COMMISSION STAFF WORKING DOCUMENT 2024 Country Report - Bulgaria Accompanying the document Recommendation for COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Bulgaria
Date: 2024-06-19
Institutions: European Commission, Secretariat-General
Subjects: Bulgaria, budget policy, digital transformation, economic policy, economic recovery, economic reform, employment policy, energy transition, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 19.6.2024  SWD(2024) 602 final  COMMISSION STAFF WORKING DOCUMENT 2024 Country Report - Bulgaria Accompanying the document Recommendation for COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Bulgaria {COM(2024) 602 final} - {SWD(2024) 600 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

The economy showed resilience in 
the face of external shocks, but 
significant challenges are ahead 

Economic  activity  faced  weaker  external 
demand and continued price pressures. (1) 
Inflation pressures from 2022 persisted at the 
beginning of 2023, but disinflation in food and 
energy  prices  helped  to  anchor 
inflation 
expectations.  This  helped  avoiding  a  wage-
price  spiral.  Looking  forward,  inflation  in  the 
services sector is also projected to decelerate, 
driven  by  second-round  effects  from  input 
prices  and  a  projected  moderation  in  wages. 
Exports  of  goods  contracted  significantly, 
industrial 
weighing  on 
production  and  sales.  Faced  with 
lower 
external  demand,  firms  cut  back  on  imports 
and invested considerably less in inventories. 

the  volume  of 

In  parallel,  firms  kept  high  employment 
increased  nominal  wages, 
levels  and 
albeit more moderately. As a result, private 
consumption  expanded,  especially  in  the  first 
half  of  2023,  supported  by  a  strong  labour 
market,  improved  consumer  confidence,  the 
decline  in  inflation  and  a  strong  lending 
activity to households (Graph 1.1). 

Investment  increased  in  2023,  supported 
by  public  investment  and  completion  of 
construction projects. The increase in public 
investment  is  linked  to  the  end  of  the  2014-
2020  cycle  of  the  EU  structural  funds,  for 
which funds were available until 2023 making 
it  the  last  year  of  implementation.  Future 
investment  is  assumed  to  be  supported  by 
EU-funded  projects,  including  the  ones  under 
the Bulgarian recovery and resilience plan, but 

(1)  The cut-off date for the data used to prepare the 27 

Country Reports was 15 May 2024. 

in 

delays 
putting this assumption at risk.  

implementation  are 

increasingly 

Graph 1.1: Real GDP growth and contributions 

Source: European Commission 

Graph 1.2: Decomposition of unit labour costs 
(ULC) growth 

Source: European Commission 

Unit  labour  costs  (ULCs)  follow  broadly 
the  pattern  for  the  EU-average  with  a 
premium  due 
long-term  nominal 
convergence.    Annual  nominal  wage  growth 
slowed  down  to  around  10%  at  the  end  of 
2023, close to the pre-pandemic growth rates 

to 

2 

 
 
 
   
 
   
(Graph  1.2).  Public  sector  wages  contributed 
sizably  to  the  aggregate  wage  inflation  in 
2023.  The  relative  wage  moderation  was 
facilitated  by  the  decrease  in  inflation  rates 
and enabled companies to curb the increase in 
production  costs,  while  resuming  real  wage 
increases.  The  minimum  wage  was  increased 
by almost 20% at the beginning of 2024. 

the  housing 

Continued  high  levels  of  lending  activity 
in 
sector  may  have 
channelled  productive  resources  away 
from  other  economic  activities.  Low 
interest rates on housing loans and continued 
high  levels  of  lending  activity  broadly  reflect 
domestic factors. Mortgage lending is linked to 
the deposit base, which continues to grow due 
to  the  increasing  disposable  income  and  the 
limited  investment  alternatives  available  to 
households.  As  a  result,  banks  have  ample 
cheap  liquidity  to  channel  to  the  housing 
market, 
leading  to  somewhat  overvalued 
house prices.  

Bulgaria  is  taking  consistent  action  to 
integrate  further  with  the  EU.  Joining  the 
euro area is a long-standing political priority of 
Bulgaria  and  the  current  target  date  is  in 
2025. 
In  April  2024,  Bulgaria  signed  a 
Partnership  Agreement  with  the  Commission 
for  the  organisation  of 
information  and 
communication  campaigns  on  the  changeover 
to  the  euro.  Bulgaria,  together  with  Romania, 
joined the Schengen area by air and sea as of 
31 March 2024,  with  land  borders  still  not 
covered.  The  country is  also  in  the process  of 
for  Economic 
joining 
Co-operation 
(OECD), 
implementing  an  action  plan  agreed  with  the 
Europe’s 
The  Council 
organisation. 
MONEYVAL  Committee 
carried  out  an 
assessment  of the effectiveness  of  Bulgaria’s 
framework  for  fighting  money  laundering  and 
countering  the  financing  of  terrorism,  which 
resulted in Bulgaria being subject to increased 
monitoring by  the  Financial  Action  Task  Force 
(FATF)  as  of  27 October 2023 (2).  The  first 

and  Development 

the  Organisation 

of 

progress  report  for  Bulgaria  was  adopted  by 
the FATF in February 2024 (3).  

The  business  environment  is  generally 
investment,  and 
not  supportive  of 
institutional  quality  remains  a  challenge. 
Business 
regulations  and  administrative 
barriers  are  hampering  58%  of  firms  in 
making  long-term  investments  (61%  for  the 
EU) (4).  Moreover,  53%  of  investors  are  not 
confident that their investments are protected 
by  law  and  courts  in  Bulgaria (5).  According  to 
the  World  Bank’s  Worldwide  Governance 
Indicators  (2022),  Bulgaria  ranks 
low  for 
accountability,  government  effectiveness,  rule 
of  law  and  control  of  corruption  compared 
with the average of the five euro area Member 
States with the lowest scores. In addition, the 
first  pillar 
remains  among 
Bulgaria’s least performing areas in the Global 
Competitiveness  Index.  On  the  Single  Market 
Scoreboard,  Bulgaria  lags  on  the  indicator  for 
efficiency  of  insolvency  procedures,  which 
reduces  the  flexibility  of  the  economy  and 
possibly discourages market exit and entry.  

(‘Institutions’) 

(SOE) 

footprint  on 

sectors, 
and  water 

Bulgaria’s  business  environment  is  also 
impeded  by  the  significant  state-owned 
enterprise 
the 
economy,  which  is  sizeable  and  concerns 
such  as  energy, 
strategic 
The 
supply. 
transport 
performance of Bulgarian SOEs varies greatly, 
with overall relatively low profitability (6). Their 
governance  framework  has  been  persistently 
weak  due  to  delays  to  the  implementation  of 
reforms,  including  under  the  recovery  and 
resilience  plan.  Coupled  with 
labour 
productivity,  it  hinders  the  competitiveness  of 
the Bulgarian economy.   

low 

(3)  Jurisdictions under Increased Monitoring - 23 February 

2024 (fatf-gafi.org) 

(4)  EIB Investment Survey – European Union. 

(5)  EU Justice Scoreboard. 

(6)  https://state-owned-

(2)  Outcomes FATF Plenary, 25-27 October 2023 

(https://www.fatf-
gafi.org/en/publications/Fatfgeneral/outcomes-fatf-
plenary-october-2023.html)  

enterprises.worldbank.org/sites/soe/files/reports/Bulgaria
%20-%20Integrated%20State-
Owned%20Enterprises%20Framework%20%28iSOEF%
29%20Assessment.pdf  

3 

 
 
 
Ageing  and  shrinking  workforce  and  a 
high  proportion  of  economically  inactive 
population  among  young  people  continue 
to  constrain  employment  gains.  Activity 
rates for people aged 20-64 peaked at 79.6% 
in  2023.  The 
inactive  population  varies 
significantly  across  regions  and  is  particularly 
high  among  Roma,  persons  with  disabilities 
lower  educational 
and 
attainment.  In  2023,  the  employment  rate 

those  with 

for 

including  in  early  childhood  education  and 
care.  This  hinders  access  to  quality  education 
for students from disadvantaged backgrounds, 
including Roma, thus perpetuating poverty. The 
educational  achievements  of  students  are 
impacted  by  their  financial  and  social  status, 
their place of residence, as well as the type of 
school they attend.  

Box 1: 

Bulgaria’s competitiveness in brief 

Bulgaria’s  competitiveness  has  weakened  in  recent  years  due  to  an  unsupportive 
business environment and low government and business efficiency (see also Annex 12). On the 
positive  side,  labour  productivity  continued  to  increase,  as  did  the  country’s  trade  within  the 
Single Market. The Bulgarian RRP aims to tackle several challenges related to decarbonisation, 
fight against corruption and public procurement.  

However, competitiveness challenges remain:  

•  Education,  training  and  skills  shortages, 

including  among  minorities  and 
disadvantaged groups, which hold back productivity, labour supply and the green/digital 
transition.  

•  Energy intensity and high energy costs, greening and storage which impact cost 

competitiveness. 

•  Weak  public  administration  and  regulation  which  negatively  affect  the  business 

environment and impede investment, innovation, and competition.  

increased to 76.2%, against the 2030 national 
target  of  79%.  Despite  decreasing  to  13.8%, 
the  share  of  people  not 
in  education, 
employment  or  training  (NEET)  aged  15-29 
remains  higher  than  the  EU  average.  Youth 
unemployment  for  15-24  year  olds  increased 
to  12.1%,  which  indicates  that  young  people 
face  more  obstacles  to  finding  work.  The 
population  is  ageing  and  declining,  while  the 
COVID-19  pandemic  resulted  in  a  sharp  drop 
in life expectancy. The working-age population 
makes up 64% of the total population, with an 
increase in the percentage of employed people 
over the age of 55.  

jeopardising 

About half of the young people lack basic 
long-term  growth 
skills, 
perspectives.  The  results  of  the  2022  OECD 
Programme 
Student 
Assessment  (PISA)  show  that  about  half  of 
in 
Bulgaria’s  15-year-olds 
mathematics,  reading  or  science  (see  Annex 
15). Educational inequalities remain very high, 

International 

in  skills 

lack 

for 

improvements 

Recent 
in  poverty  and 
social  inclusion  are  overshadowed  by 
significant 
challenges, 
structural 
hampering  upward  social  convergence. 
Bulgaria’s  overall  risk  of  poverty  or  social 
exclusion  remains high  at 32.2%,  significantly 
higher  than  the  EU  average  of  21.6%. 
However,  progress  has  been  made  towards 
achieving  the  poverty  reduction  target  under 
the  European  Pillar  of  Social  Rights  of 
787 000  fewer  people  in  poverty  in  2030. 
Vulnerable  groups  such  as  persons  with 
disabilities, those in rural areas, and the Roma 
population  face  a  heightened  risk  of  poverty. 
Old-age  poverty  also  remains  high  at  35.6%, 
with  a  significant  gap  between  men  and 
In  2022,  social  transfers,  except 
women. 
pensions, only reduced poverty by 24.4%. The 
housing  cost  overburden  rate  remains  high 
(see  Annex  14).  Child  poverty  and  social 

4 

 
 
exclusion  in  Bulgaria  stands  at  33.9% (7). 
However, Bulgaria has taken action to address 
the  issue  via  its  Child  Guarantee  national 
action  plan,  which,  among  others,  focuses  on 
providing  better  education  and  healthcare  to 
children,  especially  from  Roma  and  migrant 
backgrounds  as  well  as  children  with  a 
disability.  

The government deficit is set to 
remain close to the 3% threshold 
going forward 

The government deficit decreased further 
in  2023.  The  general  government  deficit 
narrowed markedly from 2.9% of GDP in 2022 
to 1.9% of GDP in 2023 (8), well below the 3% 
target  set  by  Bulgaria  for  the  same  year. 
Amongst  others,  a  100%  dividend  for  SOEs 
contributed to strengthening the revenue side, 
to 
alongside  a  package  of  measures 
strengthen  revenue  collection  and  fight  tax 

the  deficit,  as  well  as  a  limited  capacity  to 
execute  expenditure  planned  for  the  year. 
Altogether, these aspects mitigated the budget 
impact  of  recently  legislated  increases  in 
pensions and wages, including in 2023.  

The  general  government  deficit  is  set  to 
stabilise over the medium term, but at a 
level  close  to  the  Treaty  reference  value 
of 3%. Bulgaria adopted its 2024 budget with 
a  considerable  delay  in  December  2023.  The 
new budget targets a fiscal deficit of 2.9% of 
GDP  in  2024  and,  according  to  the  latest 
forecast by the Ministry of Finance and to the 
Convergence  Programme, 
is 
expected at 3% in 2025, and at 2.8% In 2026. 
According  to  the  Commission  forecast,  the 
deficit is expected to amount to 2.8% of GDP 
in 2024 and 2.9% of GDP in 2025. The 2024 
budget  maintains  a  strong  emphasis  on 
measures 
revenue  collection, 
including  by  checking  goods  with  high  fiscal 
risk.  Positive  impacts  on  the  budget  are  also 
expected  from:  (i)  social  contributions  due  to 
insurance 
the 

in  the  maximum 

the  deficit 

increase 

increase 

to 

Box 2: 

UN Sustainable Development Goals (SDGs) 

Bulgaria  is  lagging  behind  the  EU  average  on  most  SDGs,  including  those  related  to 
competitiveness  and  productivity  (SDGs  4,  8,  9).  The  objective  of  quality  education, 
SDG 4,  deserves particular attention.  Some improvement has been recorded on  economic 
growth  and  the  labour  market  (SDG  8),  including  higher  employment  and  less  youth  outside 
education  and  work.  Similarly,  small  increases  are  seen  in  SDG  9  related  to  innovation  and 
sustainable  industry.  A  marked  increase  in  the  share  of  population  with  access  to  high-speed 
internet, now above the EU average, is a necessary condition for  improving digital skills, which 
many  people  are  still  lacking.  Education  outcomes  covered  by  SDG 4  have  worsened  both  in 
absolute terms and relative to the EU average (Annex 1).  

Out  of  the  17  indicators,  14  remain  below  the  EU  average.  Besides  those  highlighted 
above,  these  relate  to  social  equality,  poverty,  health  (SDGs  1,  2,  3,  5,  6,  10),  climate, 
sustainability (SDGs 7, 11, 12, 13) and macroeconomic stability (SDG 16). 

fraud.  The  phasing-out  of  public  measures  to 
limit  the  economic  consequences  of  high 
energy prices also played a role in decreasing 

(7)  https://www.unicef.org/globalinsight/reports/report-card-

18-child-poverty-amidst-wealth  

(8)  Source: Eurostat 

https://ec.europa.eu/eurostat/databrowser/view/gov_10
dd_edpt1/default/table?lang=en&category=gov.gov_gfs
10.gov_10dd  

income  threshold;  (ii)  the  introduction  of  a 
domestic  top-up  tax  on  multinationals;  and 
(iii) the  elimination  of  some  VAT 
rate 
reductions, such as for natural gas and central 
heating.  The  impulse  from  fiscal  policy  is 
expected to be slightly contractionary in 2024 
(by  0.3%  of  GDP),  primarily  driven  by 
nationally  financed  investment  and  by  EU-
financed expenditure (0.6% and 0.4% of GDP, 
respectively).  Government  debt  remained  low 
at  around  23.1%  of  GDP  in  2023  but  is 

5 

 
 
 
expected  to  increase  to  24.8  %  of  GDP  and 
24.6% of GDP in 2024 and 2025 respectively, 
according to the latest Commission forecast. 

Affordability of energy remains a 
key factor for competitiveness 

High  energy  prices  continue  to  pose 
challenges 
Bulgaria’s 
for 
competitiveness.  In  2023,  energy  prices 
eased  from  the  record  highs  experienced 
during 
they 
the  2022  crisis.  However, 
remained  above  the  average  recorded  in  the 
2018-2022  period,  which  negatively  affects 
Bulgaria’s  competitiveness,  particularly  due  to 
the  high  energy  intensity  of  its  economy.  The 
current market structure leads to inefficiencies 
in energy consumption and public spending, as 
support 
compensate 
non-household  consumers  for  electricity  costs 
above  EUR 102/MWh  and  households  pay 
regulated  electricity  prices.  A  considerable 
portion  of  the  population  still  grapples  with 
energy  poverty,  highlighting  a  pressing  social 
issue.  Measures  targeting  energy-poor  and 
vulnerable 
encourage 
efficient  energy  consumption  would  be  more 
useful than the existing support measures. 

mechanisms 

households 

that 

6 

 
IMPLEMENTATION OF KEY REFORMS AND 
INVESTMENTS USING EU INSTRUMENTS 

Funding from the Recovery and Resilience 
Facility  (RRF)  and  cohesion  policy  is 
mutually reinforcing Bulgaria’s efforts to 
boost  its  competitiveness  and  stimulate 
In  addition  to  the 
sustainable  growth. 
EUR 5.7  billion  of  RRF  funding  described  in 
Annex  3,  cohesion  policy  provides  Bulgaria 
with  EUR 10.7  billion for 
the  2021-2027 
period.  Support  from  these  two  instruments 
combined  represents  around  16.18%  of  the 
country’s  GDP  in  2023,  compared  to  the  EU 
average of 5.38% of GDP (see Annex 4). 

of 
resilience 

requests,  corresponding 

implementation 
and 

Bulgaria’s 
The 
recovery 
is 
plan 
significantly  delayed  due  to  substantial 
two 
challenges.  Bulgaria  has  submitted 
payment 
to  84 
milestones  and  targets 
in  the  plan  and 
resulting  in  an  overall  disbursement  of  EUR 
1.37 billion on 16 December 2022 (see Annex 
3).  Structural  challenges  linked  to  energy 
sector,  sustainable  transport,  judicial  system 
and  education  call  for  specific  actions  to 
ensure  that  reforms  and  investments  can  be 
completed  on  time.  While  some  reforms  (e.g. 
in 
laundering, 
(e.g.,  energy 
education)  and 
efficiency,  renewable  energy,  smart  industry, 
healthcare) 
the 
implementation  of  the  Bulgarian  plan  would 
need  to  accelerate  in  order  to  meet  the 
deadline of Q2 2026. Rapid finalisation of the 
REPowerEU  chapter  is  key.  Its  inclusion  in  the 
resilience  plan  will  allow 
recovery  and 
additional  reforms  and  investments  to  be 
financed  in  support  of  Bulgaria’s  strategic 
objectives in the field of energy and the green 
transition.  

the  areas  of  anti-money 

investments, 

started, 

already 

have 

Cohesion  policy  funding  helps  tackle 
Bulgaria’s  growth  and  competitiveness 
challenges  and  aims  to  reduce  the 
country’s 
social 
disparities.  During  the  2014-2020  cohesion 

territorial 

and 

7 

policy programming period, support focused on 
research  and  innovation,  energy  efficiency, 
employment, social inclusion, and education. In 
the  current  2021-2027  programming  period, 
financing  aims  to  further  support  Bulgaria’s 
competitiveness,  green  transition  and  social 
cohesion,  improve  the  living  and  working 
conditions  of  Bulgaria’s  people,  and  promote 
regional and social convergence. 

