESF+) 
and  the  Recovery  and  Resilience  Facility  (RRF), 
Bulgaria adopted measures to promote activation, 
employability,  upskilling  and  reskilling  to  progress 
on its national employment rate target of 79% by 
2030. 

employers 

suitable 

finding 

(97)  European Union Agency for Fundamental Rights (2022), 
Roma Survey 2021. Publications Office of the European 
Union. 

(98)  Source: 2021 Census statistics. https://census2021.bg. 

(99)  National Employment Agency (2022), Employer Labour 

Needs Survey (W2/2022). 

58 

Update of 27 April 2023. Members States are classified on 
the Social Scoreboard according to a statistical methodology 
agreed with the EMCO and SPC Committees. It looks jointly at 
levels and changes of the indicators in comparison with the 
respective EU averages and classifies Member States in seven 
categories. For methodological details, please consult the 
Joint Employment Report 2023. Due to changes in the 
definition of the individuals' level of digital skills in 2021, 
exceptionally only levels are used in the assessment of this 
indicator; NEET: neither in employment nor in education and 
training; GDHI: gross disposable household income. 
Source: Eurostat 

Bulgaria’s labour market performed strongly 
in  2022,  but  challenges  remain  for  young 
people  not  in  employment,  education  or 
training  (NEET),  low-skilled  people  and  the 
Roma.  While  economic  growth  slowed  down  in 
2022,  the  employment  rate  rose  from  73.4%  in 
Q3  2021  to  76.7%  in  Q4  2022,  1.9 percentage 
points  (pps)  above  the  EU  average  and  2.8 pps 
higher  than  in  Q4  2019.  The  employment  rate  of 

10.531.1815.17.77.4575.74.32.331.73329.8422.111.618.71Critical situationTo watchWeak but improvingGood but to monitorOn averagePolicy areaHeadline indicatorLong term unemployment(% of active population aged 15-74, 2022)GDHI per capita growth                                                              (2008=100, 2021)Best performersImpact of social transfers (other than pensions) on poverty reduction (% reduction of AROP, 2021)Children aged less than 3 years in formal childcare(% of population under 3-years-old, 2021)Self-reported unmet need for medical care(% of population 16+, 2021)Housing cost overburden(% of total population, 2021)Equal opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24, 2022)Youth NEET rate(% of population aged 15-29, 2022)Gender employment gap(percentage points, 2022)Income quintile ratio(S80/S20, 2021)Share of individuals who have basic or above basic overall digital skills (% of population aged 16-74, 2021)Dynamic labour markets and fair working conditionsSocial protection and inclusionAt risk of poverty or social exclusion rate for children                       (% of population aged 0-17, 2021)Disability employment gap(percentage points, 2021)Better than averageAt risk of poverty or social exclusion rate                                            (% of total population, 2021)Employment rate(% of population aged 20-64, 2022)Unemployment rate(% of active population aged 15-74, 2022) 
 
 
 
   
 
                                                 
 
 
Low levels of basic and digital skills and low 
participation  of  adults  in  learning  create 
bottlenecks  to  employability  and  growth.  In 
2022,  adult  participation  in  learning  (25-64  age 
group)  over  the  past  4  weeks  was  significantly 
lower  than  the  EU  average  (1.7%  vs  11.9%).  In 
addition, 31% of the Bulgarian population reported 
having  at  least  basic  digital  skills  in  2021,  well 
below the EU average of 54%. Bulgaria earmarked 
funding  from  the  ESF+  and  the  RRF  to,  among 
others,  create  a  platform  for  adult  learning  and 
provide  training  for  digital  skills  to  at  least 
661 000  people.  Although  the  2022  national 
employment  plan  increased  the  budget  for  all 
labour  market  measures,  the  focus  remains  on 
direct  job  creation  (84%)  and  still  falls  short  on 
training (4%). The integration of people fleeing the 
war  in  Ukraine  can  contribute  to  overcoming 
labour  and  skills  shortages  in  Bulgaria.  Further 
efforts to close the skills gap and develop a well-
educated workforce are expected to help reach the 
national skills target of 35.4% by 2030. 

Table A14.2: Situation of Bulgaria on 2030 
employment, skills and poverty reduction targets 

country.  The  ESF+  also  provides  comprehensive 
support to address school segregation, boost dual 
VET and pilot dual education in higher education. 

Despite  improvements,  Bulgaria  still  faces 
high levels of poverty and income inequality, 
notably among vulnerable groups. In 2021, the 
income  of  the  richest  20%  of  the  population  was 
7.5  times  more  than  the  poorest  20%  (vs  5.0  in 
the EU). The share of people at risk of poverty or 
social  exclusion (AROPE)  stood  at  31.7% in  2021, 
the second highest in the EU, peaking at 78.7% for 
the  Roma.  The  AROPE  rate  for  children  was  very 
high  at  33%  in  2021  (24.4%  in  the  EU)  and  at 
77%  AROP  for  Roma  children) (100).  Implementing 
the national action plan on the child guarantee will 
be  instrumental  in  supporting  vulnerable  children 
and  households.  Poverty  has  a  strong  regional 
dimension  –  the  at-risk-of-poverty  rate  in  rural 
areas 
in  2021  was  42.5%.  11.6%  of  the 
population  in  Bulgaria  experienced  housing  cost 
overburden  in  2021  (8.3%  in  the  EU).  In  2021, 
23.7% of the population was unable to keep their 
homes  adequately  warm,  16.8 pps  above  the  EU 
average  (see  Annex  8).  Tackling  these  challenges 
will  contribute  to  reaching  the  national  target  of 
787 000 fewer people in AROPE by 2030. 

Base values are 2019 for employment rate, 2016 for adult 
participation in learning, and the reference year for AROPE is 
2019. Latest values are 2021 for employment rate (annual), 
2016 for adult participation, and 2021 for AROPE. AROPE 
reduction does not include population projections. 
Source: Eurostat 

Despite  improvements,  challenges  remain  in 
ensuring  access  to  quality  and  inclusive 
education,  particularly  for  Roma.  There  has 
been  some  progress,  but  the  provision  of  quality 
early  childhood  education  and  care  remains  low 
for  0-3-year-olds  (18.7%  vs  36.6%  in  the  EU  in 
2021).  The  employment  rate  of  recent  vocational 
education  and  training  (VET)  graduates  (64.8%  in 
2022)  is  still  well  below  the  EU  average  (79.7%). 
The Bulgarian recovery and resilience plan (RRP) is 
tackling  some  of  these  challenges  through  the 
creation  of  STEM  centres  in  schools  across  the 

is 

its 

social 
strengthening 
Bulgaria 
protection  system,  but  there  is  still  limited 
access  to  social  and  health  services.  The 
ongoing reform of the minimum income scheme is 
expected  to  strengthen  social  protection,  tying  up 
the  minimum  support  to  30%  of  the  most  recent 
at-risk-of-poverty  threshold 
in  2025.  Bulgaria 
recorded  a  significant increase  (of  9.4 pps)  of the 
impact of social transfers (other than pensions) in 
reducing poverty (29.8% in 2021), though it is still 
well below the EU average (37.0%). The long-term 
care system has one of the lowest coverage rates 
in  the  EU.  The  healthcare  system  suffers  from 
staff shortages, especially nurses (101). The RRP for 
Bulgaria  includes  investments  to  strengthen  the 
provision  of  long-term  care  and  develop  at  least 
300  outpatient  medical  units  in  areas  facing 
shortages  of  health  professionals.  The  ESF+  also 
supports  measures  to  stimulate  labour  mobility, 
of 
skills 
healthcare professionals. 

specialisation 

development, 

and 

(100) European Union Agency for Fundamental Rights (2022). 

(101) Institute for Market Economy (2022), Social Services for 

Support of Elderly People. 

59 

IndicatorsLatest dataTrend            (2015-2022)National target by 2030EU target by 203075.7(2022)11.8(2016)-118(2021)Adult learning1 (%)35.460Employment (%)7978Poverty reduction2 (thousands)-787-15 000 
 
  
 
                                                 
ANNEX 15: EDUCATION AND TRAINING 

This  Annex  outlines  the  main  challenges  for 
Bulgaria’s education and training system in light of 
the  EU-level 
targets  and  other  contextual 
indicators  under  the  European  Education  Area 
strategic framework, based on the 2022 Education 
and Training Monitor. 

Graph A15.1: The share of underachievers in 
reading, maths and science (combined) by socio-
economic status, PISA 2018 

in 

44.4% 

(47.1% 

reading, 

in  school 
Increasing  quality  and  equity 
remains  a  major  challenge. 
education 
Underachievement in  basic  skills,  as measured  by 
PISA (102) 
in 
mathematics  and  46.5%  in  sciences),  is  twice  as 
high as the European averages. There has been no 
substantial  progress  over  time.  The  rates  of  low 
achievement  in  basic  skills  are  particularly  high 
among students from disadvantaged backgrounds, 
suggesting  that  socio-economic  factors  greatly 
affect  educational  outcomes.  The  percentage  of 
disadvantaged  pupils  underachieving  in  all  three 
tested  subjects  in  PISA  is  the  highest  in  the  EU 
form  of 
to  a 
(52.3%),  pointing 
underachievement.  The  gap  between  students 
from advantaged and disadvantaged backgrounds 
is  also  among  the  highest  (see  Graph  A15.1), 
(38.3 pps,  against  the  EU  average  of  19.3 pps). 
During  2022,  Bulgaria  welcomed  more  than 
50.000  displaced  children  from  the  Ukraine  and 
offered language support and e-education services 
to those enrolled. However, only a small fraction of 
children  receiving  temporary  protection  attend 
local  schools,  including  due  to  their  family’s 
preference to follow Ukrainian education. 

severe 

tend 

Segregation  remains  a  major  obstacle  for 
accessing  quality  education.  PISA  data  further 
show  that  students  with  similar  socio-economic 
status  and  performance 
to  be 
levels 
concentrated 
in  the  same  schools.  64%  of 
Roma (103)  children  aged  6-14  attend  schools  or 
their 
kindergartens  where  all  or  most  of 
schoolmates are Roma (104). This proportion is even 
higher compared with 2016, when it was 58%. At 
the same time, only 86.2% of Roma children aged 
7-15  attend  formal  education,  compared  with 
94.6% of the total population (ibid.). 

(102) 2018 OECD Programme for International Student 

Assessment 

(103) According to Council of Europe estimations, Roma represent 

about 10% of Bulgaria’s population 

(104) Fundamental Rights Agency, 2022, Headline indicators for 

the EU Roma strategic framework for equality, inclusion and 
participation for 2020–2030. 

Source: OECD (PISA 2018).  

The teacher population is one of the oldest in 
the  EU  and  teacher  shortages  are  emerging. 
About half of schoolteachers are aged 50 or over. 
To  improve  the  attractiveness  of  the  profession, 
increasing  salaries  has  been  a  priority.  Teacher 
shortages exist particularly in certain subjects (e.g. 
STEM-related,  English)  and  in  rural  areas,  where 
the concentration of students from disadvantaged 
backgrounds  is  higher.  Meanwhile,  teachers  with 
higher levels of education or experience, tend to be 
concentrated in urban areas, where the workforce 
is also to a lesser extent aged (105). The number of 
students 
is 
increasing,  but  around  40%  of  graduates  in 
pedagogy  programmes  and  65%  of  subject-
specific  pedagogy  programmes  do  not  become 
teachers after graduation (ibid). A high percentage 
of  young  teachers  leave  the  profession  after  the 
first  year  of  teaching.  The  take-up  of  teacher 
training  programmes  in  mathematics,  ICT  and 
natural  sciences  is  insufficient  to  meet  demand. 
The need to upgrade teachers’ skills remains high. 

training  programmes 

teacher 

in 

Early  school  leaving  decreased.  In  2022,  the 
rate  of  early  leavers  from  education  and  training 
(18-24y)  decreased  by  1.7  pps  to  10.5%,  but 
remains  above  the  EU-level  target  (9%)  and  EU 
average (9.6%). It is particularly high for the Roma 
and in rural areas (19.1%). 

Participation  in  early  childhood  education 
and  care  (ECEC)  is  improving  but  remains 
low. Increasing access to quality ECEC has been a 
long-standing  priority  in  Bulgaria.  In  2020,  the 
participation  rate  improved  slightly  for  children 
between  the  age  of  3  and  the  starting  age  of 
compulsory primary education. However, at 80.1%, 

(105) World Bank Group, 2020, Bulgaria Teaching Workforce. Policy 

Note and Recommendations. 

60 

0%10%20%30%40%50%60%BulgariaEUCountry averageHigh socioeconomic statusLow socioeconomic status 
 
 
                                                 
  
                                                 
 
Table A15.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Source: (1.3,4.5,7.8,9.10,11) = Eurostat; 2 = OECD (PISA); 6 = European Commission (Joint Research Centre). Notes: Data is not 
yet available for the remaining EU-level targets under the European Education Area strategic framework, covering 
underachievement in digital skills and participation of adults in learning. The equity indicator shows the gap in the share of 
underachievement in reading, mathematics and science (combined) among 15-year-olds between the lowest and highest quarters 
of socio-economic status. 

the  enrolment  rate  remains  low  (EU  average: 
93%).  Although  ECEC  capacities  are  broadly 
sufficient  across 
remain 
insufficient  in  the  capital  and  large  urban  areas. 
Participation  rates  are  lower  for  disadvantaged 
groups, including Roma (58%, compared with 80% 
in the general population). 

the  country, 

they 

Digitalisation  in  education  and  training  is 
underway, but digital skills are low. Only 52% 
of  Bulgarians  aged  16-19  have  at  least  basic 
digital skills (106), one of the lowest rates in the EU 
the 
(average  69%).  The  pandemic  exposed 
challenges  in  digital  education,  but  at  the  same 
time  accelerated 
investments, 
including  with  support  under  the  Recovery  and 
Resilience  Facility.  For  example,  STEM  (science, 
technology, 
maths) 
laboratories (107),  including  high-tech  classrooms, 
will be installed in schools.  

reforms  and 

engineering 

and 

(106) Digital Economy and Society Index (DESI) 2021, Bulgaria. 

(107) These are specially designed and equipped learning spaces 

with a focus on digital skills and STEM.  

61 

Tertiary  educational  attainment  is  low.  Only 
33.8% of Bulgarians aged 25-34 held a university 
degree  in  2022,  compared  with  an  average  of 
42% in the EU. The percentage of STEM graduates 
is one of the lowest in the EU. 

level  and  graduates’ 

Despite efforts, the labour market relevance 
of  education  and  training  is  insufficient. 
Overall,  only  about  half  of  higher  education 
graduates  work 
in  positions  requiring  higher 
education.  The  higher  education  map  showed  a 
number  of  imbalances  between  demand  for  and 
supply  of  educational  services  at  national  and 
regional 
labour  market 
outcomes. Efforts to improve quality continue with 
the  implementation  of  the  Strategy  for  Higher 
Education  (2022-2030).  Several  measures  have 
been taken to modernise vocational education and 
training  (VET),  but  its  alignment  with  the  labour 
market could be  further improved (see Annex 14). 
Bulgaria  continues  to  have  one  of  the  lowest 
participation  rates  in  adult  learning  in  the  EU 
(1.8% in 2021, significantly  below the average of 
10.8%), particularly among low-skilled adults. 

96%84.8%91.9%80.1%202093.0%2020Reading< 15%41.5% 20.0%47.1%201822.5%2018Mathematics< 15%42.1% 22.3%44.4%201822.9%2018Science< 15%37.9% 21.1%46.5%201822.3%2018< 9 %13.4%11.0%10.5% 9.6%Men13.3%12.5%9.3%11.1%Women13.4%9.4%11.7%8.0%Cities3.6%9.6%5.7%8.6%Rural areas29.4%12.2%19.1%10.0%Native13.5%10.0%10.5%8.3%EU-born:u20.7%:u20.3%Non EU-born:u23.4%:u22.1%6Equity indicator (percentage points)::38.3201819.320187Exposure of VET graduates to work based learningTotal ≥ 60% (2025) : ::u60.1%45%31.8%36.5%33.8%42.0%Men24.6%31.2%27.7%36.5%Women39.6% 41.8%40.3%47.6%Cities45.7%46.2%47.1%52.2%Rural areas10.4%26.9%14.0%30.2%Native31.8%37.7%33.7%43.0%EU-born:u32.7%:u39.5%Non EU-born:u27.0%:u35.7%47.7% 38.3%49.4%202039.2%2020Tertiary educational attainment (age 25-34)8Total8By gender9By degree of urbanisation10By country of birth11Share of school teachers (ISCED 1-3) who are 50 years or over1Participation in early childhood education (age 3+)2Low achieving 15-year-olds in:Early leavers from education and training (age 18-24)3Total3By gender4By degree of urbanisation5By country of birth20152022IndicatorTargetBulgariaEU27BulgariaEU27 
                                                 
 
   
 
spending. Public spending on health is projected to 
increase by 0.2 percentage points (pps) of GDP by 
2070 (compared to 0.9 pps for the EU overall). 