Measures taken to improve the 
business environment 

and 

justice 

system 

Bulgaria  has  made  progress  in  improving 
the 
business 
environment. At the end of 2023, Parliament 
adopted  amendments  to  the  constitution,  in 
particular on the restructuring of the previous 
Supreme  Judicial  Council  into  a  Supreme 
Judicial  Council  as  a  management  authority 
for  the  judges  and  a  Supreme  Prosecutorial 
Council  for  the  prosecutors,  reducing  the 
powers  of 
the  Prosecutor  General  and 
widening  the  access  to  the  Constitutional 
Court.  However,  the  legislation  necessary  to 
ensure proper implementation of this reform is 
still  being  developed.  Under  the  RRP,  Bulgaria 
completed  the  first  steps  of  key  reforms  that 
to  ensure  accessible,  effective  and 
aim 
predictable  justice,  strengthen  the  anti-money 
laundering framework and improve the quality 
of  the  legislative  process.  Bulgaria  is  also 
working on a reform under the RRP to promote 
entrepreneurship,  which  includes  a  visa  for 
start-up  entrepreneurs  and  a  new  type  of 
commercial  company,  which  is  expected  to 
provide more flexible instruments for business 
development.  In  addition,  Bulgaria  is  working 
on  another  RRP  reform,  which  aims  to  unlock 
the  potential  of  e-government  to  reduce  the 
administrative  workload  for  both  people  and 
businesses, 
objectives. 
Furthermore,  Bulgaria  is  working  on  reforms 

among 

other 

 
 
under the RRP to introduce mandatory judicial 
mediation, 
in  some  commercial 
disputes,  and  to  strengthen  insolvency  and 
restructuring procedures.  

including 

governance 

Bulgaria  has  yet  to 
implement  key 
business  environment  reforms  under  the 
RRP, including in the areas of rule of law, 
of 
anti-corruption, 
state-owned  enterprises  and  public 
procurement.  These  concern,  in  particular, 
the  operational  set-up  of  the  anti-corruption 
commission,  the  transformation  of  statutory 
state-owned  enterprises,  and  the  reduction  of 
the  proportion  of  single-bidder  contracts  and 
of  direct  contracts  awarded.  These  reforms 
would 
business 
environment and,  in consequence, would have 
a 
country’s 
positive 
competitiveness.  

Bulgaria’s 

improve 

impact 

the 

on 

Unlocking investments for the 
green and digital transitions 

recommendations 

The  RRP  includes  major  reforms  for  the 
decarbonisation of the energy sector, but 
delays  create  significant  risks  to  their 
implementation.  A 
first  milestone  was 
achieved  with  the  set-up  of  the  Energy 
prepared 
Transition 
Commission,  which 
scenarios  and 
for  a 
roadmap  to  climate  neutrality.  However,  the 
adoption  of  the  roadmap  has  been  delayed, 
hampering  progress  on  other  reforms  and 
investments,  and  contributing  to  a  lack  of 
clarity for investors on the green transition. In 
the  Act  on 
addition,  amendments 
Renewable  Energy  Sources,  along  with 
associated secondary legislation, pave the way 
to  simplified  permitting  and  grid  connection 
procedures 
renewables  and  storage 
installations.  As  part  of  the  amendments, 
dedicated ‘go-to’ areas for solar photovoltaics 
and  wind  are  envisaged  as  well.  Regulatory 
work  on  the  liberalisation  of  the  electricity 
markets 
casting 
uncertainty  on  the  time  frame  for  the  reform 
to come into effect. 

advancing 

slowly, 

for 

to 

is 

Investments  are  being  launched  to  boost 
renewable energy. Bulgaria set up a scheme 
to  support  investments  in  renewable  energy 
and  storage  that  aims  to  support  at  least 
300 MW  of  storage  and  1 140 MW  of 
renewable  energy  production,  reducing  the 
country’s  reliance  on  lignite  for  electricity 
production.  Parallel  investments  are  ongoing 
to  digitalise  the  electricity  transmission  grid 
and  enable  the  integration  of  new  production 
capacity  from  renewable  energy  sources.  This 
will be supplemented by support from the Just 
Transition Fund to rehabilitate land to develop 
industrial  areas  and  build  renewable  energy 
capacity.  

The  RRF  and  cohesion  policy  funds  are 
supporting  measures  to 
improve  the 
energy  efficiency  of  buildings.  Dedicated 
schemes  are  supporting  all  types  of  buildings 
across  the  country,  from  residential  buildings 
to  public  buildings  and  non-residential 
buildings in manufacturing, trade and services, 
as  well  as  tourism  sector  buildings.  This  will 
improve  people’s  quality  of  life,  improve  air 
quality, and reduce dependence on fossil fuels.   

Bulgaria  took  a  first  step  towards  more 
sustainable  transport.  It  put  in  place  a 
national  plan  to  develop  combined  transport 
by  2030  to  make  transport  cleaner.  It  also 
signed  contracts to extend the Sofia metro to 
provide  clean,  rapid  and  efficient  public 
transport.  Additionally,  sustainable  transport 
plans  were  adopted  for  several  urban  areas, 
setting  the  ground  for  investments  in  green 
public transport across the country.  

There  has  been  progress  on  flagship 
measures linked  to  the  digital  transition. 
This  includes  a  reduction  in  the  fees  for 
spectrum  use  and  an  accelerated  spectrum 
to  encourage  faster 
assignment  process 
deployment  of  5G  networks  in  the  country.  It 
also  includes  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. 

8 

 
Investing in people for economic 
growth and social resilience 

large-scale  digital  skills  training  campaign, 
which aims to further increase the number of 
people with basic digital skills (35.5% in 2023) 
and close the gap to the EU average of 55.5%. 

include 

Bulgaria  also  took  first  steps  towards 
social 
strengthening 
and 
cohesion 
and 
modernising 
social 
healthcare 
legislation  to 
services.  Measures 
gradually  raise  the  minimum 
income  by 
introducing  annual  indexation  based  on  the 
at-risk-of-poverty threshold, and to expand the 
coverage  of  the  minimum  income,  together 
with  legislation  that  sets  minimum  quality 
standards  for  the  provision  of  social  services, 
including  long-term  care.  Implementation  of 
the European Child Guarantee is ongoing, with 
relatively  ambitious  targets.  In  the  area  of 
healthcare,  Bulgaria  adopted  several  national 
strategies,  including  to  increase  the  access  to 
and quality of services for children and young 
adults  and  to  strengthen  health  education  in 
schools, 
their 
implementation.  In  addition,  Bulgaria  adopted 
a map of the long-term needs of the sector, to 
promote  a balanced distribution of healthcare 
services  over  the  territory,  and  legislative 
amendments  to  improve  and  expand  the 
provision  of  e-health  services  to  people,  thus 
supporting  access.  Furthermore,  Bulgaria  is 
making  progress 
in  setting  up  an  air 
ambulance  system,  with  the  first  of  six 
medical  helicopters  already  having  been 
delivered. 

action 

plans 

and 

for 

the  skills  profile 

legislative  amendments 

All  levels  of  the  education  system  are 
undergoing  reforms  under  the  RRP.  This 
includes  preschool,  primary  and  secondary 
school,  higher  education  and  lifelong  learning. 
In  particular,  Bulgaria  adopted  an  action  plan 
implementing the strategic framework for the 
development  of  education, 
training  and 
learning,  which  aims,  among  other  things,  to 
improve  access  to  quality  education.  Bulgaria 
also  adopted 
to 
update 
in  vocational 
education  and  training  in  line  with  the  needs 
of  the  labour  market,  and  to  increase  the 
flexibility  of  training  opportunities  and  the 
validation  of  professional  skills.  Further,  a 
national  science,  technology,  engineering  and 
maths (STEM) centre was set up by Ordinance 
of  the  Minister  of  education  to  improve 
learning in these fields in Bulgarian schools, all 
of which will have STEM laboratories and high-
tech  classrooms  by  mid-2026.  These  are  in 
synergy  with  certain  aspects  of  the  education 
programme  under  the  European  Social  Fund 
Plus,  which  promotes  a  more 
inclusive 
education  and  the  modernisation  of  the 
education system, including to better meet the 
needs of the labour market. 

Skills are instrumental to making workers 
more  employable  and  improving  labour 
productivity.  The  available  job  vacancies, 
accompanied by slightly  rising unemployment, 
shows  that  employers  are  having  difficulty 
finding suitable staff, despite the existing pool 
of unemployed. In 2022, adult participation in 
learning  over  the  past  12 months  was  9.5%, 
significantly  lower  than  the  EU  average  of 
39.5%. Under the RRF, Bulgaria has initiated a 

Box 3: 

Combined action for more impactful EU funds 

To  boost  economic  growth  and  maximise  the  impact  of  EU  funding,  Bulgaria’s  RRP  includes 
reforms that support investments under other EU instruments, creating significant synergies and 
complementarities between the various funds. For example, the reform adopted under the RRP to 
amend the Financial Resources Management of the European Structural and Investment Funds 
Act  paves  the  way  for  a  new  way  of  implementing  local  investments  by  empowering  local 
communities in each region of the country in the management of EU funds. This new approach is 
used to implement the 2021-2027 Development of Regions programme under cohesion policy, 
which will maximise the impact of the funds in the regions. 

9 

 
 
 
 
FURTHER PRIORITIES AHEAD 

transition, 

Bulgaria  faces  challenges  related  to  the 
business 
green 
the 
environment,  access 
to  healthcare, 
education,  shortages  of  workers,  and 
social  inclusion.  Tackling  these  challenges 
long-term 
increase  Bulgaria’s 
will  help 
competitiveness  and  ensure  the  resilience  of 
its  economy.  It  will  also  help  make  further 
UN 
towards 
progress 
Sustainable Development Goals. 

achieving 

the 

is 

important  that  the 

It 
identified 
challenges  are  addressed  at  both 
national  and  regional  level.  This  will  help 
reduce  regional  disparities  and  improve  the 
administrative  and  investment  capacity  in  a 
balanced way across the country. 

Accelerating the green transition 
can bolster competitiveness  

for 

the 

the 

four 

times 

nearly 

further 

remains 

importance 

EU’s  most 
Bulgaria 
carbon-intensive economy. Greenhouse gas 
the 
intensity 
is 
EU average (9). 
policy 
Creating 
incentives  to  decarbonise  the  economy  is  of 
crucial 
long-term 
competitiveness of the economy. According to 
a  report  of  Bulgaria’s  Energy  Transition 
Commission, the accelerated phase-out of coal 
by 2030, coupled with the deployment of more 
renewables,  would  result  in  a  lower  levelised 
cost  of  electricity  and  lower  system  costs.  As 
there is little time left for implementation, the 
REPowerEU  chapter  of  the  recovery  and 
resilience plan (RRP) could focus on scaling up 
the 
measures 
decarbonisation  objectives,  in  particular  when 

achieve 

help 

that 

it  comes  to:  (i)  designating  go-to  areas  for  a 
faster deployment of renewables, including on 
degraded  land;  (ii)  further  strengthening  the 
grid  and  ensuring  transparency  of  the  grid 
connection  process;  (iii)  creating  renewable 
energy  communities;  (iv)  creating  long-term 
instruments 
for  co-financing  of  building 
renovations;  and  (v)  setting  up  an  effective 
mechanism  to  monitor  and  tackle  energy 
poverty. 

to 

Solar  photovoltaics  (PV)  experience  a 
surge,  while  wind  installations  continue 
to  face  delays.  In  2023,  Bulgaria  increased 
renewable  energy  capacity  by  23% 
its 
compared 
reaching 
the  year  before, 
6 215 MW.  This  was  driven  by  the  rapid 
deployment of solar PV installations, including 
rooftop and grid-scale (see Annex 7). However, 
the  installed  onshore  wind  capacity  (704 MW) 
has  remained  stagnant  in  the  last  10 years, 
due 
lengthy  permitting 
procedures.  Bulgaria’s  estimated  offshore 
wind potential  of 26 GW of fixed and floating 
installations  remains  untapped (10). 
In  this 
regard,  full  and  swift  implementation  of  EU 
legislation  on  renewable  energy,  along  with 
the  implementation  of  relevant  RRP  reforms, 
would  facilitate  and  speed  up  permitting  and 
deployment of renewables. 

to  complex  and 

the  RRP  and 

Limited  grid  and  storage  capacity  create 
significant  bottlenecks  for  scaling  up 
renewables.  While 
the 
Modernisation  Fund  include  financing  for  the 
upgrading of the transmission and distribution 
grid  to  integrate  new  generation  capacities, 
there 
investment  gap. 
large 
Furthermore,  due  to  the  outage  of  the 
864 MW  Chaira  pumped-storage  hydropower 
plant  and  the  lack  of  sufficient  alternative 
system 
grid-scale 

is  still  a 

capacities, 

storage 

(9)  2023 EU climate action progress report, 

https://climate.ec.europa.eu/document/download/60a04
592-cf1f-4e31-865b-2b5b51b9d09f_en. 

(10)  2020 Offshore wind technical potential in Bulgaria, 

World Bank document. 

10 

 
 
 
 
balancing becomes an increasing challenge. At 
the same time, the planned RRP investment in 
the much-needed grid-scale electricity storage 
with  3 000 MWh  of  usable  energy  capacity  is 
significantly  delayed.  To  prevent  the  need  for 
curtailment  and  avoid  high  system  balancing 
costs,  swift  integration  of  energy  storage 
installations  is  needed,  including  for  providing 
ancillary services. More broadly, further action 
such  as  implementing  the  2024  Central  and 
South-Eastern  Europe  Energy  Connectivity 
(CESEC) action plans on gases, renewables and 
electricity would boost the interconnectivity of 
the  region  and  strengthen  its  security  and 
resilience.  

is  a  need  for  a 

long-term, 
There 
sustainable  mechanism  for  financing 
energy  efficiency  renovation  The  required 
improvements to energy efficiency, notably of 
residential  buildings,  go  far  beyond  what  is 
planned  under  existing  and  envisaged  policy 
measures.  A  sustainable  financing  solution 
these  needs, 
could  effectively  address 
especially  by  reducing  reliance  on  entirely 
grant-funded renovation support. Furthermore, 
to  ensure  that  Bulgaria  meets  the  updated 
targets  under  the  revised  Energy  Efficiency 
Directive  (Directive (EU)  2023/1791),  broader-
ranging  measures  are  required, 
including 
financial support instruments. In this regard, it 
would  be  important  to  leverage  the  National 
Decarbonisation  Fund  envisioned  as  part  of 
the RRP. 

There  is  untapped  economic  potential  in 
Bulgaria’s  pace  of  transitioning  to  a 
circular 
economy.  Bulgaria’s  material 
footprint  increased  from  21.2  to  26.2  tonnes 
per  capita  between  2018  and  2022,  among 
the  EU’s  highest.  Bulgaria  is  also  one  of  the 
worst-performing  countries  as  regards  total 
waste generated per capita (see Annex 9). The 
country is also still one of the Member States 
with  the  highest  landfilling  rates  and  lowest 
recycling 
are 
needed  to  improve  waste  management  –  in 
particular to improve separate waste collection 
–  and  to  bolster  the  uptake  of  new  business 
models, moving away from a linear economy. 

performance. 

Investments 

Remaining barriers to the provision 
of adequate healthcare  

While  the  RRP  includes  major  healthcare 
reforms, some challenges remain. Reforms 
in  the  RRP  aim  to  upgrade  the  strategic 
framework,  develop  e-health  services,  and 
address shortages of healthcare professionals. 
There  are  several  barriers  to  access  to 
adequate healthcare in Bulgaria: the low share 
of  public  health expenditure,  the  high  level  of 
out-of-pocket 
insufficient 
prevention,  and  unavailability  of  adequate 
healthcare in many areas. 

payments, 

transition 

Addressing delays related to investments 
is  key  to 
in  sustainable  transport 
Bulgaria’s 
to  a  greener 
economy. This involves implementing reforms 
that supplement  those in the RRP, particularly 
by  increasing  the  administrative  capacity  and 
funding  for  investments  related  to:  (i)  railway 
integration  of  different 
infrastructure; 
modes of transportation into both national and 
urban networks; and (iii) increasing the number 
of  electric  vehicles  by  expanding 
the 
availability  of  charging  stations.  Persistent 
delays  in  investment  implementation  could 
jeopardise  the  objectives  of  modal  shift  and 
decarbonisation  of  the  transport  sector  (see 
Annex 6). 

(ii) 

Bulgaria  still  ranks  low  on  key  health 
outcomes.  Life  expectancy  at  birth  has 
recovered  from  the  decline  of  the  last  few 
years,  but  it  has  not  reached  pre-pandemic 
levels yet and is still the lowest in the EU (see 
Annex  16).  In  2020,  Bulgaria  recorded  the 
second-highest  standardised  death  rates  for 
treatable  diseases 
the 
in 
fifth-highest  for  preventable  diseases;  it  also 
avoidable 
ranked 
mortality (11).  Deep 
disparities 
between the capital region and the rest of the 
country aggravate the situation. 

overall 
regional 

the  EU  and 

fourth 

on 

(11)  Source: Eurostat, treatable and preventable mortality of 

residents by cause and sex (hlth_cd_apr). 

11 

 
 
The  high  financial  burden  on  individuals 
remains.  Bulgaria  has  a  high  proportion  of 
out-of-pocket  payments  for  healthcare  (34% 
in  2021),  more  than  double  the  EU  average. 
The  low  level  of  financial  protection  has 
adverse  effects  on  access  to  healthcare, 
undermines health status, and deepens health 
and socio-economic inequalities. 

Low  government  spending  on  healthcare 
makes  it  difficult  to  improve  quality  and 
access,  although  cohesion  policy 
is 
In  2021,  Bulgaria 
improving  outcomes. 
spent less than half the EU average on health 
per  capita.  At  65%,  government  financing  for 
healthcare is among the lowest in the EU (see 
Annex  16),  which  hinders  investment  in  new 
facilities,  equipment,  and  competitive  pay  for 
medical professionals. Although Bulgaria’s RRP 
envisages  significant  healthcare  investments, 
major  delays  have  occurred,  and  specific 
results are not yet visible. 

Prevention  is  still  underfunded.  Partly 
linked to generally low government healthcare 
spending, 
insufficient  funds  are  currently 
allocated  to  prevention.  Prevention  stands 
below  the  EU  average  also  as  a  share  of 
government spending, while inpatient care still 
takes  up  an  above-average  share  of  the 
budget (12).  Further  action  is  necessary  to 
strengthen  prevention,  also  given  the  ageing 
population.  

Bulgaria faces challenges to 
upward social convergence 

in 

the 

areas 

Improvements 
of 
employment,  wages  and  the  adequacy  of 
social assistance are largely the result of 
economic  recovery  and  targeted  reforms 
like  the  minimum  income  scheme  under 
the RRP. Positive developments in the labour 
could  be 
market  and 

inclusion 

social 

(12)  OECD / European Observatory on Health Systems and 
Policies (2023), Bulgaria: Country Health Profile 2023, 
State of Health in the EU, OECD Publishing, Paris / 
European Observatory on Health Systems and Policies, 
Brussels. 

12 

short-lived  without  improving  the  consistency 
between  policy  measures  and  stepping  up 
investments  in  the  field,  in  particular  those 
focused on vulnerable groups. 

The  country  faces  significant  shortages 
of workers  due to a  shrinking  workforce, 
high  inactivity  rates  among  vulnerable 
lack  of  relevant  skills  and 
groups, 
ineffective 
measures. 
government 
Demographic  projections  indicate  a  potential 
loss  of  a  third  of  the  working-age  population 
by  2050.  Despite  a  low  overall  job  vacancy 
rate  compared  to  the  EU  average,  employers 
struggle  to  find  suitable  workers,  with  a 
notable  increase  in  demand  for  qualified 
workers  in  2023  (see  Annex  14).  The  inactive 
population  varies  significantly  across  regions 
and  is  particularly  high  for  young  people  who 
are  not  in  employment,  education  or  training, 
for Roma, for people with a disability, and for 
those  with  lower  educational  attainment.  The 
low  level  of  skills  (notably  digital  skills)  and 
the  relatively  low  worker  mobility  add  to 
growing  shortages  of  workers.  Specific  skills 
shortages in occupations crucial  for the green 
transition  are  becoming  more  pertinent,  while 
spending  on  active  labour  market  policies 
remains 
long-term 
improvements in the quality of workers. 

hindering 

limited, 

editions 

national 

Bulgaria has recorded lower results in the 
latest 
and 
of 
international 
assessments 
education 
compared  to  results  in  past  years.  This 
indicates  that  the  root  causes  of  the  inability 
of the education system to ensure quality and 
equity  in  education  have  not  been  addressed 
effectively,  nor  have  the  substantial  regional 
disparities  in  the  education  system.  These 
include,  for  example,  challenges  linked  to  the 
teaching  profession, 
the  curricula,  social 
segregation,  and  the  strong  impact  of  socio-
economic  factors  on  performance.  The  2022 
results  of  the  Programme  for  International 
Student Assessment (PISA) of the Organisation 
for  Economic  Co-operation  and  Development 
(OECD) demonstrate that half of 15-year-olds 
do not have basic skills in reading, sciences or 
mathematics.  The  rate  of  low  achievement  is 
from 
particularly  high  among 
disadvantaged  backgrounds.  The  share  of  top 
performing  students  in  the  PISA  test  is  low, 

students 

 
 
This 

indicates 

while  the  share  of  low  scores  is  considerable 
from  advantaged 
even  among  students 
backgrounds. 
the 
that 
deficiencies of the education system affect all 
students,  thus  hindering  the  competitiveness 
prospects of all segments of the economy. The 
rate of early leavers from education decreased 
from  12.2%  in  2021  to  9.3%  in  2023  but 
remains  particularly  high  in  rural  areas  and 
among  the  Roma  communities. 
In  2023, 
participation  in  formal  childcare  of  children 
under  the  age  of  3,  which  affects  the  rate  of 
women  who  are  working  or  looking  for  a  job, 
was  17.4%,  the  same  figure  as  in  2022  (EU 
average:  35.7%).  Furthermore,  teachers  are 
among the oldest in the EU and shortages are 
emerging. About 50% of schoolteachers are at 
least  50  years  old  (EU:  39%)  and  shortages 
already  exist  in  certain  subjects  and  for 
primary  education  teachers.  Salaries  were 
substantially raised and measures were taken 
to 
the 
profession, resulting in an increased interest in 
teacher  education  programmes.  However,  the 
highest-performing  graduates  from  upper 
secondary  are  not  usually  attracted 
to 
university  programmes  preparing  teaching.  A 
large  share  of  graduates  does  not  enter  the 
profession  and  many  novice  teachers  leave 
the profession (See Annex 15).  

the  attractiveness  of 

increase 

grapples  with 
inequality 
and 

significant 
Bulgaria 
poverty 
challenges, 
notably  affecting  vulnerable  groups such 
as  children,  older  people,  people  with 
disabilities, and Roma communities.  While 
there  have  been  gradual  decreases  in  severe 
material  and  social  deprivation  rates,  overall 
poverty  rates  remain  very  high,  with  high 
income  inequality  persisting.  Policy  measures 
have aimed to improve support for vulnerable 
populations,  including  people  with  a  disability, 
contributing  to  a  broader  social  protection 
system  in  a  country  with  traditionally  low 
social  transfers.  Despite  significant  wage 
increases  over  the  past  two years,  in-work 
poverty  remains  above  the  EU  average  partly 
because  of  high  inflation,  driven  by  rising 
energy  and  food  prices.  Bulgaria  has  initiated 
measures  to  address  energy  poverty,  but 
support schemes are still in development. The 
long-term  care  system  has  one  of  the  lowest 
coverage  rates  in  the  EU,  but  targeted  large-

scale  investments  to  improve  the  quality  of 
initiated.  Also, 
social  services  have  been 
implementing 
for 
upskilling/reskilling,  notably  the  ones  included 
in  the  RRP,  can  help  facilitate  labour  mobility 
and  boost  wage  growth  for  low  earners  over 
time. 

initiatives 

boost 

upward 

Addressing  these  challenges  will  help 
Bulgaria 
social 
convergence.  The  second-stage  analysis  in 
line  with 
the  Social 
Convergence  Framework  points  to  challenges 
for  Bulgaria 
social 
convergence  in  relation  to  social  protection 
and inclusion, education and skills (13). 

that  may  affect 

features  of 

the 

Bulgaria’s unsupportive business 
environment and weak 
administration are major barriers 
to competitiveness 

the 

The  unsupportive  business  environment 
and lack of a level playing field act as a 
economy’s 
to 
barrier 
strong 
perception 
competitiveness. 
of 
The 
government  effectiveness 
is  significantly 
below the EU average (14) (see also Annex 13). 
Improving 
the  public 
the  functioning  of 
is  essential  to  creating  a 
administration 
favourable 
The 
attractiveness  of  the  public  administration  as 
an  employer  is  a  major  factor  in  this  regard, 
given 
the  central 
government  vacancies  have  remained  unfilled 
for  more  than  6 months (15). Improving  the 
administrative capacity would also help enable 
swift and steady implementation of Bulgaria’s 
RRP. Further action is necessary to implement 
reforms  included  in  the  business  environment 

that  nearly  half  of 

environment. 

business 

(13)  European Commission, SWD(2024)132. The analysis 
relies on all the available quantitative and qualitative 
evidence and analysing the policy response undertaken 
and planned. 

(14)  Worldwide Governance Indicators. 

(15)  Report on the state of the 

administration, https://www.strategy.bg/FileHandler.ashx
?fileId=33243. 

13 

 
 
and 

rule  of 

effectiveness 

processes, 
The 

component  of  the  RRP,  including  in  the  areas 
law,  digitalisation  of  public 
of 
public 
administration 
procurement. 
of 
investigations  and  the  country’s  performance 
in ensuring prosecution and final convictions in 
high-level  cases  of  corruption,  including  the 
institutional  reform  of  the  Anti-Corruption 
Commission, continue to be a challenge. Some 
53%  of  investors  are  not  confident  that  their 
investments  are  being  protected  by  law  and 
courts in Bulgaria (16). 

for 

small 

continue 

enterprises (18). 

Regulatory  bodies 
to  be 
ineffective and application of regulations 
appears  uneven.  Business  regulations  and 
administrative barriers are hampering 49% of 
firms  in  making  long-term  investment (17), 
while  ‘regulation’  issues  appear  among  the 
most 
to 
problems 
urgent 
The 
medium-sized 
independence  of  regulatory  bodies  has  come 
into question even more as appointments have 
nearly  stopped  during  the  recent  protracted 
periods  of  political  instability,  leaving  dozens 
of  posts  unfilled  or  with  an  expired 
mandate (19).  Furthermore,  regulators  have 
been  slow  to  react  in  recent  cases  of  high 
public importance, including  price  hikes  at the 
onset  of  Russia’s  war  of  aggression  against 
Ukraine,  which 
to  uneven 
enforcement of competition rules.   

could  point 

State-owned  enterprises  (SOEs)  continue 
to represent a major part of the economy 
in  key  sectors  such  as  energy  and 
transport,  and  the  reform  process  has 
been  protracted.  To  boost  Bulgaria’s 
competitiveness,  further  action  is  needed  to 
the  ongoing 
ensure 
reforms.  The  Law  on  Public  Enterprises 
adopted  in  2019,  set  out  important  priorities, 
especially,  to  improve  corporate  governance 
structure,  monitoring  and  transparency  of 
line  with  OECD 
corporate  governance 

implementation  of 

in 

Guidelines  on  Corporate  Governance  of  SOEs. 
The key reforms include the setting-up of the 
Public  Enterprises  and  Control  Agency  as  a 
central 
coordinating  body,  as  well  as 
commitments  under  the  RRP  and  ERM  II  post 
commitments  such  as  developing  a  state 
ownership  policy, publishing annual  aggregate 
reporting,  laying  down  appropriate  rules  and 
procedures  for  competitive  selection  and 
appointment of SOE boards, and transforming 
statutory  SOEs  whose  governance  structure 
does  not  comply  with  the  Commercial  Law. 
been 
Many 
implemented,  however,  progress  on  some 
elements,  notably, 
transformation  of 
the 
statutory  SOEs,  has  stalled.  Beyond  this, 
further  measures  could  focus  on  addressing 
financial  stability,  especially  of  loss-making 
SOEs,  and  –  given  Bulgaria’s  decarbonisation 
commitments – on reviewing the performance 
of  SOEs  in  the  energy  sector.  Furthermore, 
accounting  and  disclosure  requirements  could 
be strengthened.  

already 

those 

have 

of 

Public  and  private  R&D  investments  are 
still among the lowest in the EU. In recent 
years,  Bulgaria’s  innovation  performance  has 
slowly  improved  (see  Annex  11),  but  the 
country’s scientific and technological potential 
remains  largely  untapped.  Low  public  and 
private  R&D  spending  in  combination  with  a 
the  Bulgarian 
fragmented  governance  of 
research  and  innovation  system  is  further 
negatively  impacting  the  low  quality  of  the 
public science base. This, in turn, hampers the 
country’s  innovation  generation  capabilities. 
While 
private 
investments  in  combination  with  reforms  to 
address 
are 
further 
needed,  Bulgaria 
developing its research and innovation system 
under  EU  cohesion  policy.  Moreover,  the 
Research  and  Innovation  Act,  adopted  as  part 
of  Bulgaria‘s  RRP,  is  set  to  foster  policy 
coordination  by  ensuring  close  links  between 
businesses and academia. 

is  working  on 

fragmentation 

governance 

additional 

public 

and 

(16)  EU Justice Scoreboard. 

(17)  EIB Investment Survey 2022 – EU overview. 

(18)  2023 survey on the access to finance of enterprises. 

(19)  2023 rule of law report, country chapter on the rule of 

law situation in Bulgaria, pp. 29-30. 

public 

There  is  scope  to  increase  the  efficiency 
of 
investment  management. 
Although  strategic  planning  was  significantly 
strengthened in 2018, project assessment and 
selection  based  on  objective  value-for-money 
indicators  is  not  yet  in  place  (see  Annex  13). 
Bulgaria  still  has  shortcomings  in  key  areas 

14 

 
 
Box 4: 

The mid-term review of cohesion policy funding for Bulgaria 

The  mid-term  review  of  cohesion  policy  funds  is  an  opportunity  to  assess  cohesion  policy 
programmes and tackle emerging needs and challenges in EU Member States and their regions. 
Member  States  are  reviewing  each  programme  taking  into  account,  among  other  things,  the 
challenges  identified  in  the  European  Semester,  including  in  the  2024  country-specific 
recommendations.  This  review  forms  the  basis  for  a  proposal  by  the  Member  State  for  the 
definitive allocation of 15% of EU funding included in each programme.   

Bulgaria  has  made  progress  in  implementing  cohesion  policy  programmes  and  the  European 
Pillar of Social Rights, but challenges remain as outlined in this report, including in Annexes 14 
and  17.  Bulgaria  has  been  catching  up  with  the  EU  on  most  indicators,  but  remains  the  EU 
Member State with the lowest GDP per capita and is experiencing a rapid population decline. The 
country faces significant territorial disparities and needs to prioritise investments and technical 
support also to address the particularly low development in the three  northern regions. Against 
this  background,  it  remains  important  to  continue  to  implement  the  planned  priorities,  with 
particular  attention  to:  (i)  regional  and  local  stakeholders’  capacity  to  apply  integrated 
approaches  to  investments  at  local  level;  (ii)  regional  and  local  support  networks  for  research, 
innovation  and  entrepreneurship  via  targeted  measures  for  technology  transfer  and 
commercialisation; (iii) rail and road infrastructure, boosting investments in sustainable transport 
and intermodality; (iv)  supporting the implementation of the Territorial Just Transition Plans  by 
ensuring  effective  governance,  coordination  and  capacity  of  national,  regional  and  local 
stakeholders;  (v)  water  management,  in  particular  drinking  water  supply  and  waste  water 
treatment, as well as efficient waste and resource management; (vi) active labour market policy 
measures,  especially  for  groups  that  face  challenges  to  find  work,  and  investment  in  skills 
acquisition, particularly for the green and digital transitions; (vii) ensuring a quality and inclusive 
education system, including by focusing on the implementation of the European Child Guarantee; 
and  (viii)  improving  social  inclusion  of  vulnerable  groups  such  as  Roma,  including  through  the 
social economy, and promoting accessible, quality and affordable long-term care services.  

Bulgaria could benefit from the opportunities provided by the Strategic Technologies for Europe 
Platform  (STEP) (20)  initiative,  including  by  increasing  investments  in  digitalisation,  clean  and 
resource-efficient  technologies  and  green  transformation  of  its  industry.  The  STEP  initiative 
could enable Bulgaria to implement its commitments to clean tech and a circular and low-carbon 
economy  with  its  smart  specialisation  strategy  and  ensure  a  cohesive  approach  to  advance 
industrial sustainability. 

such  as  the  alignment  between  investment 
decisions  and  long-term  strategic  goals,  and 
the timely execution of capital expenditure. 

vacancies  have  remained  unfilled  for  more 
than 6 months (see Annexes 2 and 13).  

to 

is  needed 

improve 
the 

the 
Action 
attractiveness 
public 
of 
administration  as  an  employer.  Recent 
wage  increases  could  be  supplemented  with 
talent  management,  training  and  exchange 
programmes  to  ensure  that  the  appropriate 
skills and resources are available to implement 
the RRP and cohesion policy programmes. Over 
the  last  5 years,  the  share  of  civil  servants 
under  the  age  of  39  has  been  falling,  and 
close  to  half  of  the  central  government 

(20)  Regulation (EU) 2024/795  

15 

 
 
 
KEY FINDINGS 

resilience  plan 

With its wide policy scope and substantial 
financial  envelope,  Bulgaria’s  recovery 
and 
includes 
measures 
to  address  a  series  of 
structural  challenges,  in  synergy  with 
other  EU  funds,  including  cohesion  policy 
funds, by: 

(RRP) 

•  Introducing  the  necessary  reforms  in 
the energy sector, including by deploying 
renewable  energy  and  storage  capacity; 
adopting  a  roadmap  to  climate  neutrality, 
the  electricity  market,  and 
liberalising 
taking  measures  to  tackle  high  levels  of 
energy poverty.  

•  Implementing  important  investments 
in  sustainable 
rail 
infrastructure, including extending the Sofia 
metro.  

transport  and 

•  Investing 

in  the  green  transition, 
notably  in  the  area  of  biodiversity  and  in 
the water sector. 

•  Promoting the accelerated deployment 
of  5G  networks  and  high-capacity 
networks.  

•  Reforming  the  legal  framework  to 
promote  entrepreneurship  and  e-
governance,  introduce  mandatory  judicial 
mediation,  and  improve  insolvency  and 
restructuring procedures as well as reforms 
in  the  areas  of  the  rule  of  law,  public 
procurement, and the governance of state-
owned enterprises.  

and 

inclusiveness 

•  Increasing  the  quality,  labour-market 
relevance 
of 
education  and  training,  including  with  a 
focus 
ensure 
competitiveness  in  the  medium  and  long 
term.  

children, 

Roma 

on 

•  Reforming 

the  minimum 

income 
scheme  to  improve  its  adequacy  and 
coverage,  tying  the  benefit  to  30%  of  the 
risk-of-poverty  threshold,  and 
loosening 
eligibility criteria.  

of 

delays 

implementation 

The 
Bulgaria’s 
recovery  and  resilience  plan  is  facing 
substantial 
significant 
challenges  which  require  decisive  actions  to 
ensure a successful implementation of all the 
measures of Bulgaria’s recovery and resilience 
plan by August 2026.  

and 

Beyond  the  reforms  and  investments  in 
the RRP and cohesion policy programmes, 
Bulgaria would benefit from: 

•  Improving the business environment to 
boost  competitiveness,  by  ensuring  the 
independence and increasing the quality of 
regulatory  bodies  and  creating  conditions 
conducive  for  research,  development  and 
innovation. 

•  Strengthening  the  capacity  of  public 
administration, also at local  and regional 
level,  to  ensure  the  implementation  of 
reforms  and 
including  by 
investments, 
attracting and retaining skilled staff. 

•  Removing  obstacles  to  the  swift 
deployment  and 
implementation  of 
investments funded by all EU instruments.  

installations 

deployment 

•  Speeding  up  the  energy  transition,  by 
of 
the 
accelerating 
renewables,  and  wind 
in 
particular,  accelerating  the  modernisation 
of  the  power  grid,  and  increasing  the 
energy  storage  capacity  – 
is 
significant 
regional 
for 
interconnectivity  to  accelerate  the  energy 
transition  and  boost  regions’  security  and 
resilience. 

potential 

there 

16 

 
 
•  To support upward social convergence, 
addressing  shortages  of  workers, 
including  by 
improving  education 
outcomes; recruiting and retaining capable 
and motivated teachers; fostering access to 
quality  education  for  all;  increasing  adult 
learning  participation,  including  for  digital 
skills.  

•  Introducing 

activation 
effective 
policies; reducing the employment gap for 
persons  with  disabilities  as  well  as  further 
improving  access  to  healthcare  and  social 
services,  especially 
for  disadvantaged 
groups such as Roma. 

increasing 

participation 

•  Addressing  the  risk  of  poverty  and 
social exclusion, in particular for children, 
by 
early 
childhood  education  and  care,  as  well  as 
curbing  the  burden  of  housing  costs; 
reducing  income  inequality  and  increasing 
the  impact  of  social  transfers  on  reducing 
poverty. 

in 

17 

 
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 – implementation 

A4.  Other EU instruments for recovery and growth 

A5.  Resilience 

Environmental sustainability 

A6.  European Green Deal 

A7.  Energy transition and competitiveness 

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 

24 

24 

26 

31 

33 

36 

38 

38 

43 

48 

51 

51 

53 

56 

58 

62 

64 

64 

67 

69 

71 

75 

75 

77 

80 

81 

21 

 
 
 
LIST OF TABLES 

Summary table on 2019-2023 CSRs 
Key facts of the Bulgarian RRP 

Support from EU instruments in Bulgaria 
Resilience indices across dimensions for Bulgaria and the EU-27 
Indicators tracking progress on the European Green Deal from a macroeconomic perspective 
Key Energy Indicators 
Key indicators for a fair transition in Bulgaria 
Circularity indicators 

A2.1. 
A3.1. 
A3.2.  Measures in Bulgaria's RRP 
A4.1. 
A5.1. 
A6.1. 
A7.1. 
A8.1. 
A9.1. 
A10.1.  Key Digital Decade targets monitored by the Digital Economy and Society Index 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 in 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 
Bulgaria’s progress on the 2019-2023 CSRs (2024 European Semester) 
Total grants disbursed under the RRF 
Distribution of cohesion policy funding across policy objectives in Bulgaria 
Distribution of RRF funding by pillar in Bulgaria 
Greenhouse gas emissions from the effort sharing sectors in Mt CO2eq, 2005-2022 
Changes in livestock density and organic farming 
Environmental investment gap, annual average 
Bulgaria's energy retail prices for households and industry & service 
Trends in electricity prices for non-household consumers (EU and foreign partners) 
Bulgaria's installed renewable capacity (left) and electricity generation mix (right) 
Fair transition challenges in Bulgaria 
Job vacancy rate in transforming sectors and mining and quarrying 
ETS emissions by sector since 2013 
Treatment of municipal waste 
Innovation performance 2016-2023 

A1.1. 
A2.1. 
A3.1. 
A4.1. 
A4.2. 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2. 
A7.3. 
A8.1. 
A8.2. 
A9.1. 
A9.2. 
A11.1. 
A12.1.  Labour productivity (per hour worked) in different economic sectors (2015=100) 
A12.2.  Government investment, % of GDP 
A13.1.  Government effectiveness 
A13.2.  a) Use of public authorities' websites or apps (left side); b) e-government maturity (centre); c) share of individuals with 

basic or above basic overall digital skills (right side) 

A15.1.  Underachievement rates in mathematics by socio-economic background, PISA 2022 
A16.1.  Life expectancy at birth, years 
A16.2.  Projected increase in public expenditure on healthcare over 2024-2070 
A17.1.  GDP per capita (2012) and GDP growth (2013-2022), Bulgaria (NUTS-2 regions) 
A17.2.  Labour productivity (real GVA per worker), EU-27, Bulgaria (NUTS 2 regions), 2000-2022 
A18.1.  Evolution of credit activity 
A19.1.  Tax revenues from different tax types, % of total revenue 
A19.2.  Tax wedge for single and second earners as a % of total labour costs, 2023 

22 

27 
31 
32 
34 
36 
42 
47 
49 
52 
55 
56 
61 
63 
64 
65 
68 
69 
71 
76 
77 
80 
83 
83 

24 
26 
32 
34 
34 
38 
40 
41 
43 
44 
44 
48 
50 
51 
52 
56 
58 
58 
62 

63 
68 
69 
69 
71 
71 
75 
78 
78 

 
 
LIST OF MAPS 

A17.1.  Competitiveness in Bulgarian regions 

72 

23 

 
 
 
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. 