Graph A16.2: Projected increase in public 
expenditure on healthcare over 2019-2070 

AWG reference scenario  
Source: European Commission / EPC (2021) 

Spending  on  inpatient  care  made  up  the 
in 
largest  share  of  health  expenditure 
Bulgaria  (38%  in  2020).  Together  with  a 
particularly  high  number  of  acute  care  beds,  this 
points  towards  a  highly  hospital-centred  care 
model.  Correspondingly,  Bulgaria  ranks  amongst 
the countries with the lowest share of spending on 
outpatient  care.  Spending  on  medical  goods 
(mainly  pharmaceuticals)  in  outpatient  settings  in 
third  of  health 
Bulgaria 
expenditure,  amongst  the  highest  in  the  EU.  The 
consumption  of  antibacterials  (daily  defined  dose 
per  1  000  inhabitants  per  day)  was  22.4  (2021), 
well  above  the  EU  average  of  14.5  (2021).  This 
raises  public  health  concerns  about  antimicrobial 
resistance. 

represents  over  a 

Spending on prevention in Bulgaria amounted 
to  2.8%  of  total  healthcare  spending  in 
2020,  compared  to  3.4%  for  the  EU  overall. 
In  absolute  numbers,  spending  on  prevention  in 
Bulgaria  increased  by  14%  between  2019  and 
2020  (compared  to  a  26%  increase  for  the  EU 
overall). Across the EU, this increase was primarily 
spending  on  disease  detection, 
driven  by 
surveillance, control and response programmes as 
part  of  the  public  health  response  to  COVID-19. 
Between  2019  and  2020,  a 
remarkable 
proportional  increase  in  reported  spending  was 
noted  in  Bulgaria  for  epidemiological  surveillance 
and risk and disease control programmes.  

ANNEX 16: HEALTH AND HEALTH SYSTEMS 

A  healthy  population  and  an  effective, 
accessible  and  resilient  health  system  are 
prerequisites  for  a sustainable  economy and 
society.  This  Annex  provides  a  snapshot  of 
in 
population  health  and  the  health  system 
Bulgaria.  

Life  expectancy  in  Bulgaria  continues  to  be 
the lowest in the EU. It has seen a sharp decline 
after  2019.  This  decline  is  mostly  due  to  COVID-
19-related  deaths, 
the  number  of  which 
significantly  increased  in  2021. (108)  In  2020,  the 
leading  causes  of  death  were  diseases  of  the 
circulatory systems followed by cancer and COVID-
19.  The  treatable  mortality  rate  per  100  000 
population  of  213  (2020)  is  well  above  the  EU 
average  of  92  (2020).  Cancer  mortality  per  100 
000  population  in  Bulgaria  amounts  to  245 
(2020),  slightly  above  the  EU  average  of  242 
(2020). 

Graph A16.1: Life expectancy at birth, years 

Source: Eurostat 

Health  spending  relative  to  GDP  in  Bulgaria 
was  8.5%,  well  below  the  EU  average  of 
10.9%  (2020).  Health  spending  per  capita  has 
grown  faster  than  in  the  EU  overall  for  the  past 
decade, with a particularly large increase of 19.9% 
between 2019 and 2020, the highest in the EU in 
that  timeframe.  However,  with  a  per  capita 
spending  of  EUR  1 478  (in  purchasing  power 
standards) in 2020, Bulgaria was still amongst the 
lowest spending countries in the EU, below half the 
EU  average  of  EUR  3 269.  A  particular  challenge 
for  Bulgaria  is  the  high  share  of  out-of-pocket 
payments  of  36%  (2020),  the  highest  in  the  EU. 
Correspondingly, 
the  public  share  of  health 
expenditure was 63.1% (2020), well below the EU 
average  of  81.2%  (2020).  Bulgaria  also  ranks 
among  the  countries  with  the  highest  share  of 
catastrophic  health 
households  experiencing 

(108) Based on data provided directly by Member States to ECDC 
under the European Surveillance System (data current as of 
13 April 2023). 

62 

74.974.875.075.173.671.480.980.981.081.380.480.1201620172018201920202021BulgariaEU6.64.60.90.202468EUBulgaria% of GDP20192070increase 
 
      
                                                 
 
      
 
Table A16.1: Key health indicators 

Note: The EU average is weighted for all indicators, except for (*) and (**), for which the EU simple average is used. The simple 
average for (*) uses data for 2020 or most recent year if former not available. Doctors' density data refer to practising doctors in 
all countries except EL, PT (licensed to practice) and SK (professionally active). Nurses' density data refer to practising nurses in all 
countries except FR, PT, SK (professionally active) and EL (nurses working in hospitals only). 
Source: Eurostat database; except: ** ECDC 

The Bulgarian health system faces shortages 
of  nurses.  The  number  of  doctors  per  1  000 
population was 4.3 (2020), above the EU average 
of 3.9 (2020). The number of practising dentists in 
Bulgaria  was  1.1  (2020),  amongst  the  highest  in 
the  EU.  However,  the  number  of  nurses  was  4.2 
(2020), compared to the EU average of 8.3 (2020). 
The low number of nurses is also reflected in the 
lowest  nurse-to-physician  ratio  in  the  EU.  While 
the  ratio  of  nurses  to  doctors  in  the  EU  was  2.2 
(2020),  it  was  only  1.0  (2020) 
in  Bulgaria. 
Furthermore, 
reported  Labour  Force  Survey 
numbers  on  employment  in  healthcare  decreased 
recently. 

investments 

Through  its  recovery  and  resilience  plan 
(RRP),  Bulgaria  plans  to  invest  EUR  372 
million  (5.9%  of  the  RRP’s  total  value)  in 
healthcare.  Pending 
include  the 
modernisation  of  hospitals  and  medical  facilities 
providing  paediatric,  oncological  or  psychiatric 
care.  The  RRP’s  health  component  also  includes 
constructing outpatient care units, setting up an air 
ambulance  system,  and  addressing  shortages  of 
healthcare 
their 
unbalanced geographical distribution. 

professionals, 

including 

The  reforms  contained  in  the  RRP’s  health 
component include an update of the strategic 
framework  for  the  health  sector.  Bulgaria 
adopted  a  national  strategy  on  mental  health  for 
2021-2030 and a related action plan, which aims 
to  address  the  key  problems  of  the  psychiatric 
care  system  in  the  country.  Furthermore,  the  RRP 
envisages  an  update  of  several  other  strategies, 
including the national cancer plan and the national 
paediatric  strategy.  Bulgaria  is  also  preparing  an 
update of its regulatory framework for e-health.  

63 

20172018201920202021EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)191.8188.2189.0213.0NA91.7 (2020)Cancer mortality per 100 000 population232.4232.5242.2245.3NA242.2 (2020)Current expenditure on health, % GDP 7.57.37.18.5NA10.9 (2020)Public share of health expenditure, % of current health expenditure56.459.160.663.1NA81.2 (2020)Spending on prevention, % of current health expenditure 2.82.83.02.8NA3.4 (2020)Acute care beds per 100 000 population617624641658NA387.4 (2019)Doctors per 1 000 population *4.24.24.24.3NA3.9 (2020)Nurses per 1 000 population *4.44.44.44.2NA8.3 (2020)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day (total consumption for CY and CY) **18.919.519.120.722.414.5 (2021) 
 
 
   
 
ANNEX 17: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

This  Annex  showcases  the  economic  and 
social regional dynamics in Bulgaria, providing 
an update of the situation of economic, social and 
territorial  cohesion  in  and  among  the  Bulgarian 
regions versus EU averages and the main regional 
economic recovery challenges. 

Regional disparities in GDP per capita remain 
very  high  in  Bulgaria  despite  a  perceived 
convergence  towards  the  EU  average.  (graph 
17.1). Although highest growth rates during 2011-
2020  are  found  in  some  of  the  least  developed 
regions,  like  in  Severozopaden  (2.9%  per  annum) 
and  Severen  Tsentralen  (2.2%),  in  2020  regional 
disparities  remain  at  the  same  level  as  in  the 
previous  decade.  They  are  characterised  in  terms 
of  GDP  andlabour  productivity,  demographics, 
education  and  trainingemployment,  infrastructure, 
competitiveness and R&I performance, all typically 
exacerbated  in  the  Northern  parts  of  the  country 
(table A.17.1). GDP per capita varied between 92% 
of the EU average in the capital region to between 
35-40%  of  the  EU  average  in  all  other  regions. 
Economic  activity  is  highly  concentrated  in  the 
capital  region  which  generates  51%  of  the 
national GDP, despite being home to just 18,9  % 
of the population. 