Bulgaria needs to catch up with the EU on all 
SDG indicators related to fairness. While it is 
improving  on  several  of  them  (SDGs 1,  3,  5, 
7,  8,  10),  Bulgaria  has  moved  away  on  the 
indicators  for  quality  education  (SDG 4). 
Although  there  has  been  an  overall  improvement 

Graph A1.1: Progress towards the SDGs in Bulgaria 

towards  SDG 1  (No  poverty),  some  indicators 
deteriorated.  In  2022,  Bulgaria  reduced  its  severe 
material  and  social  deprivation  rate  and  the 
percentage  of  the  population  aged  18  or  over  at 
in-work at-risk-of-poverty. However, the country is 
moving further away from the EU on the indicators 
for people at risk of poverty or social exclusion and 
on the housing cost overburden rate. Another area 
where Bulgaria is improving is SDG 3 (Good health 
and  well-being)  even  though  in  some  cases,  such 
as  premature  deaths  due  to  exposure  to  fine 
particulate  matter,  the  starting  point  is  very  low 
(from 187 per 100 000 in 2016 to 158 in 2021). 
In  addition,  the  country  is  improving  its  score  on 
people  with  good  or  very  good  self-perceived 
health  (66.7%  in  2017,  68.2%  in  2022).  While 
Bulgaria  is  also  improving  on  premature  deaths 
due to exposure to fine particulate matter (SDG 3), 
its score in 2021 of 158 people per 100 000 was 
almost  three  times  the  EU  average  (57  per 
100 000). One area where Bulgaria has the largest 
gap  to  close  with  the  EU  is  quality  education 
(SDG 4).  In  2022,  it  was  68.8%  below  the  EU 

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). 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 25 April 2024. Data refer mainly to the period 2017-2022 or 2018-2023. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

24 

 
 
 
 
 
than  the  EU  average  on  SDG 17 (Partnerships  for 
the  goals)  indicators.  The  Bulgarian  debt-to-GDP 
ratio  for  2022  was  22.6%,  (EU  average:  83.5%). 
While  the  trust  in  institutions  (SDG 16)  did  not 
change  between  2017  and  2022,  the  country  is 
lagging  behind  the  EU  average  (43%  to  64%  on 
the  Corruption  Perception  Index  for  2022).  In 
addition,  it  needs  to  catch  up  with  the  EU  on 
investment  as  share  of  GDP  and  real  GDP  per 
capita  (SDG 8)  even  though  the  latter  increased 
from EUR 6 120 in 2017 to EUR 7 680 in 2022.  

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

average  after  further  deterioration  over  the 
previous 5 years. The country is moving away from 
its  2018  score  for  low  achieving  15-year-olds  in 
reading  (47.1%  in  2018,  52.9%  in  2022),  which 
was  around  twice  the  EU  average  for  2022 
(26.2%).  While  Bulgaria  is  below  the  EU  average 
on leadership positions held by women (SDG 5), it 
is only 3 percentage points below the EU average 
for  the  gender  employment  gap  for  2022  (7.7%; 
EU:  10.7%).  Bulgaria  is  improving  on  SDG 8 
(Decent work and economic growth) but at a lower 
rate than the EU average (25.2% behind in 2021, 
against  35.5%  in  2022).  For  SDG 10  (Reduced 
inequalities),  Bulgaria  is  making  progress  towards 
but was still 77% below the EU  average in 2022. 
The  Bulgarian  European  Social  Fund  Plus  (ESF+) 
and  recovery  and  resilience  plan  (RRP)  include 
measures to address most of these challenges. In 
particular, the  plan contains  measures to improve 
the  quality  and  effectiveness  of  education, 
strengthen the provision and availability of health 
services,  improve  the  minimum  income  scheme 
and support social inclusion.   

Bulgaria is improving on indicators related to 
productivity  (SDGs 8  and  9)  but  the  gap  to 
the EU average is increasing. On SDG 8 (Decent 
work and economic growth), Bulgaria is improving, 
although  it  is  moving  away  from  the  EU  average. 
The  country’s  long-term  unemployment  rate  was 
slightly  below  the  EU  average  for  2022  (2.3%  vs 
2.4%),  an  improvement  from  the  2017  score  of 
3.9%. Despite still lagging significantly behind the 
EU, Bulgaria has made some progress on R&D and 
innovation indicators (SDG 9), in particular on R&D 
personnel as a percentage of the active population 
(0.71%  in  2017,  0.85%  in  2022)  and  on  gross 
domestic  expenditure  on  R&D  as  a  percentage  of 
GDP (0.74% in  2017,  0.77%  in  2022).  Bulgaria  is 
moving  away  from  SDG 4  (Quality  education)  on 
basic  education  indicators  and  adult  participation 
in learning but is making progress on digital skills: 
in 2023, 35.5% of adults had at least basic digital 
skills,  up  from  31.2%  in  2021.  The  Bulgarian  RRP 
includes 
improve 
innovation.  These 
include  the  adoption  of  a 
research  and  innovation  act,  provision  of  digital 
skills  training  and  the  establishment  of  an 
innovation board.  

significant  measures 

to 

Bulgaria 
is  performing  well  on  SDG 17 
(Partnerships  for  the  goals).  It  is  improving 
on  macroeconomic 
indicators 
(SDGs 8  and  16),  but  still  needs  to  catch  up 
with  the  EU.  Bulgaria  performs  45.2%  better 

stability 

25 

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

Graph A2.1: Bulgaria’s progress on the 2019-2023 
CSRs (2024 European Semester) 

Source: European Commission 

The Commission has assessed the 2019-2023 
country-specific recommendations (CSRs)  (21) 
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)  (23).  At  this  stage  of  RRP  implementation, 
55%  of  the  CSRs  focusing  on  structural  issues 
from  2019-2023  have  recorded  at  least  ‘some 
progress’,  while  40%  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 (22)  and 

(21)  2023 CSRs : EUR-Lex - 32023H0901(02) - EN - EUR-Lex 

(europa.eu)  
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) 

(22)  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). 

(23)  Member States were asked to effectively address in their 
RRPs all or a significant subset of the relevant country-
specific recommendations issued by the Council. 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. 

26 

No Progress5%Limited Progress40%Some Progress41%Substantial Progress14% 
 
 
   
 
 
 
 
 
Table A2.1:  Summary table on 2019-2023 CSRs 

(Continued on the next page) 

27 

BulgariaAssessment in May 2024RRP 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 collateralSubstantial 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 guidelinesSubstantial 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 sustainabilityLimited 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.Limited 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 1Limited ProgressInlinewiththegeneralescapeclause,takeallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability,whileenhancinginvestment. Not relevant anymoreNot applicableSDG 8, 16Mobiliseadequatefinancialresourcestostrengthentheresilience,accessibilityandcapacityofthehealthsystem,andensureabalanced geographical distribution of health workers.Limited ProgressRelevant RRP measures being implemented as of 2022 and planned for 2023,2026SDG 3 
 
 
 
  
 
Table (continued) 

(Continued on the next page) 

28 

2020 CSR 2Some ProgressEnsure adequate social protection and essential services for all Some 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 workingSome ProgressRelevant RRP measures planned as of 2023SDG 8and promote digital skillsLimited ProgressRelevant RRP measures being implemented as of 2020 and planned for 2022,2023,2024,2026SDG 4and 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. Some 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 1Not relevant anymoreIn2022,pursueasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationallyfinancedinvestment.Keepthegrowthofnationallyfinanced current expenditure under control.Not relevant anymoreNot applicableSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term.Not relevant anymoreNot applicableSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticular investment supporting the green and digital transition.Not relevant anymoreNot applicableSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Not relevant anymoreNot applicableSDG 8, 16 
 
 
  
 
Table (continued) 

(Continued on the next page) 

29 

2022 CSR 1Some ProgressIn 2023, ensure that the growth of nationally financed primary current expenditureisinlinewithanoverallneutralpolicystance,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeingUkraine.Standreadytoadjustcurrentspendingtotheevolvingsituation.Substantial ProgressNot applicableSDG 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryandResilienceFacilityandother Union funds.Some ProgressNot applicableSDG 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachieving prudent medium-term fiscal positions.Some ProgressNot applicableSDG 8, 162022 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 importsLimited 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.Substantial ProgressRelevant RRP measures planned as of 2022-2026SDG 7, 9, 13Stepupeffortstoreduceenergydemandbyincreasingenergyefficiency in industry and in private and public building stock.Limited 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 72023 CSR 1Some ProgressWinddowntheemergencyenergysupportmeasuresinforce,usingtherelatedsavingstoreducethegovernmentdeficit,assoonaspossiblein2023and2024.Shouldrenewedenergypriceincreasesnecessitateneworcontinuedsupportmeasures,ensurethatsuchsupportmeasuresaretargetedatprotectingvulnerablehouseholdsandfirms,arefiscallyaffordableandpreserveincentivesforenergysavings.Substantial ProgressNot applicableSDG 8, 16Ensureprudentfiscalpolicy,inparticularbylimitingthenominalincreaseinnationallyfinancednetprimaryexpenditurein2024tonotmore than 4,6 %.Some ProgressNot applicableSDG 8, 16PreservenationallyfinancedpublicinvestmentandensuretheeffectiveabsorptionofgrantsundertheFacilityandofotherUnionfunds, in particular to foster the green and digital transitions.No ProgressNot applicableSDG 8, 16Fortheperiodbeyond2024,continuetopursueamedium-termfiscalstrategyofgradualandsustainableconsolidation,combinedwithinvestmentsandreformsconducivetohighersustainablegrowth, in order to achieve a prudent medium-term fiscal position.Some ProgressNot applicableSDG 8, 16RRP 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. 
 
 
  
 
Table (continued) 

Note:            
* See footnote (23). 
** 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 

30 

2023 CSR 2Ensureaneffectivegovernancestructureandstrengthentheadministrativecapacitytoallowforaswiftandsteadyimplementationofitsrecoveryandresilienceplan.SwiftlyfinalisetheREPowerEUchapterwithaviewtorapidlystartingitsimplementation.Proceedwiththespeedyimplementationofcohesionpolicyprogrammes,inclosecomplementarityandsynergywith the recovery and resilience plan.2023 CSR 3Limited ProgressReduce reliance on fossil fuels andLimited ProgressRelevant RRP measures planned as of 2024SDG 7, 9, 13acceleratetheenergytransitionthroughfasterdeploymentofrenewableenergysources,whileensuringstoragecapacitiestoincrease the flexibility of the energy system.Limited ProgressRelevant RRP measures planned as of 2024SDG 7, 9, 13Strengthen the electricity grid infrastructure and improve the management thereof by streamlining the connection procedures and introducing smart grid elements.Limited ProgressRelevant RRP measures planned as of 2024SDG 7, 9, 13Continueeffortstoincreaseinterconnectionwithneighbouringcountries.Some ProgressSDG 7, 9, 13Acceleratebuildingrenovationinordertoincentiviseenergyefficiency and address energy poverty.Limited ProgressRelevant RRP measures planned as of 2024SDG 1, 2, 7, 10Promote new future-proof solutions in district heating andNo ProgressSDG 7sustainableurbantransport,andacceleratedevelopmentofrailwayinfrastructure.Limited ProgressRelevant RRP measures being implemented as of 2022SDG 11Stepuppolicyeffortsaimedattheprovisionandacquisitionofskillsand competences needed for the green transition.Limited ProgressRelevant RRP measures being implemented as of 2022SDG 4RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union. 
 
  
 
ANNEX 3: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 

This Annex provides a snapshot of Bulgaria’s 
implementation of its recovery and resilience 
plan  (RRP),  past  the  mid-way  point  of  the 
Recovery  and  Resilience  Facility’s 
(RRF) 
lifetime.  The  RRF  has  proven  central  to  the  EU’s 
recovery  from  the  COVID-19  pandemic,  helping 
speed  up  the  twin  green  and  digital  transition, 
while  adapting  to  geopolitical  and  economic 
developments and strengthening resilience against 
future  shocks.  The  RRF  is  also  helping  implement 
the  UN  Sustainable  Development  Goals  and 
address  the  country-specific  recommendations 
(see Annex 2).    

The  RRP  paves  the  way  for  disbursing  up  to 
EUR 5.689  billion  in  grants  under  the  RRF 
over  the  2021-2026  period,  representing 
6.1%  of  Bulgaria’s  GDP (24).  As  of  mid-May 
2024,  EUR  1.369  billion  has  been  disbursed  to 
Bulgaria under the RRF.  

Bulgaria still has EUR 4.3 billion available in 
grants  from  the  RRF.    This  will  be  disbursed 
after  the  assessment  of  future  fulfilment  of  the 
remaining 299 milestones and targets (25) included 
in  the  Council  Implementing  Decision (26)  (CID), 
ahead  of  the  2026  deadline  established  for  the 
RRF.   

Bulgaria’s  progress  in  implementing  its  plan 
is  recorded  in  the  Recovery  and  Resilience 
Scoreboard (27).  The 
scoreboard  gives  an 
overview  of  the  progress  made  in  implementing 
the RRF as a whole. Graph A3.1 shows the current 
state of play as reflected in the scoreboard.  

Bulgaria  is  working  on  the  elaboration  of  a 
REPowerEU chapter to be added to its RRP, to 
phase  out  its  dependency  on  Russian  fossil 
fuels,  diversify 
its  energy  supplies  and 
produce  more  clean  energy  in  the  coming 

(24)  GDP information is based on 2023 data. Source: 

https://ec.europa.eu/economy_finance/recovery-and-
resilience-scoreboard/index.html?lang=en    

(25)  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.  

(26)  https://data.consilium.europa.eu/doc/document/ST-8091-

2022-ADD-1/en/pdf  

years.  Once  submitted,  assessed,  and  adopted,  it 
the  supply  of 
to  ensuring 
will  contribute 
affordable, secure, and sustainable energy.  

The  plan  has  a  strong  focus  on  the  green 
transition, dedicating 57.1% of the available 
funds  to  measures  that  support  climate 
objectives  and  23.1%  of  its  total  allocation 
to support the digital transition. It also retains 
a  strong  social  dimension  with  social  protection 
measures,  especially  related  to  health  and  long-
term care.  

Table A3.1:  Key facts of the Bulgarian RRP 

Source: RRF Scoreboard 

request  completed, 
With  one  payment 
Bulgaria’s  implementation  of 
its  RRP  is 
significantly  delayed.  The  Commission  gave  a 
positive assessment of Bulgaria’s payment request 
on  7  November  2022,  taking  into  account  the 
opinion of the Economic and Financial Committee. 
This  led  to  EUR  1.37  billion  being  disbursed  in 
financial  support  on  16  December  2022 (28).  The 
related 22 milestones and targets covered reforms 
and investments towards decarbonising the energy 
large-scale  deployment  of 
sector,  promoting 
digital 
judicial 
system,  strengthening  the  anti-money  laundering 
framework, 
sector, 
strengthening  the  adequacy  and  coverage  of  the 
minimum income scheme. 

infrastructure, 

digitalising 

reforming 

public 

the 

the 

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

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

resilience-scoreboard/country_overview.html  

resilience-scoreboard/country_overview.html  

31 

Initial plan CID adoption date4 May 2022Scope Revised Plan without REPowerEU chapterLast major revision8 December 2023Total allocation EUR 5.7 billion in grants (6.1% of 2023 GDP)Investments and reforms 50 investments and 47 reforms Total number of milestones and targets321Fulfilled milestones and targets22 (6.9% of total) 
 
 
 
   
 
 
 
Graph A3.1: Total grants disbursed under the RRF 

Note: This graph displays the amount of grants, including pre-
financing, 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 

As  of  15  May  2024,  the  Commission  is 
working  in  collaboration  with  Bulgaria  to 
assess its second payment request. Table A3.2 
highlights  some  relevant  measures  achieved  so 
far,  and  some  that  will  be  implemented  before 
2026 to keep making Bulgaria’s economy greener, 
more digital, inclusive, and resilient.   

Table A3.2:  Measures in Bulgaria's RRP 

Source: FENIX 

32 

EUR 1.37billion (24%)Total allocation: EUR 5.689billionReforms and investments implemented• Strengthening of the anti-money laundering framework• National Plan for the Development of Combined Transport in Bulgaria by 2030• New Industrial Parks ActUpcoming reforms and investments• Establishment of the Innovation Board• Legislation supporting the fast deployment of off-shore wind• New zero-emission public transport vehicles 
  
 
   
 
ANNEX 4: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

EU funding instruments provide considerable 
resources for recovery and growth to the EU 
Member States. In addition to the EUR 5.7 billion 
of  Recovery  and  Resilience  Facility  (RRF)  funding 
described in Annex 3, EU cohesion policy funds (29) 
provide EUR 10.7 billion to Bulgaria for the 2021-
2027  period (30).  Support 
two 
instruments  combined  represents  around  16.18% 
of  the  country’s  2023  GDP,  compared  to  an  EU 
average  of  5.38%  of  GDP (31).  Cohesion  policy 
supports  regional  development,  economic,  social 
and  territorial  convergence,  and  competitiveness 
through  long-term  investment  in  line  with  EU 
priorities and with national and regional strategies. 

these 

from 

During  the  2014-2020  programming  period, 
cohesion  policy  funds  boosted  Bulgaria’s 
competitiveness, with  tangible achievements 
notably  in  research  and  innovation,  energy 
efficiency,  employment,  social  inclusion,  and 
education.  By  the  end  of  the  eligibility  period  in 
December  2023,  2014-2020  cohesion  policy 
funds (32)  had  made  EUR 7.9 billion  available  to 
Bulgaria (33),  of  which  EUR 4.5 billion  has  been 
disbursed  since  March  2020,  when  the  COVID-19 
pandemic began (34). More than 40 000 SMEs have 
benefited  from  this  support,  which  has  helped 
improve 
stimulate  growth,  create 
competitiveness. The SAFE initiative has supported 
more  than  100 000  SMEs  and  improved  the 
the  face  of  a 
resilience  of  businesses 
by 
economic 
challenging 
environment 
compensating  for 
increased  electricity  costs. 
Moreover,  a  total  of  24  cutting-edge  research 
complexes and laboratories have been set up with 

jobs  and 

in 

(29)  In 2021-2027, cohesion policy funds include the Cohesion 
Fund, the European Regional Development Fund, the 
European Social Fund Plus and the Just Transition Fund. 

(30)  European territorial cooperation (ETC) programmes are 
excluded from the figure. In 2021-2027, the total 
investment, including national financing, amounts to 
EUR 12.9 billion. 

(31)  RRF funding includes both grants and loans, where 

applicable. The EU average is calculated for cohesion policy 
funds excluding ETC programmes. GDP figures are based on 
Eurostat data for 2022. 

(32)  In 2014-2020, cohesion policy funds included the Cohesion 

Fund, the European Regional Development Fund, the 
European Social Fund and the Youth Employment Initiative. 
REACT-EU allocations are included but ETC programmes are 
excluded. 

(33)  In 2014-2020, the total investment, including national 

financing, amounted to EUR 9.2 billion. 

(34)  Cut-off date: 14 May 2024. 

labour-market 

the  help  of  European  Regional  Development  Fund 
(ERDF)  resources.  This  has  helped  create  the 
necessary  conditions  for  advancing  research  and 
development and creating new job opportunities in 
the  field.  During  the  same  period,  more  than 
890 000 people received support under measures 
for 
integration,  upskilling  and 
reskilling,  and  social  inclusion,  co-financed  by  the 
European  Social  Fund (ESF). Over  55 000  children 
and their families gained access to early childhood 
development  services  while  230 000  people 
received  direct 
the 
consequences  of  the  COVID-19  pandemic.  In  the 
education  system,  both  students  (450 000)  and 
pedagogic  specialists  (45 774)  were  supported  to 
develop  specific  knowledge  and  skills,  and  the 
latter also increased their qualifications. 

to  overcome 

support 

In  the  current  programming  period  (2021-
2027),  cohesion  policy will  provide a  further 
boost  to  Bulgaria’s  competitiveness,  to  the 
green  transition  and  to  social  cohesion, 
improving  the  living  and  working  conditions 
of  Bulgaria’s people, and  promoting  regional 
and  social  convergence.  Bulgaria  has  allocated 
EUR 2.4 billion  of  its  ERDF  and  European  Social 
(ESF+)  funding  to  climate-related 
Fund  Plus 
the  green 
priorities,  with  an  emphasis  on 
transition,  including  energy  independence.  These 
measures  will  help  people,  households  and  SMEs 
overcome  the  challenges  of  the  green  transition. 
Investments  will,  for  instance,  help  tackle  climate 
change and natural disaster risks, aiming to reduce 
the  share  of  the  population  living  at  risk  of 
disasters  (floods,  fires,  etc.)  by  at  least  35%. 
Cohesion  policy  will  also  invest  in  sustainable 
transport  by  supporting  the  deployment  of  more 
than  160  electric  vehicle  charging  stations  and 
infrastructure  for  alternative  fuels  in  ports  and 
along  the  national  road  network,  as  well  as 
developing intermodality in urban areas. The focus 
in  2021-2027  is  on  enabling  balanced  regional 
development and helping regions with insufficient 
investment  catch  up.  This  is  why  Bulgaria  has 
allocated  50%  of  its  total  ERDF,  ESF+  and 
Cohesion  Fund  funding (35)  to 
less 
developed 
(North-West, 
regions 
North-Central, and North-East). The Just Transition 
Fund  will  support  reskilling  and  upskilling  and  the 
creation of new employment opportunities for over 
15 000 workers in the three Bulgarian regions that 

its  three 

northern 

(35)  Excluding the funds for technical assistance and the Fund for 

European Aid to the Most Deprived. 

33 

 
 
 
 
 
 
are most affected by the transition (Stara Zagora, 
Kyustendil  and  Pernik).  More  than  2 190  hectares 
of  land  surface  area  will  be  rehabilitated  to 
develop  industrial  areas  and  construct  renewable 
energy  infrastructure,  such  as  photovoltaic  parks, 
industrial  parks  for  clean  technologies,  and  a 
hydrogen-based  value  chain.  With  support  from 
the  ESF+,  more  than  212 000  employed  and 
unemployed people will benefit from upskilling and 
reskilling  initiatives,  and  another  160 000  will  be 
supported to improve their digital skills, supporting 
the  green  and  digital  transition.  Under  the  Child 
Guarantee,  measures  to  reduce  child  poverty  will 
benefit  over  200 000  children  will  be  supported 
under  the  Child  Guarantee  with  measures  to 
reduce child poverty. In education, ESF+ will target 
more than 760 000 children and students aiming 
to  improve  their  educational  outcomes  and  the 
inclusiveness  of  the  educational  system.  In  this 
regard, Cohesion policy substantially contributes to 
achieving  the  UN  Sustainable  Development  Goals 
(SDGs)  in  Bulgaria,  in  particular  SDG  9  (Industry, 
innovation,  infrastructure),  SDG  8  (Decent  work 
and  economic  growth)  and  SDG  4 
(Quality 
education).  

Through combined action, cohesion policy and 
the recovery and resilience plan (RRP) have a 
impact  of  the  EU 
mutually  reinforcing 
support in Bulgaria. For instance, in the area of 
digitalisation of SMEs, the RRP includes a voucher 
system,  supporting  the  initial  two  stages  of 
digitalisation  (computerisation  and  connectivity), 
while  cohesion  policy  funds  support  the  four 
additional  stages  (visibility,  transparency,  forecast 
capacity, and adaptability), focusing on developing 
the necessary technologies for Industry 4.0. In the 
water  sector  as  well,  cohesion  policy  and the  RRP 
will  complement  each  other  to  maximise  their 
impact on the ground: cohesion policy will invest in 
water  supply  and  sanitation 
in 
agglomerations  with  over  10 000  inhabitants, 
whereas  the  RRP  will  focus  its  investments  on 
agglomerations  between  5 000  and  10 000 
inhabitants. Together, cohesion policy and the RRP 
also  improve  the  sustainability  of  the  Bulgarian 
transport  system.  The  reform  of  the  strategic 
transport  system  adopted  under  the  RRP  includes 
an  independent  audit  of  the  organisation  and 
technical  capacity  of  the  bodies  responsible  for 
investments,  such  as  the  National 
transport 
the  Road 
Infrastructure  Company, 
Railway 
Infrastructure  Agency  and 
the  Ministry  of 
Transport and Communications. At the same time, 
cohesion policy funds will support, amongst others, 

infrastructure 

technical  assistance  to  prepare  and  implement 
projects  on  trans-European  transport  network 
(TEN-T) 
roads  network.  The 
contribution of cohesion policy and RRP funding by 
policy  objective  is  illustrated  by  Graphs  A4.1  and 
A4.2. 

railways  and 

Graph A4.1: Distribution of cohesion policy funding 
across policy objectives in Bulgaria 

Source: European Commission 

Graph A4.2: Distribution of RRF funding by pillar in 
Bulgaria 

(1) Each RRP measure helps achieve the aims of two of the 
six policy pillars of the RRF. The primary contribution is shown 
in the outer circle while the secondary contribution is shown in 
the inner circle. Each contribution represents 100% of the RRF 
funds. Therefore, the total contribution to all pillars displayed 
on this chart amounts to 200% of the RRF funds allocated to 
Bulgaria. 
Source: European Commission 

The Technical Support Instrument (TSI) helps 
Bulgaria  to  strengthen  public  administration 
and to create a better enabling environment 
for  EU  and  national  investment.  The  TSI  has 
to  design  and 
in  Bulgaria 
funded  projects 
implement growth-enhancing reforms since 2016. 
The  support  provided  in  2023  included  action  to 
create  and  implement  regulatory  mechanisms  for 
the natural gas market, and improve the country’s 
capabilities  for  risk-based  anti-money  laundering 
supervision. The TSI also helps Bulgaria to increase 
its  capacity  to  implement  specific  reforms  and 

34 

PO1 Smarter EuropePO2 Greener EuropePO3 Connected EuropePO4 Social EuropePO5 Europe closer to citizensPO8 JTFGreen transitionDigital transformationSmart, sustainable and inclusivegrowthSocial & territorial cohesionHealth & resilienceNext generation 
   
 
   
Table A4.1:  Support from EU instruments in Bulgaria 

(1) RRF implementation period is 2021-2026. 
(2) The public sector loan facility’s programming period is 2021-2025 and the amount reflects the national share in its grant 
component reserved until the end of the period.   
(3) Common agricultural policy programming periods are 2014-2022 and 2023-2027.   
(4) EMFF – European Maritime and Fisheries Fund, EMFAF – European Maritime, Fisheries and Aquaculture Fund. 
(5) Data on the Connecting Europe Facility covers transport and energy and has a cut-off date of 15 May 2024. 
(6) Data on Horizon Europe (2021-2027) has a cut-off date of 13 May 2024. 
(7) 2021-2027 data on the LIFE programme has a cut-off date of 15 May 2024. 
(8) The amount of the EU guarantee signed under the EFSI Infrastructure and Innovation Window was derived based on the 
signed amount of the operations and the average internal multiplier, as reported by the EIB (cut-off date is 31 December 2023). 
(9)The amount of the EU guarantee and of the volume of operations signed under InvestEU includes the EU compartment as well 
as the Member State compartments (cut-off date is 31 December 2023).   
(10) SURE - European instrument for temporary support to mitigate unemployment risks in an emergency. 
Source: European Commission 

investments  included  in  its  RRP  by  strengthening 
the  strategic  approach  and  innovation  in  the  civil 
service. 

Bulgaria  also  receives  funding  from  several  other 
EU  instruments,  including  those  listed  in  Table 
A4.1. 

35 

Amount 2021-2027 (EUR million)Cohesion policy9 507.8RRF grants (1)5 688.8Public sector loan facility (grant component) (2)98.3Common agricultural policy (3)5 640.0EMFF/EMFAF (4)84.9Connecting Europe Facility (5) 354.8Horizon 2020 / Horizon Europe (6) 106.0LIFE programme (7) 39.9Volume of operations (EUR million)European Fund for Strategic Investment 2015-2020 (8) 602.1InvestEU 2021-2027 (9) 334.5PeriodTotal amount available (EUR million)Disbursed amount (EUR million)SURE (10)2020-2022 971.2 971.2EU grantsAmount 2014-2020 (EUR million)7 924.3--9 800.0 251.0 215.7EU loans80.8 549.4 161.943.6EU guaranteesEU Guarantee (EUR million) 
 
  
 
ANNEX 5: RESILIENCE 

Table A5.1:  Resilience indices across dimensions for Bulgaria and the EU-27 

(1) The synthetic indices aggregate the relative resilience situation of countries across all considered indicators. For an indicator, 
each country’s relative situation in the latest available year is compared with the collection of values of that indicator for all 
Member States and all years in the reference period. 
Source: Resilience Dashboards - version spring 2024, data up to 2022 

This  Annex  uses  the  Commission’s  resilience 
dashboards (RDB) (36) to show Bulgaria’s relative 
resilience  capacities  and  vulnerabilities (37)  that 
may be of relevance for societal, economic, digital, 
and  green  transformations,  and  for  dealing  with 
future shocks and geopolitical challenges. (38) 

According  to  the  set  of  resilience  indicators 
in  the  RDB,  Bulgaria  has  overall  medium-
average  vulnerabilities  (in  line  with  the  EU 
level)  and  medium-low  capacities  (compared 
to  medium-high  at  EU  level).  The  situation 
regarding its vulnerabilities has improved while the 
capacity  side  has  not  changed  from  last  year. 
Bulgaria’s  situation 
in  the 
distribution  of  indicators:  around  40%  of  the 
vulnerability  indicators  are  medium-high  or  high, 

is  also  reflected 

(36)  https://ec.europa.eu/info/strategy/strategic-

planning/strategic-foresight/2020-strategic-foresight-
report/resilience-dashboards_en.  
Resilience is defined as the ability not only to withstand and 
cope with challenges but also to undergo transitions, in a 
sustainable, fair, and democratic manner. 2020 Strategic 
Foresight Report: Charting the course towards a more 
resilient Europe (COM(2020) 493). 

(37)  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, 
while capacities refer to enablers or abilities to cope with 
crises and structural changes and to manage transitions. 

(38)  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. 

while  over  50%  of  all  capacities  are  medium-low 
or low. 

Bulgaria  has  decreased 
its  previously 
medium-high vulnerabilities in the social and 
economic dimension to a medium level. It still 
has  the  highest  income  quintile  share  ratio  in  the 
EU  and  among  the  highest  regional  dispersion  of 
household  income.  It  also  has  an  above-average 
at-risk-of-poverty-or-social exclusion (AROPE) rate 
and  high  vulnerabilities  in  the  area  of  health (39). 
Bulgaria  also  has  relatively 
low  social  and 
economic  capacities,  due  to  its  low  government 
expenditures  on  education,  health,  and  social 
protection,  its  average  PISA  scores,  and  the  ratio 
of government investments to GDP. These factors 
threaten to exacerbate the effects of transitions in 
all areas of the social and economic dimension. 

energy 

In  the  green  dimension,  Bulgaria  has  stable 
and  relatively  low  vulnerabilities  compared 
to the EU average. Among the reasons for these 
are  Bulgaria’s  consumption  footprint  per  capita, 
the 
and 
communication technology (ICT), or the soil sealing 
index.  However, 
in  the  green 
its  capacities 
dimension  remain  below  the  EU  average,  at 
medium-low,  as  a  result  of  the  low  level  of 
energy 
per 
environmental 
productivity or organic farming.  

information 

patents 

capita, 

used 

in 

(39)  It ranks fourth highest for its antimicrobial resistance and 

highest in terms of the premature deaths due to particulate 
matter 2.5. 

36 

BGBGEU-272023 RDB2024 RDB2024 RDBHighMedium-highMediumMedium-lowLowHighMedium-highMediumMedium-lowLowCapacitiesGeopoliticalVulnerabilities0.440.510.41Capacities0.550.660.65DigitalVulnerabilities0.240.230.52Capacities0.240.330.65GreenVulnerabilities0.670.700.44Capacities0.320.390.70Social and economicVulnerabilities0.290.410.47Capacities0.220.220.67DimensionDistribution of indicators by vulnerabilities and capacitiesOverall resilienceVulnerabilities0.380.430.50Capacities0.350.370.67Vulnerabilities0%20%40%60%80%100%Vulnerabilities(57 indicators)Capacities(64 indicators) 
 
 
 
 
 
 
   
 
 
In  the  digital  dimension  of  resilience, 
its  medium-high 
Bulgaria  maintains 
vulnerabilities  and  medium-low  capacities. 
Among  its  main  challenges  are  the  limited  and 
increasing  proportion  of  employees  who  do  not 
telework, the many businesses without ICT training 
programmes,  individuals’  limited  access  to  digital 
public  services,  and  an  absence  of  cloud  services 
compared  to  the  EU  average.  As  far  as  its  digital 
capacities  are  concerned,  the  country  has  the 
lowest  digital  competence  of  adults  and  young 
people 
level  of 
cybersecurity awareness. 

in  the  EU  and  the 

lowest 

In  the  geopolitical  dimension,  Bulgaria  has 
medium vulnerabilities, comparable to the EU 
average,  and  it  has  medium-high  capacities. 
Among  its  vulnerabilities,  the  metal  footprint  per 
capita  and  its  increasing  employment  gap  (EU 
versus non-EU nationals) are relatively high, while 
on  the  capacity  side  the  proportion  of  non-EU 
citizens in total employment is particularly low. 

37 

 
 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 6: EUROPEAN GREEN DEAL 

Bulgaria’s  green  transition  needs  more 
action  in  several  areas,  including  to  specify  the 
policies  needed  to  reach  the  2030  effort  sharing 
target,  to  reduce  emissions  from  road  transport 
and  buildings,  to  manage  potential  losses  from 
climate  hazards, 
institutional 
improve 
framework for climate adaptation, and biodiversity 
and  ecosystem  protection.  This  Annex  provides  a 
snapshot  of  climate,  energy,  and  environmental 
aspects of the transition in Bulgaria (40). 

the 

4%  from  2005  levels  by  2030.  The  additional 
policies  planned  by  Bulgaria  are  projected  to 
contain  the  increase  at  2%  compared  to  2005 
levels (42).  Bulgaria  is  therefore  projected  to  fall 
short of its effort sharing target, a 10% reduction 
compared to 2005 levels, by 12 percentage points. 
This highlights the importance of a higher level of 
ambition  in  the  policies  and  measures  planned  in 
Bulgaria’s  final  updated  NECP,  due  by  30 June 
2024. 

In  its  draft  updated  national  energy  and 
climate  plan  (NECP)  Bulgaria  has  not  yet 
consistently  mapped  its  investment  needs 
and  funding  sources  to  achieve  its  2030 
climate  and  energy  targets.  It  only  provides 
investment  needs  for  a  few 
information  on 
selected  measures 
such  as  natural  gas 
infrastructure  or  energy  storage  projects.  The 
investment  needs  are  not  separated  into  public 
and  private.  Besides,  the  plan  only  occasionally 
outlines 
to 
implement  the  planned  measures,  and  there  is 
also  no  consolidated  overview  at  NECP  level.  It  is 
therefore not possible to identify potential funding 
gaps.  For  the  smooth  implementation  of  the 
policies  and measures  to reach  the  2030  targets, 
specifying  the  investment  needs  and  sources  for 
implementation  consistently  and  with  complete 
and detailed coverage is key. 

the  main  sources  of  financing 

Bulgaria’s policies and measures planned are 
insufficient  to  reach  its  2030  effort  sharing 
target (41).  Bulgaria's  2022  greenhouse  gas 
emissions  from  its  effort  sharing  sectors  are 
expected  to  come  in  at  2%  above  2005  levels. 
With  current  policies,  Bulgaria  is  projected  to  see 
emissions increase in the effort sharing sectors by 

(40)  This Annex is complemented by Annex 7 on energy transition 

and competitiveness, Annex 8 on the fair transition to 
climate neutrality, Annex 9 on resource efficiency, circularity, 
and productivity, and relevant topics in other annexes to this 
country report. 

(41)  The national greenhouse gas emission reduction target is 
laid down in Regulation (EU) 2023/857 (the Effort Sharing 
Regulation). The aim is to align the action in the sectors 
concerned with the objective to reach the EU-level economy-
wide target of greenhouse gas reductions of at least 55% 
compared to 1990 levels. The target also applies to the 
sectors outside the current EU Emissions Trading System, 
notably buildings (heating and cooling), road transport, 
agriculture, waste, and small industry (known as the effort 
sharing sectors). 

Graph A6.1: Greenhouse gas emissions from the 
effort sharing sectors in Mt CO2eq, 2005-2022 

Source: European Environment Agency 

from 

Greenhouse  gas  emissions 
road 
transport  and  buildings  are  a  significant 
concern  for  Bulgaria.  In  2022,  greenhouse  gas 
emissions  from  road  transport  increased  by  29% 
compared  to  2005  levels,  and  their  share  of  the 
effort sharing emissions rose from 31.8% in 2005 
to  44.2%.  Between  2005  and  2022,  emissions 
from  buildings  fell  by  17.6%,  well  below  the  EU 
average  of  27.6%.  Appropriate  policies  and 
measures  are  yet  to  be  specified  in  Bulgaria  to 
curb  greenhouse  gas  emissions  in  these  sectors, 
given  the  shortfall  from  its  2030  effort  sharing 
target.  To  prepare  for  the  road  transport  and 
building  sectors to  be  integrated  in  the  emissions 
trading  system  in  2027,  measures  supporting 
vulnerable consumers appear most pertinent.  

(42)  The effort sharing emissions for 2022 are based on 
approximated inventory data. The final data will be 
established in 2027 after a comprehensive review. 
Projections of effort sharing emissions ‘with existing 
measures’ (WEM) and ‘with additional measures’ (WAM) are 
based on the latest data reported by 15 March 2023 under 
Article 18 of Regulation 2018/1999 (the Governance 
Regulation). 

38 

05101520253020052022MtCO2eWasteSmall industryAgricultureBuildings (under ESR)Domestic transport (excl. aviation) 
 
 
 
   
 
 
 
Bulgaria’s  renewable  energy  contribution  set 
in  its  draft  updated  national  energy  and  climate 
plan (NECP), 34.1 % by 2030, is slightly above the 
II  of  the 
required  contribution  under  Annex 
Regulation (43). 
Governance 
Furthermore, 
Bulgaria’s  national  contributions  for  energy 
efficiency amount to 8.42 Mtoe (-10.7%) for final 
energy  consumption  and  12.4  Mtoe  (-11.6%)  for 
primary  energy  consumption.  These  contributions 
are  set  at  an  energy  consumption  level  which  is 
lower,  and  thus  more  ambitious,  than  the  results 
of the EED recast Annex I formula.  

is  high 

In  Bulgaria,  much  remains  to  be  done  to 
contain greenhouse gas emissions, especially 
for  passenger  transport  (see  above) (44).  The 
in  Bulgaria, 
use  of  passenger  cars 
compared to buses and coaches. At just 0.1%, the 
share of battery electric vehicles in passenger cars 
is  still  very  low,  and  in  2023,  the  number  of 
publicly accessible charging points in Bulgaria was 
just  above  1 400,  or  one charging point  for  every 
three  e-vehicles  (EU  average  of  1:10).  At  24%  of 
inland  freight  transport,  Bulgaria  has  one  of  the 
highest  shares  of  freight  transport  by  inland 
waterway 
in  the  EU.  74%  of  railways  are 
electrified, a relatively high share. 

Recent trends indicate that carbon removals 
from the atmosphere are falling in Bulgaria’s 
land  use,  land-use  change  and  forestry 
(LULUCF)  sector.  To  reach  the  2030  target  for 
LULUCF, 
of 
1 163 kt CO2eq are  needed (45).  Bulgaria’s  forests 
achieve a major share of its net carbon removals 
through land use. 

additional 

removals 

Bulgaria's  challenges  regarding  the  climate 
adaptation  are  the  high  climate  protection 
gap (46) and institutional weaknesses. Bulgaria 

(43)  The EU target set out in the revised Renewable Energy    

Directive is to have 42.5% of gross final energy consumption 
coming from renewable energy sources by 2030, with the 
aspiration to reach 45%. The formula in Annex I to Directive 
(EU) 2023/1791 sets the indicative national contribution for 
Bulgaria at 13.7 Mtoe for primary energy consumption and 
8.8 Mtoe for final energy consumption. 