Graph A17.1: GDP per head (2010) and GDP growth 
(2011-2020), Bulgaria (NUTS-3 regions) 

Source: Eurostat, DG REGIO elaboration 

Labour productivity has steadily increased in 
Bulgaria  but  it  is  lagging  behind  the  EU  and 
significant regional disparities persist (graph 
17.2).  In  2021  Bulgaria  has  the  lowest  labour 
productivity  in  the  EU  (measured  as  gross  value 
added PPS per person employed), equal to around 
52% of the EU average. Labour productivity is the 
highest in the capital region, (almost twice as high 
as  in  Yuzhen  tsentralen,  the  least  productive 
growth 
the 
region).  However, 
(measured as gross value added in constant 2015 
prices per person employed) of 1.5% in the capital 
region  has  been  below  the  national  average. 

productivity 

Severoitztochen  region  (1.2%)  showed  the  lowest 
growth. 

Graph A17.2: Labour productivity (real GVA per 
worker), EU-27, Bulgaria (NUTS 2 regions), 2000-
2020 

Source: Eurostat, DG REGIO elaboration 

Bulgaria  was  severely  affected  by  the 
COVID-19  pandemic.  At  country  level,  average 
mortality in 2020 and 2021 was 29% higher than 
the average during 2015-2019. Bulgaria also had 
the highest excess mortality in the EU. At regional 
level,  excess  mortality  was  particularly  high  in 
Yuzhen  Tsentralen  (+31%)  and  the  capital  region 
(+30%). 

The  socio-economic  consequences  of  the 
pandemic  have  been  assymetrically  felt.  In 
contrast  to  the  upward  trend  during  2015-2019, 
the  employment  rate  dropped  in  2020  in  all 
regions. In 2021, employment (partly) recovered in 
some  regions;  while  it  continued  to  decrease  in 
Severen  Tsentralen  (-2.2%  pp), Yuzhen  Tsentralen 
(-1.2 
pp). 
Unemployment  rates  went  up  in  2020  for  all 
regions, and continued to increase in 2021 in most 
regions.  Only 
the 
the 
unemployment rate showed a significant recovery 
(Graph 17.3). 

Yugoitztochen 

capital 

region 

(-0.9 

and 

pp) 

in 

Bulgaria  and  some  of  its  less  developed 
regions  rapidly  lose  its  population.  Between 
2011  and  2020,  the  population  of  Bulgaria 
decreased  by  almost  6.3%.  In  some  regions,  the 
loss  of  population 
In 
Severozapaden population shrank by 16%, about a 
quarter  of  which  was  linked  to  net  migration.  In 
Severen  Tsentralen  the  decrease  was  12%,  one 
fifth of which caused by net migration. Rural areas 
are most affected by this trend as their population 

is  extremely  high. 

64 

0.51.01.52.02.53.03.5102030405060708090Annual real GDP per head growth2011-2020 (average % change on the preceding year)GDP (PPS) per head in 2010 (EU = 100)Capital regionOther NUTS2 regionsNational averageEU275152535455565000102030405060708091011121314151617181920thousands of EUR per  personCapital regionOther NUTS2 regionsEU27National average 
 
  
  
 
 
Table A17.1: Selected indicators at regional level - Bulgaria 

Source: EUROSTAT, EDGAR database 

decreased  by  18.6%  between  2011  and  2020.  In 
contrast, the capital region's population decreased 
by  only  2.3%  due  to  natural  population  change, 
but  was  compensated  by  an  increase  in  net 
migration (1.9%). 

In Bulgaria, health issues are contributing to 
the  poor  demographic  situation.  The  country's 
overall  life  expectancy  is  about  six  years  lower 
than the EU average, and this gap is slightly wider 
in  Northern 
infant 
regions.  Additionally, 
mortality  rate  in  Bulgaria  is  higher  than  the  EU 
average,  with  the  lowest  rates  recorded  in  the 
capital region. 

the 

Graph A17.3: Unemployment in Bulgarian regions, 
2019-2021 

Source: Eurostat, DG REGIO elaboration 

Overall the unemployment rate in Bulgaria is 
lower  than  in  the  EU  but  there  are  wide 
regional variations. In 2021, the unemployment 
rate was 5.3 % in Bulgaria (7.0% in the EU), but as 
low  as  3.5%  in  the  capital  region  and  as  high  as 
11% 
region  of 
Severozapaden,  wherethe  employment  rate  was 
also  particularly  low  (65%  against  the  national 
average of 73%). The unemployment rate in rural 

least  developed 

the 

in 

lower 
regions. 

in  some  of  the 

areas  amounts  to  8.8%.  Employment  in  high-
technology  sectors  and  R&D  expenditure are 
less 
also  much 
developed 
In  Yugoiztochen  and 
Severoiztochen only 1.2% and 1.4% of the workers 
are  employed  in  high-technology  sectors.  R&D 
expenditure is as low as 0.3% of GDP in all regions 
except  the  capital  region  where  it  is  more  than 
twice  as  high  (0.8%),  but  still  well  below  the  EU 
average (2,07 %). 

The  rail  density  and  road  infrastructure  are 
far  below  the  EU  average.  Also in  terms  of 
railway and motorway infrastructure, the Northern 
regions lag behind the Southern ones. In 2020, the 
Northern 
regions  hosted  only  112  km  of 
motorways  out  of  the  total  of  806  km  in  the 
country. 

All  Bulgarian  regions  rank  below  the  EU 
average  in  terms  of  competitiveness.  The 
regional  competitiveness index  value is  highest in 
the  capital  Yugozapaden  region  (85.4  %  of  EU 
average).  The 
in 
is 
lowest  value 
Severozopaden (49 % of EU average). 

found 

In some Bulgarian regions, less than 25% of 
the  population  aged  30-34  has  a  tertiary 
(20.8%), 
These  are  Yugoiztochen 
degree. 
Severozapaden  (22.1%)  and  Yuzhen  Tsentralen 
(24.2%).  By  contrast,  in  the  capital  region  the 
share (46.4%) is higher than the EU average. 

the  population  used 

The ICT uptake is low in Bulgaria. In 2020, only 
27%  of 
for 
interaction with public authorities against 56% on 
average  in  the  EU.  The  capital  region  has  the 
highest  share  (36%)  while  in  Severozapaden  and 
Yugoiztochen  the  shares  are  as  low  as  17%  and 
18%, respectively. 

internet 

65 

02468101214SeverozapadenSeverenTsentralenSeveroiztochenYugoiztochenYugozapadenYuzhenTsentralenUnemployment (%)201920202021NUTS 2 RegionGDP per head (PPS)Productivity (GVA (PPS) per person employed)Population growthLife expectancy at birthInfant mortality rateUnemployment ratePopulation with high educational attainmentR&D expenditureTransport performance by carMotorway densityRegional Competitiveness IndexEU27=100, 2021EU27=100, 2021Total % change, 2011-2020Years, 2020% of infants, 2020% of active population, 2021% of population aged 30-34, 2021% of GDP, 2019(*) ref year 2020% Pop. within 1h30 travel/within 120 km radius, 2018km/km2  2020Range 0-100, 2022European Union1001002.079.73.37.042.02*82.00.0273100.0Bulgaria5752-6.373.65.15.332.70.8056.90.007465.9Severozapaden3944-16.472.15.911.122.10.4029.40.000949.0Severen tsentralen3939-12.072.86.16.729.60.3037.10.000062.4Severoiztochen4343-4.773.54.76.127.60.5046.90.006658.9Yugoiztochen4545-5.573.37.75.520.80.4056.50.011653.4Yugozapaden9670-2.374.52.93.546.61.2071.40.014185.4Yuzhen tsentralen3837-5.373.96.04.024.20.5067.70.008861.6 
  
 
  
 
MACROECONOMIC STABILITY 
ANNEX 18: KEY FINANCIAL SECTOR DEVELOPMENTS 

than 

is  higher 

Bulgaria has a comparatively small financial 
sector,  with  banks  acting  as  the  main 
financial  intermediaries.  The  ratio  of  total 
assets to GDP is close to 100%, while the top five 
lenders hold 67.2% of total banking-sector assets. 
Bulgaria’s  banking  sector 
is  dominated  by 
subsidiaries  and  branches  of  euro-area  banks. 
Domestic  banks  accounted  for  27.8%  of  total 
assets in 2022, slightly higher than pre-pandemic. 
The  number  of  bank  branches  relative  to  the 
the  EU  average, 
population 
reflecting  both  the  limited  digital  skills  among 
certain  population  groups  and  contained  labour 
costs. At the same time, Bulgaria’s FinTech sector 
has  been  growing  rapidly.  The  digital  payments 
sector is by far the largest contributor to this rapid 
growth,  followed  by  alternative  credit,  data 
analytics, and digital-asset exchange. The market-
funding  ratio  has  declined  further  in  recent  years 
to a relatively low level in 2021 (Table A18.1). This 
is because companies’ access to non-bank funding, 
especially  the  use  of  listed  shares  and  debt 
securities, remains very limited, while loans remain 
the  dominant  source  of  funding.  No  green  bond 
issuances have been undertaken so far in Bulgaria, 
and  sustainable-finance 
initiatives  are  mainly 
supported by public policies and investment funds. 

Overall, the banking sector remains resilient, 
highly  profitable  and  well  capitalised.  The 
system-wide capital-adequacy ratio was 20.9% in 
the  third  quarter  of  2022,  above  the  EU  average. 
Following  the  pronounced  decline  in  2020,  the 
in  Bulgaria  strongly 
profitability  of  banks 
rebounded,  with  return  on  equity  of  8.8%  at  the 
end  of  2021  and  10.6%  in  the  third  quarter  of 
2022. The cost-to-income-ratio, at 45.1% in 2022, 
remained  close  to  pre-pandemic  levels.  The  loan-
to-deposit ratio has declined since the onset of the 
pandemic,  driven  by  strong  deposit  growth.  Non-
performing loans (NPLs) remain relatively high, but 
have been steadily decreasing, including during the 
pandemic.  The  overall  NPL  ratio  has  been  on  a 
downward  trend  across 
individual  banks  and 
lending  segments  in  recent  years  due  to  loan 
write-offs  and  sales.  However,  the  NPL  ratio  was 
still  at  4.2%  in  the  third  quarter  of  2022  –  well 
above the EU average (1.8%) – as the pace of NPL 
reduction  in  Bulgaria  has  been  slower  than  in 
many  other  EU  Member  States.  NPLs  to  non-
financial  corporations  have  also  fallen  in  recent 
years,  but  still  stood  at  6.7%  of  total  loans  and 
advances in 2022 (compared with 7.6% at the end 

66 

of  2021)  and  were  even  higher  for  domestically 
owned banks. In 2022, the share of (stage 2) loans 
that  have  deteriorated  significantly 
in  credit 
quality under the International Financial  Reporting 
Standard (IFRS) 9 indicates increased credit risk.  

Graph A18.1: Evolution of credit activity 

Source: ECB. 

The  second-round  effects  of  higher  energy 
prices  and  interest  rates  are  likely  to  weigh 
on  asset  quality.  For  the  banking  sector,  higher 
energy prices and interest rates are likely to affect 
the  debt-repayment  capacity  of  borrowers,  in 
particular more vulnerable and indebted borrowers 
and  borrowers  active  in  more  energy-intensive 
sectors.  The  sharp  increase  in  energy  prices, 
possible disruptions in energy supply, deterioration 
indirect 
in  economic  sentiment  and  potential 
effects  of  the  slowdown  in  economic  activity  in 
Bulgaria’s  main  trading  partners  may  affect  the 
real  economy  and  deteriorate  the  debt-servicing 
In  addition,  the  clearly 
ability  of  borrowers. 
pronounced  trend  towards  a  shift  in  the  interest-
rate cycle could weigh on borrowers by increasing 
the  cost  of  servicing  loan  obligations.  As  in  other 
countries,  the  unexpectedly  high  inflation  is  likely 
to  generate  significant 
losses  for  Bulgarian 
insurers’  non-life  business.  The  losses  can  stem 
from  several  factors,  including:  (i)  a  significant 
increase in the currently underestimated technical 
provisions  on  past  claims,  especially  for  long-tail 
business; (ii) a significant increase in the loss ratio 
of  future  claims  if  insurers  find  it  difficult  to 
correctly price future inflation in their premiums in 
a  timely  manner;  and  (iii)  lower  underwriting 
volumes as inflation might reduce saving capacity 
and purchasing power among policyholders. 

-505101520Total privateNFCHH% 
 
 
  
 
Table A18.1: Financial Soundness Indicators 

(1) Last data: Q3-2022. 
(2) Data is annualized.  
Source: ECB, Eurostat, S&P Global Capital IQ Pro. 

institutions 

Lending  activity  strengthened  in  2021  and 
increased even further in 2022. In 2022, more 
new  loans  were  granted  to  households  than  to 
non-financial  corporations.  By  the  end  of  2022, 
year-on-year  growth  in  lending  to  non-financial 
corporations  was  11.1%,  below  the  peak  reached 
in  August  2022,  while  lending  to  households 
continued to grow strongly at 16.0% year-on-year. 
The factors driving banks’ credit supply include an 
increase in deposits and a stable liquidity position 
of  credit 
in  Bulgaria.  Household 
demand for loans for most of 2022 was supported 
by  still-moderate  interest  rates.  For  non-financial 
corporations,  the  elevated  credit  growth  in  2022 
was  mostly  due  to  the  need  for  working  capital 
and the need to accumulate inventory amid rising 
production costs. Most recently, in the first months 
lending  growth  started  moderating, 
of  2023 
notably  to  non-financial  corporations.  From  a 
longer-term  perspective,  the  cost  of  lending  to 
non-financial  corporations  has  been  declining  (to 
just  below  3%  at  the  end  of  2021),  but  started 
increasing toward the end of 2022, in line with the 
shift in the global interest-rate cycle.  

The  booming  housing  market  and  strong 
growth in mortgage lending have triggered a 
policy response. Eurostat’s House Price Index for 
Bulgaria has increased by around 54% since 2015, 
and house-price growth accelerated further during 
the pandemic. At the same time, annual growth in 
mortgage  loans  has  accelerated  significantly  in 

67 

recent  years  in  Bulgaria,  peaking  at  18.7%  year-
on-year  in  June  2022.  This  growth,  and  the  risks 
ensuing  from  the  anticipated  change 
in  the 
interest-rate  cycle,  prompted 
the  Bulgarian 
National  Bank  to  increase  the  countercyclical 
capital  buffer  (CCyB)  from  0.5%  to  1%  from 
October 2022, to 1.5% from January 2023, and to 
2.0% from 1 October 2023.  

to  virtual  assets  and 

Bulgaria  has  taken  steps  to  strengthen  the 
anti-money  laundering  (AML/CFT)  framework 
but  more  remains  to  be  done.  Bulgaria  has 
taken  action  to  improve  the  AML/CFT  supervisory 
framework  and  work  is  ongoing  on  the  update  of 
the national risk assessment of money laundering 
and  terrorist  financing  and  the  sectorial  risk 
assessments  of  the  non-profit  organisations’ 
sector;  the  sectorial  assessments  of  the  risks 
relating 
investor 
citizenship  scheme has been concluded. Steps are 
being  taken  to  enhance  the  analytical  capacity  of 
the  Financial  Intelligence  Unit  to  make  better  use 
of suspicious transaction reports and increase the 
use  of  financial  intelligence.  Bulgaria  underwent 
an assessment of the effectiveness of its AML/CFT 
framework  against  international  standards  which 
resulted in recommended actions to be addressed. 
A  draft 
law  aiming  to  fully  transpose  the 
provisions  of  the  5th  Anti-money  Laundering 
Directive was submitted to the National Assembly 
but was ultimately not adopted. 

the 

201720182019202020212022Total assets of the banking sector (% of GDP)101,5101,6100,0107,7101,399,6Share (total assets) of the five largest banks (%)56,559,762,567,167,2-Share (total assets) of domestic credit institutions (%)123,622,122,322,828,427,8NFC credit growth (year-on-year % change)4,88,67,64,05,711,1HH credit growth (year-on-year % change)8,99,110,67,614,516,0Financial soundness indicators:1      - non-performing loans (% of total loans)10,27,76,55,94,84,2- capital adequacy ratio (%)21,820,619,523,122,920,9- return on equity (%)210,211,811,24,98,810,6Cost-to-income ratio (%)145,145,346,847,245,045,1Loan-to-deposit ratio (%)172,675,578,069,768,870,2Central bank liquidity as % of liabilities0,00,0-0,00,00,0Private sector debt (% of GDP)98,694,990,792,584,4-Long-term interest rate spread versus Bund (basis points)128,549,668,276,456,339,0Market funding ratio (%)17,115,515,413,712,3-Green bonds issued to all bonds (%)------1-34-1011-1718-2425-27Colours indicate performance ranking among 27 EU Member States. 
 