(44)  Unless otherwise indicated, data in this section refer to 
2021. See European Commission, 2023, EU transport in 
figures, transport.ec.europa.eu. 

(45)  National LULUCF targets of the Member States in line with 

Regulation (EU) 2023/839. 

is  vulnerable  to  extreme  climate  events  such  as 
heatwaves  and  heavy  rainfall.  From  1980-2019, 
only  5%  of  losses  caused  by  climate-related 
events  were  insured.  Insurance  coverage  is  below 
50%  for  all  climate-related  risks.  Bulgaria’s 
vulnerability to floods is at medium levels, due to 
intense  and  frequent  extreme  weather 
more 
events.  Bulgaria 
coordination  among 
authorities and has not yet aligned  its monitoring 
and modelling to current measures and challenges. 
It has limited administrative capacity for action on 
little  progress  on 
adaptation, 
lacks  subnational 
international  networks. 
planning and reporting to align planning tools and 
help  coordinate  mechanisms  to  ensure  that 
subnational  policies  are  regularly  reviewed  and 
updated (47). 

it  has  made 
It 

lacks 

that 

Bulgaria  has  scope  to  improve  biodiversity 
and nature protection and restoration. At the 
end of 2021, it ranked 3rd in the EU for the share 
of protected land,  with 35% of its land protected. 
Bulgaria  continues  the  process  of  identifying  and 
developing site-specific conservation objectives. In 
2023,  the  Law  on  Biodiversity  was  amended  to 
establish a new approach for management of the 
Natura  2000  network.  The  amendments  however 
envisage 
conservation 
measures  are  still  to  be  put  in  place  and  their 
implementation  is  foreseen  further  in  the  future. 
According to these amendments, the management 
plans with measures for the protected areas are to 
be adopted four years after the entry into force of 
the  provisions  –  i.e.  by  October  2027.  Moreover, 
while  38%  of  species  were  reported  to  be  in  a 
favourable status against the EU average of 28%, 
only  12%  of  habitats  were  reported  to  be  in 
favourable status compared to the EU average of 
15%.  

the  necessary 

Issues  with  water  resource  management 
persist.  The  water  exploitation  index  plus  (WEI+), 
which  tracks  water  use  against  renewable  water 
resources,  measured  1.6%  in  2019  (EU  average 
3.6%).  The  wo9rst  seasonal  water  scarcity 
conditions  were  recorded  at  2.5%  in  Q1  of  2019. 
In  2020,  Bulgaria’s  economy  generated  EUR 10 
per  cubic  meter  of  water  abstracted,  the  lowest 
figure  in  the  EU.  In  2020,  Bulgaria  abstracted 
11.54%  of  water  for  agriculture  (EU  average: 
32.12%). Based on reporting in the 2nd river basin 

(46)  On the climate protection gap, see the annotations to Table 

(47)  See the Commission’s 2023 recommendation on Bulgaria’s 

A6.1. 

progress on climate adaptation.  

39 

 
 
 
 
food  waste  per  person  than  the  EU  average,  in 
2021  producing  103  kg  against  the  average  131 
kg  per  person.  Most  waste  was  generated  during 
manufacture of food products and beverages and 
household  use.  Bulgaria  has 
legally  binding 
national  compost  quality  standards  and  a  quality 
management  system  for  compost  produced  from 
separately  collected  biowaste.  Nevertheless,  the 
composting and digestion rate of municipal waste 
fell  from  43  kg  per  person  in  2015  to  10  kg  per 
person in 2021 to reach only 2% of all municipal 
waste. The low composting and digestion rates are 
considered key reasons for low biowaste recycling 
rates. 

There  is  scope  to  accelerate  the  uptake  of 
sustainable agricultural practices. The country 
has one of the lowest shares of organic farming in 
the EU, at 2.3% of total utilised agricultural area in 
2020 against the EU average of 9.1% and the EU 
target  of  25%  by  2030.  The  share  of  organic 
farming has fallen since 2016 when it was 3.2%. 
Bulgaria’s  livestock  density  index  barely  changed 
between 2010 and 2020 and is well below the EU 
average  at  0.75%.  The  application  of  organic 
nitrogen  fertilizers (incl.  urea),  followed by  animal 
manure,  applied  to  soil,  and  diary  and  non-dairy 
cattle  manure  management,  put  the  highest 
burden  on  the  environment  in  terms  of  ammonia 
emissions into the air. The agricultural sector was 
responsible  for  generating  88.7%  of  all  ammonia 
emissions against the EU average of 90.7%. 

Bulgaria  would  benefit  from  investing  more 
in  biodiversity  and  ecosystems,  water 
management,  pollution  prevention  and 
control,  and  the  circular  economy  (including 
waste  management).  Over  the  2014-2020 
period,  the  environmental  investment  gap  was 
estimated  at  EUR  1.9  billion  per  year.  The  gap  is 
estimated  to  be  marginally  increasing  over  the 
2021-2027  period  and  approaching  EUR  2  billion 
per year. There remains an opportunity to increase 
funding for biodiversity and ecosystems (a gap of 
EUR 970  million),  water  management  (EUR 436 
million) as well as pollution prevention and control 
(EUR 411  million).  Bulgaria  would  also  benefit 
from  investing  in  circular  economy,  improving 
separate  waste  collection,  and  diverting  waste 
from landfilling and incineration (EUR 147 million). 

management  plan,  46%  of  all  surface  water 
bodies  achieved  a  good  ecological  status  and  3% 
failed  to  achieve  a  good  chemical  status (48). 
Bulgaria  is  one  of  the  few  EU  countries  that  has 
yet to adopt its 3rd river basin management plan. 
in  a  good 
Its  marine  waters  are  not  yet 
environmental status as tracked by the descriptors 
used  in  the  Marine  Strategy  Framework  Directive. 
It  has  not  yet  communicated  its  programme  of 
measures  under  the  Directive,  the  programme 
being overdue since May 2022. 

Groundwater  nitrate  pollution  is  a  source  of 
concern. The latest figures for the gross nitrogen 
balance on agricultural land in Bulgaria indicate an 
average surplus of 28.8kg of nitrogen per hectare 
in  2019.  The  content  of  nitrates  in  groundwater 
exceeds  the  EU  average  at  30.5  versus  20.5  mg 
nitrates/l.  Over  the  reporting  period  from  2016-
2019,  14.5%  of  groundwater  monitoring  stations 
recorded  levels  above  the  maximum  50  mg 
nitrates/l.  By  contrast,  the  gross  phosphorus 
balance was -5.4 kg/ha in 2019. In 2020, 2.6% of 
monitoring  sites  were  reported  to  have  pesticide 
levels  exceeding  the  thresholds  set  by  the 
Groundwater Directive. 

Graph A6.2: Changes in livestock density and 
organic farming 

Livestock unit (LSU)/ha of UAA: it measures the stock of 
animals (cattle, sheep, goats, equidae, pigs, poultry and 
rabbits) converted in LSUs per hectare of UAA. 
Source: Eurostat 

The  agri-food  system  has  yet  to  shift  to  a 
more  effective  and  efficient  methods  of 
managing  food  waste.  Bulgaria  produces  less 

(48)  The chemical status of 64% of surface water bodies was 

unknown. 

40 

012024681020162020% LSU per hectare% of total utilised agricultural areaLivestock density index Bulgaria (% LSU per ha)Livestock density index EU-27 (% LSU per ha)Organic farming Bulgaria (% of total utilised agricultural area)Organic farming EU-27 (% of total utilised agricultural area) 
       
 
 
Graph A6.3: Environmental investment gap, annual 
average 

The numbers are computed by the European Commission 
based on the latest internal reports, Eurostat, EIB and national 
data sources. 
Source: European Commission 

41 

460220651 18841143614797002004006008001 0001 200Pollution prevention &controlWater managementCircular economy andwasteBiodiversity andecosystemsmillion EUR2014-20202021-2027 
       
 
Table A6.1:  Indicators tracking progress on the European Green Deal from a macroeconomic perspective 

Sources:  (1)  Member  States’  emission  data  for  2019  and  2020  are  in  global  warming  potential  (GWP)  values  from  the  4th 
Assessment Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC). Member States’ 2005 base year emissions 
under  Regulation  (EU)  2018/842,  emissions  data  for  2021  and  2022,  and  2030  projections  are  in  GWP  values  from  the  5th 
Assessment Report (AR5) of the IPCC. 2021 data are based on the final inventory reports, 2022 data are based on approximated 
inventory reports and European Environmental Agency’s calculation of effort sharing emissions. The final data for 2021 and 2022 
will  be  established  after  a  comprehensive  review  in  2027.  The  2030  target  is  in  percentage  change  of  the  2005  base  year 
emissions. Distance to target is the gap between the 2030 target and projected effort sharing emissions with existing measures 
(WEM) and with additional measures (WAM), in percentage change from the 2005 base year emissions. The measures included 
for  the  2030  emission  projections  reflect  the  state  of  play  as  reported  in  Member  States'  draft  updated  national  energy  and 
climate plans or, if unavailable, as reported by 15 March 2023 as per Regulation 2018/1999. (2) Net removals are expressed in 
negative figures, net emissions in positive figures. Reported data are from the 2024 greenhouse gas inventory submission. 2030 
value  of  net  greenhouse  gas  removals  as  in  Regulation  (EU)  2023/839  –  Annex  IIa.  (3)  The  2030  national  objectives  for 
renewable  energy  and  energy  efficiency  are  indicative  national  contributions,  in  line  with  Regulation  (EU)  2018/1999  (the 
Governance  Regulation),  the  EU-level  2030  renewable  energy  target  set  out  in  Directive  EU/2018/2001  amended  by  Directive 
EU/2023/2413 (the revised Renewable Energy Directive) – 42.5% of gross final energy consumption with the aspiration to reach 
45% –, and the formula in Annex I to Directive (EU) 2023/1791 (the Energy Efficiency Directive). (4) Passenger battery electric 
vehicles (BEV) and fuel cell electric vehicles  (FCEV). (5) The climate protection gap refers to the share of non-insured economic 
losses caused by climate-related disasters, based on modelling of the risk from floods, wildfires, windstorms, and the insurance 
penetration rate. Scale: 0 (no protection gap) –4 (very high gap) (European Insurance and Occupational Pensions Authority, 2022). 
(6) Total water consumption in renewable freshwater resources available for a territory and period. (7) Material extractions  for 
consumption and investment. (8) Years of potential life lost through premature death due to exposure to particulate matter with a 
diameter  of  less  than  2.5  micrometres.  (9)  Share  of  habitats  in  good  conservation  status  according  to  the  records  submitted 
under  Art.  17  of  the  Habitats  Directive  (Directive  92/43/EEC)  for  2013-2018.  (10)  Multi-species  index  measuring  changes  in 
population abundances of farmland bird species. (11) Source: annex 12 of the Commission’s proposal for a soil monitoring law, 
SWD (2023) 417 final. (12) Estimates of organic carbon content in arable land. 

42 

Target200520192020202120222030WEMWAMProgress to climate and energy policy targetsGreenhouse gas emission reductions in effort sharing sectors (1)Mt CO2eq, %, pp22 326.417%16%12%2%-10%-14-12Net greenhouse gas removals from LULUCF (2)Kt CO2eq-16 295 -9 586 -9 605-9 579-9 540-9 718n/an/aShare of energy from renewable sources (1) (3)%9%22%23%19%19%33%--Energy efficiency: primary energy consumption (3)Mtoe19.218.017.118.618.913.7Energy efficiency: final energy consumption (3)Mtoe10.19.99.510.29.98.423Projected20182019202020212022202120222030Green transition: mobility         Greenhouse gas emissions: road transportMt CO2e---9.910.1769.0786.69.7Share of zero-emission vehicles in new registrations (4)% 0.50.61.22.23.6912.1n/aNumber of publicly accessible AC/DC charging points --1616141032299178446956n/aShare of electrified railways%71.2%71.2%71.3%74.4%-56.1%-n/aGreen transition: buildings         Greenhouse gas emissions: buildingsMt CO2e---2.12.1537.0486.71.5Final energy consumption in buildings2015=100105.79%104.85%105.40%113.17%106.39%104.00%97.21% Climate adaptation         Climate protection gap (5)score 1-4--2.02.01.81.51.5n/a20182019202020212022202020212022State of the environmentWater | Water exploitation index (WEI+) (1) (6)% of renewable freshwater1.41.6---3.6--Circular economy | Material footprint (7)tonnes per person19.420.221.721.223.314.214.814.9Pollution | Years of life lost due to air pollution by PM2.5 (8)per 100.000 inhabitants1 8361 5241 5541 443-545584-Biodiversity | Habitats in good conservation status (9)%12.214.7                       Common farmland bird index (10)2000=100-----78--Green transition: agri-food sectorOrganic farming% of total utilised agricultural area2.562.342.31.71-9.1--Nitrates in groundwatermg NO3/litre28.6328.2527.9--20.42--Food waste per capitaKg per capita108103-130131-Share of soil in poor health (11)%4341Soil organic matter in agricultural land (12)Mt per ha230----7 904--DistanceEU-27 
 
     
 
ANNEX 7: ENERGY TRANSITION AND COMPETITIVENESS 

This  Annex (49)  sets  out  Bulgaria’s  progress 
and  challenges  in  accelerating  the  net-zero 
energy  transition  while  bolstering  the  EU’s 
competitiveness 
energy 
sector (50). It considers measures and targets put 
forward in the draft updated National Energy and 
Climate Plans (NECP) for 2030. 

clean 

the 

in 

displays 

on 
progress 
good 
Bulgaria 
diversification  of  energy 
sources  but 
continued reliance on fossil fuels undermines 
the  country's  competitiveness.  Efforts 
to 
accelerate  the  deployment  of  renewable  energy 
sources  are  yet  to  bear  fruit  and  the  potential  of 
energy efficiency remains untapped. 

While  energy  prices  in  Bulgaria  smoothened 
over  2023  after  a  sharp  peak  during  the 
crisis,  and  remained  below  the  EU  average, 
they  did  not  fall  back  to  their  historic 
average,  posing  challenges  for  the  country’s 
competitiveness.  Gas  prices  for  households  in 
the  second  semester  of  2023  were  20%  lower 
than  the  beginning  of  the  year  and  remained 
significantly lower (38%) than the EU average. For 
industry, gas prices were 30% lower at the end of 
2023  compared  to  the  first  half  of  the  year, 
the  EU  average  by  33%. 
remaining  below 
Electricity cost households 5% more in the second 
semester  of  2023  compared  to  the  beginning  of 
the  year.  For  industry,  electricity  prices  in  the 
second  half  of  2023  were  9%  lower  than  in  the 
first  semester  of  2023  and  32%  below  the  EU 
average.  

Bulgaria  decreased  the  use  of  coal  in  its 
electricity mix in 2023. (51) In 2023 coal as part 
of  the  electricity  mix  stood  at  11.56  TWh  and 
28.91% share, whereas it was 21.79 TWh (43.39% 
of  the  mix)  in  2022  and  17.09  TWh  (36.19%  of 
the mix) in 2021.  

For  phase  out  of  coal,  Bulgaria  outlined 
certain  commitments  in  the  Territorial  Just 

(49)  It is complemented by Annex 6 as the European Green Deal 

focuses on the clean energy transition and by Annex 8 on the 
action taken to protect the most vulnerable groups, 
complementing ongoing efforts under the European Green 
Deal, REPowerEU and European Green Deal Industrial Plan. 

Transition  Plans.  However,  the  draft  updated 
NECP  and  the  regional  commitments,  including 
intermediary  transition  steps  for  2026  and  2030, 
do  not  seem  to  be  aligned  towards  a  coal  phase 
out deadline by 2038 (52). 

In 2023 regulated electricity prices protected 
Bulgarian  households  from  the  impact  of 
price  increases.  Energy  support  measures  were 
not  targeted:  compensation  was  given  to  all  non-
household  consumers,  regardless  of  consumption, 
for  electricity  costs  above  EUR  102/MWh. 
Following its recovery and resilience plan, Bulgaria 
adopted  a  new  Energy  Act  which  is  expected  to 
liberalise  its  wholesale  electricity  market  (as  of 
July  2025  following  a  postponement  from  July 
2024) and retail market (as of January 2026). (53) 

Graph A7.1: Bulgaria's energy retail prices for 
households and industry & service 

(1) For industry, consumption bands are I3 for gas and IC for 
electricity, which refer to medium-sized consumers and 
provide an insight into affordability 
(2) For households, the consumption bands are D2 for gas 
and DC for electricity 
(3) Industry prices are shown without VAT and other 
recoverable taxes/levies/fees as non-household consumers 
are usually able to recover VAT and some other taxes 
Source: Eurostat 

consumers 

In  relative  terms,  electricity  prices  for  non-
household 
increased 
significantly compared to the US, Japan, and 
to  a  lesser  extent,  the  UK.  Although  there  has 
been  a  slight  decline  since  the  first  half  of  2022, 

have 

(50)  In line with the Green Deal Industrial Plan and the Net-Zero 

(52)  See the Commission’s assessment of the draft updated 

Industry Act. 

National Energy and Climate Plan  

(51)  Ember data for 2021-2023. 

(53)  P. 34, draft updated National Energy and Climate Plan  

43 

0.000.050.100.150.200.250.300.35€/KWhGas (industry & service) - BGGas (industry & service) - EUGas (households) - BGGas (households) - EUElectricity (industry & service) - BGElectricity (industry & service) - EUElectricity (households) - BGElectricity (households) - EU 
 
 
   
 
 
 
Bulgaria’s  electricity  prices  have  persisted  above 
those  of  the  US  and  Japan.  This  could  potentially 
affect the international competitiveness of energy-
intensive industries in the country. 

Graph A7.2: Trends in electricity prices for non-
household consumers (EU and foreign partners) 

(1) For Eurostat data (EU and BG), the band consumption is ID 
referring to large-sized consumers with an annual 
consumption of between 2 000 MWh and 20 000 MWh, such 
as in electricity intensive manufacturing sectors, and gives an 
insight into international competitiveness 
(2) JP = Japan 
Source: Eurostat, IEA 

Interest 

In  2022-2023  Bulgaria  showed  strong 
progress  in  diversifying  away  from  Russian 
including  by  completing  the  Project  of 
gas, 
Common 
(PCI)  Greece-Bulgaria  gas 
interconnector (ICGB). Its further expansion from 3 
to  5  bcm/year  will  further  increase  security  of 
supply for the region. Bulgaria managed to reduce 
its  gas  demand  between  August  2022  and 
December  2023  by  17%  in  comparison  to  the 
average  of  the  five  previous  years.  Bulgaria 
operates  one  underground  storage  facility 
in 
Chiren  with  a  total  capacity  of  0.55  bcm, 
representing  around  20%  of  its  total  yearly 
demand  and  currently  under  expansion  as  a  PCI. 
Bulgaria  fulfilled  its  gas  storage  obligations  last 
winter, reaching 97.6% by 1 November 2023, and 
ended  the  winter  season  with  a  storage  filled  at 
44.22%  by  1  April  2024.  In  2023  the  Bulgaria-
Serbia gas interconnector PCI was inaugurated and 
is  expected  to  become  operational  in  2024.  The 
largest  gas  supplier,  Bulgargaz,  signed  a  contract 
with  Türkiye's  BOTAS  and  the  Bulgarian  TSO 
Bulgartransgaz.  This  was 
followed  by  an 
interconnection agreement in early 2024 between 
Bulgartransgaz and BOTAS. 

Electricity  production  in  Bulgaria  amounted 
to 50 TWh (54) in 2022, making the country a 
net  exporter 
(around  12  TWh).  Bulgaria’s 
Kozloduy  nuclear  power  plant  operates  two 
WWER-1000  reactors,  which  contribute  close  to 
one-third of the national electricity generated. The 
plant  signed  diversification  agreements  with 
Westinghouse  and  Framatome  for  non-Russian 
nuclear fuel. The government announced the start 
of work on two new reactors at the same facility, 
the first of which is planned for 2033. 

Total  renewable  energy  capacity  in  Bulgaria 
in  2023  stood  at  6215  MW  (23%  increase 
compared to 2022). (55) The total wind capacity in 
Bulgaria  for  2023  was  702  MW  (unchanged 
compared  to  2022),  all  onshore.  The  total  solar 
installed  capacity  in  2023  was  2937  MW,  69% 
increase compared to 2022 and all due to PVs.  

Graph A7.3: Bulgaria's installed renewable 
capacity (left) and electricity generation mix 
(right) 

(1) "Other" includes renewable municipal waste, solid biofuels, 
liquid biofuels and biogas. 
Source: IRENA, Ember 

In  2022,  the  self-consumption  rate 
in 
Bulgaria  was  rather  low  in  the  residential 
sector (27%) and high in the industrial (70%) 
and  utility  (100%)  sectors.  Smaller  scale 
prosumers  are 
indirectly  subsidised  by  being 
excluded  from  the  obligation  to  pay  an  injection 
tariff,  which  is  applied  to  all  producers  connected 
to the transmission level. 

The  revision  of  Bulgaria’s  Renewable  Energy 
Act  in  2023  takes  steps  to  transpose  the 
Renewable  Energy  Directive  and  accelerate 
the deployment of renewables. It envisions the 

(54)  Source: Enerdata Global Energy Research – Bulgaria 

(55)  IRENA report 2024 

44 

050100150200250Index ( 2018 S2 = 100)JPUKUSBGEU 
  
 
 
designation  of  priority  areas  for  wind  energy 
(onshore  and  offshore),  where 
development 
projects  will  benefit  from  accelerated  permitting. 
The  revision  introduces  definitions  for  renewable 
energy  communities  and  renewable  energy  self-
consumers. It simplifies the permitting process for 
renewables  installations  for  own  use  of  up  to  1 
MW, and renewable energy installations of up to 5 
MW located on existing buildings connected to the 
grid.  Finally,  the  revision  introduced  a  legal  basis 
for  one-stop-shops  for  renewables.  In  2024  the 
national  regulatory  authority  adopted  a  new 
ordinance  for  connection  to  the  grid  of  electricity 
sites, 
renewables  and  storage,  further 
facilitating  their  deployment.  Bulgaria’s  relatively 
high  share  of  renewables  in  heating  and  cooling 
(31.67%  in  2022)  is  due  to  biomass  use,  which 
supplies half of the population. 

incl. 

Bulgaria has not adopted measures to reduce 
energy  import  dependency  by  facilitating 
biomethane  production  and  use.  The  country’s 
biogas  production  amounts  to  0.07  BCM  (50.12 
ktoe) (2022). Bulgaria does not use biomethane in 
the transport sector (2021) or for injection into the 
natural  gas  grid (56).  It  is  estimated  that  Bulgaria 
can 
replace  about  21%  of  natural  gas 
consumption with biomethane by 2030. (57), (58) 

Despite  strong  electricity 
interconnection 
with  its  neighbours,  including  a  new  400  kV 
line  with  Greece  (PCI  Maritsa  East-Nea 
Santa),  Bulgaria  needs  to 
its 
transmission  and  distribution  grids.  In  2023 
requests to connect renewable sources to the grid 
reached  40 000  MW.  To  free  grid  capacity, 
Bulgaria  introduced  a  ~25 000  EUR  reservation 
charge for each MW of planned projects.  

improve 

As  part  of  its  recovery  and  resilience  plan, 
Bulgaria will develop an additional 1 200 MW 
of  interconnection  capacity  with  Romania 
and  Greece  by  2025  and  will  carry  out 
investment  to  facilitate  the  integration  of 
new  renewable  sources  with  4  500 MW  of 
capacity. Bulgaria received EUR 197 million under 
its 
the  EU  Modernisation  Fund 

to  upgrade 

(56)  Draft updated National Energy and Climate Plan 

(57)  https://energy.ec.europa.eu/publications/2023-biomethane-

country-fiches_en  

(58)  https://energy.ec.europa.eu/system/files/2023-

09/Biomethane_fiche_PT_web.pdf 

distribution  grids  and  accelerate  the  deployment 
of  smart  meters.  The  Chaira  pump  hydro  storage 
plant has a capacity of about 800 MW but has not 
been online since 2022, following an outage. 

constitutes 
empowerment 
Consumer 
untapped  potential,  as  a  significant  portion 
of  consumers  are  on  fixed  price  contracts 
due to regulated prices. The regulated segment 
comprises  40%  of 
the  Bulgarian  energy 
market. (59) Switching rates for electricity stand at 
25%, and for gas at 15%.  

Energy  efficiency  gains  in  Bulgaria  slowed 
down  despite  untapped  potential.  In  2022, 
Bulgaria had a primary energy consumption (PEC) 
of  18.9  Mtoe,  a  2%  increase  compared  to  2021, 
and  a  6.2%  increase  compared  to  2012.  It  had  a 
final  energy  consumption  (FEC)  of  9.9  Mtoe,  a 
2.7%  decrease  compared  to  2021,  and  a  7.6% 
increase  compared  to  2012.  In  2023,  the  highest 
results  came  from  the  residential  sector,  which 
decreased  FEC  by  11%,  while  the  lowest  came 
from transport which increased its FEC by 2.5%.  

Bulgaria  should  take  measures  to  reach  its 
2030 target for reducing energy consumption 
in  buildings.  Heating  and  cooling (60)  represent 
the highest share of FEC in residential buildings, at 
about  79% (61),  with  renewables  supplying  about 
32% (62)  of  energy  used  in  2022  for  heating  and 
cooling. Between 2021 and 2030 Bulgaria plans to 
renovate  about  8%  of  the  total  floor  space  of 
buildings and save about 2.9 TWh and around 1.3 
Mt of CO2 emissions. 

Bulgaria  missed  the  energy  savings  required 
by  2020  under 
the  Energy  Efficiency 
Directive by 8%. For the new period 2021-2030, 
Bulgaria opted for a mix of seven policy measures, 
including  an  energy  efficiency  obligation  scheme, 
similar  to  2014-2020.  Bulgaria  notified  the 
Commission of two energy saving measures under 

(59)  P.70, Draft updated National Energy and Climate Plan  

(60)  Space heating and cooling and domestic hot water 

(61)  Eurostat, 2024. 

https://data.europa.eu/data/datasets/uvygjkxev6pywqwbgmg
wyg?locale=en  

(62)  Ministry of Energy, Bulgaria, 2022, A comprehensive 

assessment of the potential for high-efficiency cogeneration 
and for effective district heating and cooling systems in 
Bulgaria https://energy.ec.europa.eu/system/files/2022-
01/BG%20CA%202020%20en.pdf  

45 

 
 
 
Bulgaria  has  a  track  record  of  exporting 
batteries  and  shows  potential  in  this  sector. 
Two  lead-acid  battery  manufacturing  plants  and 
one recycling facility (38 400 t/y) are in operation 
under  a  Bulgarian  battery  producer.  The  company 
operating them has unveiled plans to establish a 1 
GW bipolar lead-acid manufacturing plant.  

A Belgian battery producer has expressed an 
interest  in  developing  a  lithium-ion  battery 
manufacturing  facility  (10  GW/y),  a  R&D 
center  and  a  recycling  plant  (50  000  t/y)  in 
Bulgaria.  And  a  Bulgarian-German  joint-venture 
plans  to  create  a  Tier-1  PV  panel  manufacturing 
plant  with  an  output  capacity  of  1  GW.  Bulgaria 
also has a 10-20 MW manufacturing capacity for 
alkaline electrolysers. 

its  recovery  and  resilience  plan  (starting  year 
2023) (63). New annual savings for 2021 are lower 
than needed to achieve the 2030 targets.  

The  most  common  financing  schemes  for 
energy  efficiency  are  grants,  followed  by 
debt  and  equity  financing.  Most  measures 
target  the  public  or  building  sectors,  with  a 
balance across businesses, households and mixed. 
Less  than  7%  of  EU  cohesion  policy  funds 
allocated  to  Bulgaria  cover  energy  efficiency 
investment. 

The  share  of  heat  pumps  in  heating  and 
cooling is 3%, compared to 37% for heating 
boilers  (incl.  biomass  boilers) (64).  In  H1  2023, 
the ratio of residential electricity/natural gas prices 
ratio was 1.27, very favourable for the deployment 
of  efficient  heat  pumps,  while  the  non-residential 
electricity/natural gas price ratio was 2.45, slightly 
favourable  to  the  deployment  of  efficient  heat 
pumps (65) (66). 

A  low  level  of  market  surveillance  activities 
on products covered by ecodesign and energy 
labelling  creates  concerns  about  compliance 
levels. 

its 

Europe 

increase 

South-Eastern 

To  accelerate  the  region’s  energy  transition 
and 
resilience,  Bulgaria 
undertook  commitments  under  the  Central 
energy 
and 
connectivity  (CESEC)  forum.    Bulgaria  plans  to 
establish  a  Regional  Renewable  Hydrogen  Cluster 
together  with  Greece  and  Romania (67).  The 
development of a CCS facility in South Kavala and 
the  construction  of  a  hydrogen  pipeline  between 
Greece  and  Bulgaria  are  labelled  as  a  Projects  of 
Common Interest.    

(63)  2023 national energy and climate progress report (NECPR) 

(64)  Ministry of Energy, Bulgaria, 2022, A comprehensive 

assessment of the potential for high-efficiency cogeneration 
and for effective district heating and cooling systems in 
Bulgaria https://energy.ec.europa.eu/system/files/2022-
01/BG%20CA%202020%20en.pdf 

(65)  Eurostat, 2023 household gas prices: 

https://ec.europa.eu/eurostat/databrowser/view/nrg_pc_202/d
efault/table?lang=en Non-residential gas 
prices:  https://ec.europa.eu/eurostat/databrowser/view/nrg_p
c_203/default/table?lang=en  

(66)  EHPA, 2023.  

(67)  MoU, 19.01.2024 

46 

 
 
Table A7.1:  Key Energy Indicators 

(1) The ranking of the main suppliers is based on the latest available figures (for 2022) 
(2) Venture Capital investment includes Venture Capital deals (all stages), Small M&A deals and Private Equity (PE) growth deals 
(for companies that have previously been part of the portfolio of a VC investment firm or have received Angel or Seed funding). 
Source: Eurostat, Gas Infrastructure Europe, JRC elaboration based on PitchBook data (03/2024), JRC SETIS (2024) 

47 

20192020202120222019202020212022Import Dependency [%] 38.5%38.2%36.2%37.1%60.5%57.5%55.5%62.5%of Solid fossil fuels 7.5%9.6%10.5%11.6%43.3%35.8%37.3%45.8%of Oil and petroleum products 102.6%97.5%97.2%106.1%96.7%96.8%91.7%97.7%of Natural Gas 100.4%96.4%96.2%106.1%89.7%83.6%83.6%97.6%Dependency from Russian Fossil Fuels [%]of Natural Gas 79.4%75.2%79.8%41.4%39.7%41.3%41.1%21.0%of Crude Oil62.7%2.0%2.4%1.4%28.8%26.7%26.4%19.5%of Hard Coal99.8%84.5%87.9%35.7%43.5%49.1%47.4%21.5%2016201720182019202020212022Gas Consumption (in bcm)3.2                   3.3                   3.1                   2.9                 2.9                 3.3                 2.7                 Gas Consumption year-on-year change [%]2.7%3.4%-5.5%-7.6%1.3%14.3%-18.0%Gas Imports - by type (in bcm)3.1                   3.3                   3.1                   2.9                 2.9                 3.3                 2.9                 Gas imports - pipeline3.1                   3.3                   3.1                   2.9                 2.9                 3.3                 2.5                 Gas imports - LNG0.00.00.00.00.00.00.4                 Gas Imports - by main source supplier (in bcm) (1)Russia3.1                   3.3                   3.1                   2.3                 2.2                 2.6                 1.2                 Azerbaijan-                   -                   -                   -                 0.0                 0.3                 0.6                 Greece-                   -                   0.0                   0.6                 0.6                 0.4                 0.8                 United States-                   -                   -                   -                 -                 -                 0.4                 20192020202120222023LNG Terminals - storage capacity m3 LNGNumber of LNG Terminals00000LNG Storage capacity (m3 LNG)00000Underground StorageNumber of storage facilities1                      1                      1                      1                    1                    Technical Capacity (bcm)0.6                   0.6                   0.6                   0.5                 0.5                 20162017201820192020202120222023Gross Electricity Production (GWh) (2)45,279            45,613            46,838            44,277          40,754          47,568          50,499          -              Combustible Fuels22,088         23,633         22,606         21,573       17,827       23,079       26,583       -              Nuclear15,776         15,545         16,125         16,555       16,626       16,487       16,462       -              Hydro4,568           3,493           5,423           3,383         3,320         5,067         3,833         -              Wind1,425           1,504           1,318           1,317         1,477         1,434         1,499         -              Solar1,388           1,403           1,343           1,417         1,469         1,467         2,094         -              Geothermal0000000-              Other Sources34                 34                 22                 31               36               35               28               -              Gross Electricity Production [%]Combustible Fuels48.8%51.8%48.3%48.7%43.7%48.5%52.6%-              Nuclear34.8%34.1%34.4%37.4%40.8%34.7%32.6%-              Hydro10.1%7.7%11.6%7.6%8.1%10.7%7.6%-              Wind3.1%3.3%2.8%3.0%3.6%3.0%3.0%-              Solar3.1%3.1%2.9%3.2%3.6%3.1%4.1%-              Geothermal0.0%0.0%0.0%0.0%0.0%0.0%0.0%-              Other Sources0.1%0.1%0.0%0.1%0.1%0.1%0.1%-              Net Imports of Electricity (GWh)6,372-               5,480-               7,807-               5,810-             3,408-             8,778-             12,195-          -              As a % of electricity available for final consumption -21.1%-17.4%-24.9%-18.7%-11.2%-27.7%-39.1%-              Electricity Interconnection [%]-                   7.1%9.3%9.2%11.3%14.7%23.5%21.2%Share of renewable energy consumption - by sector [%]Electricity19.1%19.0%22.4%23.5%23.6%21.4%20.2%-              Heating/cooling30.0%29.9%33.3%35.4%37.2%30.0%31.7%-              Transport7.2%7.3%8.1%7.9%9.1%7.6%7.7%-              Overall18.8%18.7%20.6%21.5%23.3%19.4%19.1%-              20192020202120222023VC investments in climate tech start-ups and scale-ups (EUR Mln)-               0.03             -               18.83             2.01               as a % of total VC investment (3) in Bulgaria start-ups and scale-ups-               0.1%0.0%30.5%2.5%Research & Innovation spending in Energy Union R&i prioritesPublic R&I (EUR mln)-               -               -               -              -              Public R&I (% GDP)-               -               -               -              -              Private R&I (EUR mln)2.7                2.8                -               -              -              Private R&I (% GDP)0.004%0.005%-               -              -              ELECTRICITY/ENERGYCLEAN ENERGYBulgariaEUENERGY DEPENDNCEDIVERSIFICATION OF GAS SUPPLIES 
 
  
 
ANNEX 8: FAIR TRANSITION TO CLIMATE NEUTRALITY 

implement 

This  Annex  monitors  Bulgaria’s  progress  in 
ensuring  a  fair  transition  towards  climate 
neutrality  and  environmental  sustainability, 
particularly  for  workers  and  households  in 
vulnerable  situations.  Providing  upskilling  and 
reskilling schemes that are relevant for the green 
transition  will  help 
the  Council 
Recommendation on  ensuring  a  fair  transition 
towards climate neutrality (68). The green economy 
is  growing  in  Bulgaria.  Between  2015  and  2021, 
total jobs in the environmental goods and services 
sector  grew  significantly,  by  78.4%  (to  around 
68 000)  (EU:  18.2%),  reaching  2.2%  of  total 
employment  (EU:  2.7%).  Also,  between  2015  and 
2022, 
(GHG)  emission 
intensity  of  Bulgaria’s  workforce  (see  Graph  A8.1 
and Table A8.1) fell from 19.2 to 17.4 tonnes per 
worker. Although it remains above the EU average 
(14.3 tonnes per worker in 2022) (69), it indicates a 
positive  trend  in  the  green  transition.  Bulgaria’s 
recovery  and  resilience  plan  envisages  reforms 
and 
investment  for  a  fair  green  transition, 
complemented  by  measures  under  the  European 
Social  Fund  Plus  (ESF+)  and  the  Just  Transition 
Fund (see Annex 4).  

the  greenhouse  gas 

Graph A8.1: Fair transition challenges in Bulgaria 

Source: Eurostat, EU Labour Force Survey, EMPL-JRC GD-
AMEDI/AMEDI+ and DISCO(H) projects (see Table A8.1). 

Employment in energy-intensive industries is 
stable. In 2023, employment in Bulgaria’s energy-

(68)  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. 

(69)  Workforce-related calculations are based on the EU Labour 
Force Survey. Note, in the 2023 country report for Bulgaria, 
such indicators were calculated based on employment 
statistics in the national accounts. This may result in limited 
comparability across the two reports. 

48 

intensive 
industries  comprised  3.4%  of  total 
employment  (3.5%  in  EU).  Employment  in  mining 
and  quarrying  has  decreased  by  -10.9%  since 
2015 (to around 22 900 workers in 2023). The job 
vacancy  rate  in  construction  (see  Graph  A8.2),  a 
key  sector  for  the  green transition, is much lower 
than  the  EU  average  (0.5%  vs  3.6%  in  the  EU  in 
2023).  Nevertheless,  90%  of  small  and  medium-
sized  enterprises  (SMEs)  in  the  sector  reported 
that  skills  shortages  are  holding  them  back  in 
general  business  activities (70).  According  to  the 
European  Labour  Authority 
labour 
shortages were reported in 2023 for a number of 
occupations 
required  specific  skills  or 
knowledge  for  the  green  transition (72),  including 
electrical  engineers  and  heavy  truck  and  lorry 
drivers. 

(ELA) (71), 

that 

Upskilling  and  reskilling  are  key  for  smooth 
labour market transitions and promoting jobs 
in  transforming  sectors.  In  Bulgaria,  36%  of 
SMEs  think  that  skills  required  for  greening 
business  activities  are  becoming  more  important 
(EU:  42%) (70).  If  Bulgaria  matches  its  projected 
contribution  to  the  EU’s  2030  renewable  energy 
target,  between  700  and  1 700  additional  skilled 
workers will be needed for the deployment of wind 
and  solar  energy (73),  which  may  require  an 
investment in skills of EUR 3.7-4.7 million (74). The 
ESF+  has  made  EUR  152  million  available  for 
measures  promoting  green  skills  and  jobs  (see 
Annex 14). It is expected that by 2029 more than 
212 000 unemployed and employed people at risk 
of  losing  their  job  due  to  the  restructuring  of  the 
economy will increase their skill level, including by 
acquiring green skills. In 2023, with the support of 
ESF+,  Bulgaria 
several  measures 
supporting  the  green  transition.  In  particular,  the 
‘Adapted  Working  Environment’  measure  aims  to 
help enterprises meet the challenges related to the 
transition  to  a  climate-neutral  economy  and 

launched 

(70)  Eurobarometer on skills shortages, recruitment, and retention 

strategies in small and medium-sized enterprises. 

(71)  Based on the European Labour Authority 2024 EURES Report 
on labour shortages and surpluses 2023, i.e. data submitted 
by the EURES National Coordination Offices. 

(72)  Skills and knowledge requirements are based on the 

European Skills Competences and Occupations (ESCO) 
taxonomy on skills for the green transition. 

(73)  EMPL-JRC AMEDI+ project. 

(74)  National Statistical Institute, Monitoring Business Tendencies 

in the Industrial Sector, December 2022. 

0.01.02.03.04.05.0Greenhouse gasemissions per workerEmployment inEnergy-intensiveindustriesEnergy povertyTransport poverty(proxy)Carbon inequalityBG Latest vs EU LatestEU LatestBG 2015 vs EU Latest 
 
  
 
 
 
Table A8.1:  Key indicators for a fair transition in Bulgaria 

Source: Eurostat (env_ac_ainah_r2, lfsa_egan2d, ilc_mdes01), EU Labour Force Survey (break in time series in 2021), EMPL-JRC 
GD-AMEDI/AMEDI+ and DISCO(H) projects. 

provide  relevant  training  programmes  to  more 
than 90 000 people.  