  
 
ANNEX 19: TAXATION  

This  Annex  provides  an 
indicator-based 
overview of Bulgaria’s tax system.  It includes 
information on the tax structure (the types of tax 
that  Bulgaria  derives  most  of  its  revenue  from), 
the  tax  burden  on  workers,  and  the  progressivity 
and redistributive effect of the tax system. It also 
provides 
tax  collection  and 
compliance. 

information  on 

a percentage both of GDP and of total tax revenue. 
There  is  therefore  room  to  increase  them  to 
address  potential  fiscal  sustainability  challenges. 
However, there are no significant policy reforms in 
the  pipeline  with  respect  to  taxation.  The  only 
mentionable initiative is the public consultation on 
a law proposing amendments and supplements to 
the Tax and Social Insurance Procedure Code. 

from 

Bulgaria’s  tax  revenue  is  relatively  low  in 
its  GDP,  with  the  highest 
relation  to 
contribution 
consumption 
coming 
taxation. The low tax environment with respect to 
direct taxes is beneficial for economic activity as it 
encourages  investment  and  labour  supply.  Table 
A19.1  shows  that  Bulgaria’s  tax  revenue  as  a 
percentage of GDP was considerably below the EU 
aggregate  in  2021  and  almost  the  same  as  in 
2020.  The  share  of  consumption  taxes  as  a 
proportion  of  total  tax  revenue  was  significantly 
above  the  EU  aggregate  (45.8%  compared  with 
27.5%),  but  revenue  from  labour  taxes  was 
significantly below the EU aggregate, as a share of 
both GDP and total taxation (see Table A19.1 and 
Graph  A19.2).  Environmental  taxes  represented 
9%  of  total  taxation  in  2021,  the  highest  rate  in 
the  EU-27.  This  was  mostly  due  to  energy  taxes, 
reflecting  the  application  of  the  ‘polluter  pays’ 
principle 
to 
environmental  sustainability,  see  Annex  6). 
Revenue from property taxes was relatively low as 

(For  more  on  policies 

related 

Graph A19.1: Tax wedge for single and second 
earners as a % of total labour costs, 2022 

Second earner tax wedge assumes first earner at 100% of 
the average wage and no children. For the methodology of 
the tax wedge for second earners see OECD (2016) “Taxing 
Wages 2014-2015”. 
Source: European Commission 

Bulgaria has a flat-rate tax system, which is 
not  progressive,  unlike  the  EU  average. 
Bulgaria has a flat-rate tax system with one of the 

Table A19.1: Taxation indicators 

(1) Forward-looking effective tax rate (OECD). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average 
For more data on tax revenues as well as the methodology applied, see European Commission, Directorate-General for Taxation 
and Customs Union, Taxation trends in the European Union: data for the EU Member States, Iceland, Norway and United Kingdom: 
2021 edition, Publications Office of the European Union, 2021, https://data.europa.eu/doi/10.2778/843047 and the Data on 
Taxation webpage data https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en. 
For more details on the VAT gap, see European Commission, Directorate-General for Taxation and Customs Union, VAT gap in the 
EU: report 2022, Publications Office of the European Union, 2022, https://data.europa.eu/doi/10.2778/109823  
Source: European Commission, OECD 

68 

34.934.934.934.934.920253035404550100150Tax wedge, % of total labour costsEarnings in % of the average wageSingle earner - BGSingle earner - EU averageSecond earner -  BGSecond earner -  EU average2010201920202021202220102019202020212022Total taxes (including compulsory actual social contributions) (% of GDP)25.430.330.530.737.939.940.040.6Labour taxes (as % of GDP)8.411.111.511.120.020.721.320.9Consumption taxes (as % of GDP)13.414.314.014.110.811.110.711.2Capital taxes (as % of GDP)3.65.05.05.67.18.18.08.5Total property taxes (as % of GDP)0.50.80.70.81.92.22.22.2Recurrent taxes on immovable property (as % of GDP)0.30.30.30.31.11.21.21.1Environmental taxes as % of GDP2.73.03.02.82.42.42.22.2Tax wedge at 50% of average wage (Single person) (*)32.534.934.934.934.933.932.331.932.131.7Tax wedge at 100% of average wage (Single person) (*)32.534.934.934.934.941.040.139.939.639.7Corporate income tax - effective average tax rates (1) (*)9.19.19.119.519.419.1Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)3.63.84.14.78.67.78.17.8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)20.2100.831.640.7VAT Gap (% of VAT total tax liability, VTTL)9.76.311.09.1BulgariaEU-27Tax structureProgressivity & fairnessTax administration & compliance 
 
       
 
 
       
 
 
 
 
 
 
 
 
 
Graph A19.2: Tax revenue from different tax types as % of total taxation revenue 

Source: European Commission 

reduce 

labour  demand  for 

lowest  personal  income  tax  rate  in  the  EU  (only 
10%).  Unlike  some  Member  States  with  a  flat 
income  tax  rate,  there  is  no  basic  tax  allowance, 
limiting  the  progressivity  of  the  tax 
further 
system. (109) As a result, the tax wedge is relatively 
high  for  low-income  earners  and  comparatively 
low  for  high-income  earners  (Graph  A19.1).  This 
low-skilled 
may 
workers.    The  lack  of  progressivity  of  the  tax 
system  contributes  also  to  the  low  ability  of  the 
tax and benefit system to redistribute income. The 
the  Gini-
tax  and  benefit  system 
coefficient  (measure  for  income  inequality)  in 
2021 only by 4.7 pps, which is well below the EU 
average of 7.8 pps (see Table  A19.1). Simulations 
based  on  the  EUROMOD  model  suggest  that  an 
annual  basic tax  allowance  of  EUR  2  800  for  low 
incomes  financed  by  an  increase  in  the  statutory 
tax  rate  could  reduce  relative  poverty  by  around 
0.6  percentage  point  and  inequality  by  0.8  Gini 
points. (110) 

reduces 

in  VAT  compliance  should  be 
improvement 
interpreted  with  caution,  however,  given  that  the 
estimate  relies  on  adjusted  data  from  2014. 
is  still  considerable  room  for 
Overall,  there 
improvement as concerns the efficiency of the tax 
administration.  Bulgaria  is  lagging  behind  other 
Member States in terms of the degree to which tax 
returns are pre-filled, which may be considered as 
an  indicator  for  the  compliance  costs  taxpayers 
face. (111)  The  electronic  filing  rates  for  personal 
income tax returns have improved but are still low 
compared  with  other  Member  States.    Bulgaria’s 
Recovery  and  Resilience  Plan  (RRP)  does  not 
include  tax  reforms, despite  several  existing  CSRs 
(CSR2018,  CSR2019  and  CSR2020)  on  taxation. 
However,  there  are  some  related  measures  that 
may  enhance 
the  digitalisation  of  public 
administration. 

of 

tax  administration. 

There  remain  challenges  as  regards  the 
Tax 
efficiency 
compliance  has  improved  as  reflected  by  the 
decrease  in  the  VAT  gap  (the  gap  between 
revenues actually collected and the theoretical tax 
liability),  which  decreased  by  3.4 pps  to  6.3% 
between  2019  and  2020.  The  observed 

(109) The maximum monthly social security contribution is BGN 3 

400 (€ 1 739) meaning that the marginal tax rate is 
regressive and then the tax wedge is relatively high for low-
income earners. However, income tax base of employees can 
be deducted by BGN 6 000 (€ 3 069) annually per child, up 
to BGN 12 000 for two children and BGN 18 000 for three 
children. The tax relief for disabled children is BGN 12 000. 

(110) Barrios, S. et al. (2020), “Progressive Tax Reforms in Flat Tax 
Countries”, Eastern European Economics, Vol. 58/2, pp. 83-
107. 

(111) Source: TaxTech - Forum on Tax Administration (oecd.org), 

Table DM2. 

69 

51.4327.5421.0136.0245.8318.15Tax revenue shares in 2021, Bulgaria (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital7.984.320.951.000.120.190.902.641.592.750246810Bulgaria -environmentaltaxationEU -environmentaltaxationBulgaria -property taxationEU - propertytaxationEnvironmental and property taxation as % of total tax revenue, Bulgaria and EUEnergy taxesTransport taxesResource/pollution taxesRecurrent property taxesOther property taxes 
                                                 
                                                 
 
        
ANNEX 20: TABLE WITH ECONOMIC AND FINANCIAL INDICATORS 

Table A20.1: Key economic and financial indicators 

(1) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
(2) Net international investment position (NIIP) excluding direct investment and portfolio equity shares. 
Source: Eurostat and ECB as of 2 May 2023, where available; European Commission for forecast figures (Spring forecast 2023). 

70 

2004-072008-122013-1920202021202220232024Real GDP (y-o-y)6.81.42.3-4.07.63.41.52.4Potential growth (y-o-y)5.91.82.32.22.32.22.62.1Private consumption (y-o-y)9.21.42.1-0.68.84.83.61.5Public consumption (y-o-y)2.5-0.32.38.30.46.53.94.0Gross fixed capital formation (y-o-y)16.5-4.21.80.6-8.3-4.32.23.3Exports of goods and services (y-o-y)15.02.95.6-10.411.08.32.63.2Imports of goods and services (y-o-y) 19.7-1.15.4-4.310.910.52.92.8Contribution to GDP growth:Domestic demand (y-o-y)10.5-0.32.01.23.63.33.22.2Inventories (y-o-y)0.7-0.70.2-1.13.81.3-1.50.0Net exports (y-o-y)-4.52.20.2-4.00.2-1.2-0.20.3Contribution to potential GDP growth:Total Labour (hours) (y-o-y)1.8-1.00.1-0.4-0.3-0.10.4-0.1Capital accumulation (y-o-y)2.01.70.80.80.50.30.40.4Total factor productivity (y-o-y)2.11.11.41.82.12.01.91.8Output gap1.40.8-0.5-4.70.31.40.40.7Unemployment rate11.110.39.16.15.34.34.34.0GDP deflator (y-o-y)7.54.03.14.37.115.110.43.9Harmonised index of consumer prices (HICP, y-o-y)6.84.60.41.22.813.09.44.2HICP excluding energy and unprocessed food (y-o-y)6.54.40.52.01.910.410.95.3Nominal compensation per employee (y-o-y)8.69.87.57.211.318.413.59.1Labour productivity (real, hours worked, y-o-y)3.53.21.90.86.52.11.22.1Unit labour costs (ULC, whole economy, y-o-y)4.76.65.59.03.616.012.26.8Real unit labour costs (y-o-y)-2.62.52.34.5-3.30.81.62.8Real effective exchange rate (ULC, y-o-y)2.84.54.34.53.712.26.23.2Real effective exchange rate (HICP, y-o-y)3.92.10.02.21.13.4..Net savings rate of households (net saving as percentage of net disposable income)-11.9-2.6-1.2.....Private credit flow, consolidated (% of GDP)28.08.42.63.64.4...Private sector debt, consolidated (% of GDP)86.7134.7107.492.584.4...of which household debt, consolidated (% of GDP)18.027.923.624.323.8...of which non-financial corporate debt, consolidated (% of GDP)68.7106.883.968.360.6...Gross non-performing debt (% of total debt instruments and total loans and advances) (1)3.314.711.25.14.0...Corporations, net lending (+) or net borrowing (-) (% of GDP)-8.1-0.67.0.....Corporations, gross operating surplus (% of GDP)27.028.629.8.....Households, net lending (+) or net borrowing (-) (% of GDP)-7.8-2.7-0.9.....Deflated house price index (y-o-y)24.8-6.52.45.22.5-2.4..Residential investment (% of GDP)3.93.42.22.92.82.5..Current account balance (% of GDP), balance of payments-14.6-6.51.70.0-1.9-0.7-0.20.0Trade balance (% of GDP), balance of payments-15.4-6.72.12.01.70.5..Terms of trade of goods and services (y-o-y)2.81.21.35.0-0.80.51.7-0.1Capital account balance (% of GDP)0.21.11.71.40.70.9..Net international investment position (% of GDP)-51.2-88.5-52.0-25.6-18.5-12.5..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (2)..25.647.747.545.8..IIP liabilities excluding non-defaultable instruments (% of GDP) (2)..51.341.039.135.8..Export performance vs. advanced countries (% change over 5 years)57.424.812.116.317.3...Export market share, goods and services (y-o-y)6.3-0.23.1-0.75.04.20.0-0.6Net FDI flows (% of GDP)-18.5-6.1-2.1-4.5-1.8-2.4..General government balance (% of GDP)1.5-1.8-0.3-3.8-3.9-2.8-4.8-4.8Structural budget balance (% of GDP)..0.3-2.4-4.0-3.2-5.0-5.0General government gross debt (% of GDP)24.914.723.724.523.922.925.028.1forecast 
 
 
 
 
 
     
 
 
 
ANNEX 21: DEBT SUSTAINABILITY ANALYSIS 

This  Annex  assesses  fiscal  sustainability 
risks for Bulgaria over the short, medium and 
long term. It follows the same multi-dimensional 
approach  as  the  European  Commission’s  2022 
Debt Sustainability Monitor, updated based on the 
Commission’s 2023 spring forecast. 

1  -  Short-term  risks  to  fiscal  sustainability 
low  overall.  The  Commission’s  early-
are 
detection  indicator  (S0)  does  not  signal  major 
short-term  fiscal  risks  (Table  A21.2). (112)  Gross 
financing needs are expected to remain limited at 
6.3%  of  GDP  in  the  short  term  (i.e.  over  2023-
2024), although slightly increasing compared with 
the  recent  peak  in  2020  (Table  A21.1).  Financial 
markets’ perceptions of sovereign risk are positive, 
as confirmed by the ratings of the main agencies. 

2 - Medium-term risks to fiscal sustainability 
are medium overall. 

The  DSA  for  Bulgaria  shows  that,  under  the 
baseline, government debt ratio, is projected 
to  strongly  increase  over  the  medium  term 
going  just  above  the  60%  of  GDP  reference 
(Graph  A21.2) (113), (114)  The 
value 
assumed  structural  primary  balance  (a  deficit  of 
4.4%  of  GDP)  contributes  to  these  developments. 
It  appears  particularly  low  compared  with  past 
fiscal performance, indicating that the country has 

in  2033 

(112)The S0 is a composite indicator of short-term risk of fiscal 
stress. It is based on a wide range of macro-financial and 
fiscal variables that have proven to perform well in the past 
in detecting situations of upcoming fiscal stress.  

(113)The assumptions underlying the Commission’s ‘no-fiscal 
policy change’ baseline notably comprise: (i) a structural 
primary deficit, before ageing costs, of 4.4% of GDP as of 
2024; (ii) inflation converging linearly towards the 10-year 
forward inflation-linked swap rate 10 years ahead (which 
refers to the 10-year inflation expectations 10 years from 
now); (iii) the nominal short- and long-term interest rates on 
new and rolled over debt converging linearly from current 
values to market-based forward nominal rates by T+10 (as 
for all Member States); (iv) real GDP growth rates from the 
Commission 2023 spring forecast until 2024, followed by 
EPC/OGWG ‘T+10 methodology projections between T+3 and 
T+10, i.e. for 2025-2033 (on average 1.6%); (v) ageing costs 
in line with the 2021 Ageing Report (European Commission, 
Institutional Paper 148, May 2021). For information on the 
methodology, see the 2022 Debt Sustainability Monitor 
(European Commission, Institutional Paper 199, April 2023). 

(114)Table 1 shows the baseline debt projections 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.  

ample room for corrective action. (115) At the same 
time,  the  baseline  projections  up  to  2033  benefit 
from  a  favourable  snowball  effect  with  real  GDP 
growth  at  around  1.6%  over  2025-2033. 
Government gross financing needs are expected to 
increase over the projection period, reaching 9.0% 
of  GDP  in  2033,  significantly  above  the  level 
forecast for 2024 (Table A21.1). 

The  baseline  projections  are  stress  tested 
against  four  alternative  scenarios  to  assess 
the  impact  of  changes  in  key  assumptions 
(Graph  1).  For  Bulgaria,  reverting  to  historical 
fiscal  trajectories  under  the  ‘historical  structural 
primary  balance  (SPB)’  scenario  would  lead  to  a 
significantly  lower  government  debt  ratio.  If  the 
SPB  gradually  converged  to  a  deficit  of  0.3%  of 
GDP (its historical 15-year average), the projected 
debt-to-GDP ratio would be close to 28 pps. lower 
compared  to  the  baseline  in  2033.  A  permanent 
worsening  of  the  macro-financial  conditions,  as 
reflected  under  the  ‘adverse  interest-growth  rate 
differential’  scenario  (i.e.  1  pp.  higher  than  the 
baseline)  would  result  in  a  higher  government 
debt-to-GDP ratio by 3.5 pps. of GDP by 2033, as 
compared  with 
temporary 
worsening  of  financial  conditions,  as  reflected  in 
the  ‘financial  stress  ‘scenario  (i.e.  temporarily 
increase of interest rates by 1 pp.), would lead to a 
broadly  similar  public  debt-to-GDP  ratio  by  2033 
compared  with  the  baseline.  The  ‘lower  structural 
primary  balance  (SPB)’  scenario  (i.e.  SPB  level 
permanently  reduced  by  half  of  the  cumulative 
forecast  change),  would  lead  to  a  significantly 
higher  government  debt-to-GDP  ratio  by  2033 
(+7.3 pps. of GDP) compared with the baseline.  

the  baseline.  A 

(115) The Commission projections take into account the draft 
2023 budget and medium-term fiscal framework (2023-
2026) tabled to Parliament by the caretaker government 
with delay, on 28 April 2023. These plans present only a 
baseline no-policy-change scenario without consolidating 
fiscal policy measures as the caretaker government did not 
propose policies beyond its mandate. Such measures can be, 
however, put forward and adopted by Parliament with 
impact already as of 2023.  

71 

 
 
                                                 
                                                 
 
 
Additionally,  stochastic  debt  projections 
indicate  medium  risk  (Graph  2). (116)  These 
stochastic 
to  97% 
simulations  point 
probability  of  the  debt  ratio  in  2027  being 
greater  than  in  2022,  entailing  medium  risk. 
In  addition,  such  shocks  point  to  significant 
uncertainty  (i.e.,  the  difference  between  the 
10th  and  90th  debt  distribution  percentiles) 
surrounding  the  government  debt  baseline 
projections. 

3  -  Long-term  risks  to  fiscal  sustainability 
are medium overall. (117)  

The  S2  sustainability  gap  indicator  (at  5.9 
pps.  of  GDP)  points  to  medium  risk, 
suggesting  that  Bulgaria  would  need  to 
significantly  improve  its  structural  primary 
balance to ensure debt stabilisation over the 
long  term.  This  result  is  underpinned  by  an 
unfavourable initial budgetary position (4.6 pps. of 
GDP)  and  the  projected  increase  of  ageing  costs, 
mainly  stemming  from  pension  spending  (0.8  pp. 
of GDP) over the long term (Table A21.1).  

GDP)  (Table  A21.2),  while  the  debt  requirement 
provides a negative contribution of 0.7 pp. of GDP 
thanks to Bulgaria’s low debt-to-GDP ratio. 

interest 

increase  of 

Finally,  several  additional  risk  factors  need 
to  be  considered  in  the  assessment.  On  the 
one hand, risk-increasing factors are related to the 
recent 
rates,  Bulgaria’s 
negative net international investment position, the 
shares of government debt in foreign currency and 
of government debt held by non-residents, and to 
contingent  liability  risks  related  to  liabilities  of 
government  control  entities  classified  outside  the 
general  government.  On  the  other-hand,  risk-
mitigating factors include the lengthening of debt 
maturity  in  recent  years  and  relatively  stable 
financing  sources  (with  a  diversified  and  large 
investor base). Government deficit could also turn 
out lower, should the major political parties in the 
Bulgarian 
their 
commitment for fiscal consolidation already as of 
2023. In addition, the structural reforms under the 
NGEU/RRF,  if  fully  implemented,  could  have  a 
further  positive  impact  on  GDP  growth  in  the 
coming years, and therefore help to mitigate debt 
sustainability risks. 

materialise 

parliament 

Combined  with  debt  vulnerabilities,  as 
highlighted by the S1 indicator, overall long-
term  risks  are  assessed  as  medium.  Indeed, 
the  S1  sustainability  gap  indicator  signals  that  a 
significant consolidation effort of 4.7 pps. of GDP 
would be needed to reduce debt to 60% of GDP by 
is  mainly  driven  by  the 
2070.  This  result 
unfavourable 
position 
(contribution  by  4.3  pps.  of  GDP)  and,  to  a  lower 
extent, to the contribution of ageing costs (1 pp. of 

budgetary 

initial 

(116)These projections show the impact on debt of 2000 different 

shocks affecting the government’s primary balance, 
economic growth, interest rates and exchange rates. The 
cone covers 80% of all simulated debt paths, therefore 
excluding tail events 

(117)The S2 fiscal sustainability gap indicator measures the 

permanent fiscal effort (SPB adjustment) in 2024 that would 
be required to stabilise public debt over the long term. It is 
complemented by the S1 fiscal sustainability gap indicator, 
which measures the permanent fiscal effort required in 2024 
to bring the debt-to-GDP ratio to 60% in the long term (by 
2070). For both the S1 and S2 indicators, the risk 
assessment depends on the amount of fiscal consolidation 
needed: ‘high risk’ if the required effort exceeds 6 pps. of 
GDP, ‘medium risk’ if it lies between 2 pps. and 6 pps. of 
GDP, and ‘low risk’ if the effort is negative or below 2 pps. of 
GDP. The overall long-term risk classification brings together 
the risk categories derived from S1 and S2. S1 may notch up 
the risk category derived from S2 when it signals a higher 
risk than S2. See the 2022 Debt Sustainability Monitor for 
further details. 

72 

 
                                                 
Table A21.1: Debt sustainability analysis - Bulgaria 

Source: Commission services. 

Table A21.2: Heat map of fiscal sustainability risks - Bulgaria 

Source: Commission services. 

73 

Table 1. Baseline debt projections20202021202220232024202520262027202820292030203120322033Gross debt ratio (% of GDP)24.523.922.925.028.131.635.238.842.345.949.553.256.960.6Changes in the ratio4.5-0.6-1.12.13.03.53.63.63.63.63.63.73.73.7of whichPrimary deficit3.33.42.34.34.24.34.44.44.54.54.54.54.54.5Snowball effect0.5-2.8-3.4-1.9-0.9-0.8-0.8-0.8-0.9-0.9-0.9-0.8-0.8-0.8Stock-flow adjustments0.8-1.20.0-0.2-0.30.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)5.53.24.46.36.47.07.37.77.98.18.38.58.79.0S1S2Overall index  (pps. of GDP)4.75.9of which Initial budgetary position4.34.6Debt requirement-0.7Ageing costs1.01.4of which    Pensions0.50.8     Health care0.20.2     Long-term care0.10.1Others0.20.3Table 2. Breakdown of the S1 and S2 sustainability gap indicators0102030405060708020202021202220232024202520262027202820292030203120322033Graph 1. Deterministic debt projections Historical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioBaseline% of GDPp10p20p40p60p80p90010203040506020202021202220232024202520262027% of GDPGraph 2. Stochastic debt projections 2023-2027MedianBaselineBaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallMEDIUMLOWMEDIUMMEDIUMMEDIUMMEDIUMDebt level (2033), % GDP60.632.967.864.160.8Debt peak year20332028203320332033Fiscal consolidation space100%89%100%100%100%Probability of debt ratio exceeding in 2027 its 2022 level97%Difference between 90th and 10th percentiles (pps. GDP)26.2Source: European Commission (for further details on the Commission's multidimensional approach, see the 2022 Debt Sustainability Monitor)(1)Debtlevelin2033.Green:below60%ofGDP.Yellow:between60%and90%.Red:above90%.(2)Thedebtpeakyearindicateswhetherdebtisprojectedtoincreaseoveralloverthenextdecade.Green:debtpeaksearly.Yellow:peaktowardsthemiddleoftheprojectionperiod.Red:latepeak.(3)Fiscalconsolidtationspacemeasurestheshareofpastfiscalpositionsinthecountrythatweremorestringentthantheoneassumedinthebaseline.Green:highvalue,i.e.theassumedfiscalpositionisplausiblebyhistoricalstandardsandleavesroomforcorrectivemeasuresifneeded.Yellow:intermediate.Red:low.(4)Probabilityofdebtratioexceedingin2027its2022level.Green:lowprobability.Yellow:intermediate.Red:high(alsoreflectingtheinitialdebtlevel).(5)thedifference 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.Short termMedium term - Debt sustainability analysis (DSA)Long termOverall                               (S0)Overall Deterministic scenariosStochastic projectionsS2S1Overall(S1 + S2)LOWMEDIUMMEDIUMMEDIUMMEDIUM