Energy  poverty  indicators  slightly  improved, 
but  significant  challenges  remain.  The  share 
of  the  population  unable  to  keep  their  homes 
adequately  warm decreased  from  39.2% in  2015 
to 22.5% in 2022, but it was still the highest in the 
EU,  well  above  the  EU  average  (9.3%) (75).  The 
indicator  decreased  by  1.2  percentage  points 
between  2021  and  2022,  despite  energy  price 
increases due to supply constraints caused by the 
COVID-19  pandemic  and  Russia’s  war  of 
aggression against Ukraine. This improvement was 
attributed to emergency measures implemented in 
Bulgaria. Nevertheless, 42.7% of the population at 
risk  of  poverty  (AROP)  (EU:  20.1%)  and  20.9%  of 
lower  middle-income  households  (in  deciles  4-5) 
(EU:  11.6%)  were  affected  by  energy  poverty  as 
they  reported  being  unable  to  keep  their  home 
adequately  warm  in  2022.  Bulgaria  has  adopted 
an  official  definition  for  energy  poverty,  but  the 
related  support  schemes  are  not  yet  developed. 
The targeted heating allowance has been the main 
instrument  to  tackle  energy  poverty  for  the  most 
vulnerable  groups,  but  the  scheme  is  limited  in 
time  and  scope.  In  addition,  in  response  to  the 
energy crisis, Bulgaria took advantage of the SAFE 
initiative (76)  in  2023  to  provide  a  one-off  benefit 
to  over  365 000  households  under  the  ESF  to 
compensate  them  for  the  high  energy  prices.  On 
the other hand, in January 2023, just 12.2% of the 
population at risk of poverty  spent a considerable 
share  of  their  budget  (more  than  6%)  on  private 
transport fuels (EU: 37.1%) (77). 

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

(76)  Thanks to the Support Affordable Energy (SAFE) initiative, 

Member States can support vulnerable households to tackle 
rising energy prices. 

(77)  Affordability of private transport fuels is one key dimension 

of transport poverty. The indicator has been developed in the 
context of the EMPL-JRC GD-AMEDI/AMEDI+ projects. 

Air  pollution  remains  an  issue  in  Bulgaria, 
and income is influencing emissions’ volume, 
leading  to  environmental  inequalities.  The 
average  levels  of  air  pollution  in  Bulgaria  stood 
above the EU average (15.1 vs 11.4 µg/m3 PM2.5), 
with  all  regions  exposed  to  critical  levels  of  air 
pollution (78).  This  has  led  to  a  significant  impact 
on health, affecting vulnerable groups in particular 
such as older people  and people with pre-existing 
health  conditions,  and  around  10 800  premature 
deaths  annually (79).  Despite  performing  better 
than  the  EU  on  average,  environmental  inequality 
can still be observed through the difference of the 
carbon  consumption  footprint  of  the  richest  20% 
and  poorest  20%  of  the  population  (in  2021,  it 
was 1.7 times higher in Bulgaria vs 1.8 in the EU), 
showing  that  higher  income  groups  contribute 
significantly  more 
to  GHG  emissions  and 
pollution (80).  

Methodology explained in Economic and distributional effects 
of higher energy prices on households in the EU. 

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

Quality Guidelines (annual exposure of 5µg/m3). 

(79)  EEA- Air Quality Health Risk Assessment  

(80)  Developed in the context of the EMPL-JRC DISCO(H) project. 
Methodology explained in Joint Research Centre, 2024. 
Carbon and environmental footprint inequality of household 
consumption in the EU. JRC137520. The EU average refers to 
EU27 without Italy (household income data not available for 
IT in the HBS) 

49 

IndicatorDescriptionBG 2015BGEUGHG per workerGreenhouse gas emissions per worker – CO2 equivalent tonnes19.218.6 (2022)14.3 (2022)Employment EIIEmployment share in energy-intensive industries, including mining and quarrying (NACE B), chemicals (C20), minerals (C23), metals (C24) and automotive (C29)3.1%3.4% (2023)3.5% (2023)Energy povertyShare of the total population living in a household unable to keep its home adequately warm39.2%22.5% (2022)9.3% (2022)Transport poverty (proxy)Estimated share of the AROP population that spends over 6% of expenditure on fuels for personal transport9.1%12.2% (2023)37.1% (2023)Carbon inequalityRatio between the consumption footprint of the top 20% vs bottom 20% of the income distribution1.71.7 (2021)2.7 (2021) 
 
 
 
 
 
  
 
Graph A8.2: Job vacancy rate in transforming 
sectors and mining and quarrying 

B - Mining and quarrying 
C - Manufacturing 
D - Electricity, gas, steam and air conditioning supply 
E - Water supply; sewerage, waste management and 
remediation activities 
F - Construction 
H - Transportation and storage 
Source: Eurostat jvs_a_rate_r2. 

lags 

in 
fair 

implementing  measures 
Bulgaria 
enabling  a 
to  climate 
transition 
neutrality  as  the  measures  planned  are  still 
at  an  early  stage  of  preparation.  The  three 
territorial just transition plans to support the three 
main  coal  regions  in  the  path  towards  climate 
neutrality were delayed and were only adopted at 
the  end  of  2023.  Bulgaria  set  up  an  Advisory 
Council for the European Green Deal and provides 
specific 
social 
entrepreneurship,  e.g.,  for  financing  green  and 
climate  innovations.  Further  work,  including  on 
compensating  for  the  delays  in  adopting  the  Just 
Transition Fund, is needed to create incentives for 
job-to-job transitions, upskilling and reskilling, and 
mobility  across  sectors,  as  well  as  to  help  key 
stakeholders  achieve  the  transition  objectives  by 
2030 (81). 

programmes 

support 

for 

(81)  Based on the monitoring review of the Council 

Recommendation on ensuring a fair transition towards 
climate neutrality, which took place in October 2023. 

50 

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%BCDEFHEU 2023BG 2023BG 2015 
  
 
PRODUCTIVITY 
ANNEX 9: RESOURCE PRODUCTIVITY, EFFICIENCY AND CIRCULARITY 

The green transition of industry and the built 
environment,  in  particular  decarbonisation, 
resource  efficiency  and 
is 
Bulgaria’s 
essential 
competitiveness (82). In this regard, priorities for 
Bulgaria  are  waste  management  and  the  use  of 
circular materials in industry and construction. 

circularity, 

boost 

to 

The  state  of  the  environment  in  Bulgaria 
remains  a  source  of  concern,  particularly  in 
terms  of  circular  economy  and  waste 
management.  The  pace  of  Bulgaria’s  circular 
economy  transition  is  insufficient  to  achieve  the 
EU Circular Economy Action Plan goals and there is 
room  for  improvements  in  waste  management 
and  resource  efficiency.  The  material  footprint 
increased  from  21.2  to  26.2  tonnes  per  capita 
between  2018  and  2022,  remaining  among  the 
EU’s highest. Total waste generated per capita has 
decreased over the last decade,  however Bulgaria 
remains  one  of  the  worst-performing  countries, 
producing 16.8 tonnes per capita in 2020 (83).       

Bulgaria is only at the start of its transition 
to  a  circular  economy.  This  is  indicated  by  the 
large  amounts  of  resources  used  and  waste 
generated  and  the  rather  low  share  of  secondary 
raw materials. With EUR 0.33 generated per kg of 
material  consumed  in  2021  (domestic  material 
consumption  of  23  tonnes  per  person),  resource 
productivity in Bulgaria is below the EU average of 
EUR 2.09  per  kg.  In  2020,  Bulgaria  was  the  EU’s 
second-largest 
with 
17 000 kg/capita  (EU  average:  5 000 kg/capita) 
and had the EU’s highest percentage share of total 
hazardous  waste  generated 
(12%).  Bulgaria’s 
recovery  and  resilience  plan  (RRP)  and  cohesion 
the  uptake  of  circular 
policy 
economy  solutions  for  companies  to  reduce  the 
industry’s  resource  intensity  and  address  the 
energy transition. 

tools  support 

generator, 

waste 

Despite some positive trends, poor air quality 
still  seriously  affects  Bulgaria.  In  2021,  the 
years  of  life  lost  due  to  exposure  to  PM2.5  and 
NO2  stood  well  above the  EU  average,  accounting 
for  1 443  and  294  years,  respectively,  per 

(82)  See also Annexes 6, 7 and 12 

(83)  Bulgaria ranked second after Finland for most waste 

generated per capita in 2020. 

51 

100 000 inhabitants. The smog-precursor emission 
intensity  dropped  by  80%  between  2008  and 
2021,  but  still  reached  3 300  tonnes/EUR  versus 
an EU average of 0.86 tonnes/EUR. However, these 
indicators have decreased over time.  

Graph A9.1: ETS emissions by sector since 2013 

Source: European Commission 

came 

In 2023, Bulgaria’s greenhouse gas emissions 
under  the  EU  emissions  trading  system 
(ETS) (84) were 34% lower than in 2019. About 
72% of the greenhouse gases from Bulgaria’s ETS 
from  power  generation, 
installations 
significantly more than the EU average of 57%. Of 
the total emissions from all industry sectors, 31% 
came from the chemical industry, 31% each from 
refineries  and  from  cement  and  lime  production, 
21%  from  other  industries,  and  8%  from  the 
metals  industry.  Since  2019,  the  power  sector’s 
emissions have declined by  35% (85).  The industry 
sectors’  emissions  have  declined  by  slightly  less, 
33%. Since 2013, greenhouse gas emissions have 
declined by 48% in power generation and by 10% 
in the industry sectors. Greenhouse gas emissions 
in  both the power  sector and  the  industry  sectors 
showed  both  increases  and  decreases  in  that 
decade.  

The  Bulgarian  economy  remains  particularly 
exposed to waste management inefficiencies, 
despite  municipal  waste  generation  being 
below  the  EU  average.  There  is  no  significant 
‘polluter  pays’  principle,  as 
progress  on  the 

(84)  This analysis excludes air travel. The data for 2023 reflects 
verified emissions as of 14 May 2024 and may still be 
revised due to late data submissions. For more details and 
the data sources, see Weitzel, M; van der Vorst, C. (2024), 
Uneven progress in reducing emissions in the EU ETS, JRC 
Science for policy brief, JRC138215, Joint Research Centre.  

(85)  This includes a steep decrease of 19% year-on-year in 2020, 
and a steep rebound in the next 2 years, with an average 
increase of 19.5% year-on-year. 

00.20.40.60.810510152025303520132014201520162017201820192020202120222023Emissions relative to 2013Mt CO2eCement & LimeChemicalsMetalsRefineriesPower generationOtherBulgaria (both axes) 
 
 
 
  
 
 
Bulgaria continues to postpone the application of a 
fairer  calculation  of  waste  collection  fees  after 
adopting  the  necessary  legal  basis.  It  would  be 
beneficial to put into practice this fairer calculation 
of waste collection fees. 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.  Bulgaria  did  not  meet  the  2020 
is 
recycling  target  for  municipal  waste  and 
assessed  to  be  at  high  risk  of  not  meeting  the 
2025 
for  municipal  and 
packaging  waste.  In  2020,  landfilling  represented 
61.7%  of  waste  generated  (compared  to  an  EU 
average  of  23%).  There  is  room  to  make  better 
use  of  the  potential  of  the  circular  economy 
transition  to  support  the  decarbonisation  of 
Bulgaria’s industry. 

recycling 

targets 

generated 

improvements.  Waste 
from 
construction  and  demolition  activities  almost 
doubled  between  2010  and  2020,  reaching 
1.15 million tonnes. However, the figure per capita 
stands well below the EU average. The proportion 
of  backfilling  increased  but  remained  well  below 
the EU average – 52.6%. It stood at 7.7% in 2022. 
On  construction  and  demolition  waste,  Bulgaria 
has  a  programme  for  meeting  the  targets  for 
recycling  and  recovery  of  construction  waste  and 
waste  from demolition of buildings’, which is part 
of the national waste management plan for 2021-
2028.  The  2022  strategy  and  action  plan  for 
transition 
to 
implement  21  measures 
the  areas  of 
sustainable  plastic  waste  management,  product 
design,  innovation  in  production  processes,  and 
upgrading  of 
the  separate  waste  collection 
systems. 

the  circular  economy  aim 
in 

to 

There  is  still  room  to  improve  resource 
efficiency in the Bulgarian built environment 
system.  Between  2016  and  2020,  Bulgaria’s 
residential  floor  areas  per  capita  increased  to 
36.11 m2  per  capita,  almost  equalling  the  EU 
average  of  36.48 m2.  By contrast,  non-residential 
floor  areas  remained  well  below  the  average  – 
10.11 m2 per capita versus 15.51 m2. The growth 
rate  of  both  these  building  categories  was  higher 
than  the  EU  average  growth,  especially  in  the 
residential  sector.  In  2020,  Bulgaria  submitted  a 
to 
long-term 
decarbonise  the  building  stock.  The  adoption  of 
circular economy principles is mentioned as part of 
the plan’s main priorities. 

renovation 

strategy 

aiming 

Graph A9.2: Treatment of municipal waste 

Source: Eurostat 

The  built  environment  continues  to  play  a 
role  in  depleting  resources,  despite  recent 

Table A9.1:  Circularity indicators 

Source: Eurostat, European Environment Agency 

52 

4074424084450010020030040050020182019202020212022Kg per capita Waste treatment to be determinedLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU-27201820192020202120222023EU-27Latest yearIndustryResource productivity (purchasing power standard (PPS) per kilogram)0.80.80.80.80.9-2.52022Circular material use rate (%)2.54.15.94.84.8-11.52022Eco-innovation index (2013=100)36.939.144.455.957.7-121.52022Recycling of plastic packaging (%)59.250.6----40.72021Cost of air emissions from industry (EUR bn)11.69.18.111.5--352.72021Built environmentRecovery rate from construction and demolition waste (%)24.0-96.0---89.02020Soil sealing index (base year = 2006)103.0-----103.42018Non-residential floor area (m2 per capita)14.614.915.2---18.02020Waste backfilled (%)------9.92020 
            
 
            
 
ANNEX 10: DIGITAL TRANSFORMATION 

for 

the 

targets 

The Digital transformation is key to ensuring 
a  resilient  and  competitive  economy.  In  line 
with the Digital Decade  Policy  Programme, and in 
particular  with 
digital 
transformation  by  2030,  this  Annex  describes 
Bulgaria’s  performance  on  digital  skills,  digital 
infrastructure/connectivity and the digitalisation of 
businesses  and  public  services.  Where  relevant,  it 
makes reference to progress on implementing the 
Recovery  and  Resilience  Plan  (RRP).  Bulgaria 
allocates  23.1%  of  its  total  RRP  allocation  to 
(EUR  1.3  billion) (86).  Under 
digital  objectives 
Cohesion Policy, an additional EUR 1.3 billion (13% 
of  the  country’s  total  Cohesion  Policy  funding)  is 
allocated 
digital 
transformation (87). 

country’s 

the 

to 

The  Digital  Decade  Policy  Programme  sets 
out  a  pathway  for  EU’s  successful  digital 
transformation  by  2030.  Bulgaria’s  national 
roadmap outlines the actions it intends to take to 
reach  the  objectives  and  targets  at  national 
level (88).  The  2023  Report  on  the  state  of  the 
Digital  Decade  highlighted  the  need  to  accelerate 
and deepen the collective efforts to reach the EU-
wide  targets  and  objectives (89).  Among  others,  a 
digitally 
the 
population 
development  and  adoption  of  digital  technologies 
and  leads  to  productivity  gains  and  new  business 
models.  It  also  leads  to  higher  inclusion  and 
participation 
increasingly 
in  an  environment 
shaped  by  the  digital  transformation.  Digital 
technologies,  infrastructure  and  tools  all  play  a 
the 
role 
structural 
challenges, 
strategic  dependencies, 
cybersecurity and climate change. 

in  addressing 
including 

increases 

current 

skilled 

(86)  The share of financial allocations that contribute to digital 
objectives has been calculated using Annex VII to the 
Recovery and Resilience Facility Regulation. 

(87)  This amount includes all investment specifically aimed at or 
substantially contributing to digital transformation in the 
2021-2027 Cohesion Policy programming period. The source 
funds are the European Regional Development Fund, the 
Cohesion Fund, the European Social Fund Plus, and the Just 
Transition Fund. 

(88)  Updated National Strategic Document "Digital 

Transformation of Bulgaria for the period 2024-2030", 
https://egov.government.bg/wps/portal/ministry-
meu/strategies-policies/digital.transformation/itis-national-
strategic-
documents/national.strategic.document.digital.transformatio
n   

(89)  European Commission (2023): Report on the State of the 

Digital Decade 2023, 2023 Report on the state of the Digital 
Decade | Shaping Europe’s digital future (europa.eu). 

53 

Bulgaria  scores  low  in  relation  to  digital 
skills.  35.5%  of  Bulgaria’s  population  has  basic 
digital  skills,  among  the  lowest  in  the  EU.  The 
percentage  of  ICT  specialists  is  also  one  of  the 
lowest  in  the  EU,  although  the  proportion  of 
female  ICT  specialists  is  the  highest.  One  of  the 
priorities  of  Bulgaria’s  RRP  is  the improvement  of 
digital skills, with significant investments to adapt 
the skill set of the workforce to new labour market 
needs,  and  setting  up  a  national  online  platform 
for adult learning. 

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  networks  (VHCN),  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,  and  on  5G  coverage  on 
the 3.4-3.8 GHz spectrum band, which is essential 
for enabling advanced applications requiring large 
spectrum  bandwidth.  Under  its  RRP,  Bulgaria  has 
already 
improve 
connectivity, such as the reform on the creation of 
a  favourable  investment  environment,  and  is 
making  progress  towards  the  efficient  use  of  the 
radio frequency spectrum. 

implemented  measures 

to 

is  also  very 

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  services  and  artificial 
low.  Only  29%  of 
intelligence) 
Bulgarian  enterprises  have  taken  up  at  least  one 
of these three technologies, below the EU average 
of  55%  for  2023.  Cloud  adoption  (14%)  is 
remarkably  low  compared  to  the  EU  average 
(39%).  Furthermore,  the  share  of  Bulgaria’s  SMEs 
with  at  least  a  basic  level  of  digital  intensity  is 
28%, well below the EU average (58%). Bulgaria’s 
RRP includes measures such as a voucher scheme 
for the digitalisation of SMEs, supporting activities 
with,  for  example,  web-based  ICT  services  for 
platforms, and software solutions. The RRP will be 
targeted  Cohesion  Policy 
complemented  by 
investments  focusing  on  the  development  of 
necessary technologies for Industry 4.0 to support 
SMEs 
levels  of 
last  four 
In  2022,  2%  of  enterprises  in 
digitalisation. 
Bulgaria  reported  ICT  service  outage  due  to 
cyberattacks  (e.g.  ransomware  attacks,  denial  of 
service  attacks).  Over  the  same  year,  17.1%  of 

in  achieving  the 

 
 
 
 
enterprises  developed  or  reviewed  their 
security policy within the previous 12 months. 

ICT 

Bulgaria has a very low level of performance 
in  relation  to  the  digitalisation  of  public 
services,  although  progress  is  expected  as  a 
result  of  the  country’s  ongoing  initiatives. 
Bulgaria  scores  far  below  the  EU  average  for 
digital  public  services  for  citizens  (67  vs  79)  but 
has reached above the EU average for businesses 
(92 vs 85). The percentage of e-government users 
has  also  stagnated  in  recent  years,  at  35.4% 
compared to the EU average of 75%. The country 
has  one  electronic  identification  (eID)  scheme, 
which  has  been  notified  under 
the  eIDAS 
Regulation. Bulgaria’s RRP features measures that 
the  digitalisation  of  public 
contribute 
administration  and  the  provision  of  digital  public 
services  in  key  areas  such  as  justice,  healthcare, 
employment and social protection (90). 

to 

(90)  European Commission (2023): Country reports - Digital 

Decade report 2023, https://digital-
strategy.ec.europa.eu/en/library/country-reports-digital-
decade-report-2023  

54 

 
 
Table A10.1:Key Digital Decade targets monitored by the Digital Economy and Society Index 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 evolution will also be monitored separately and taken 
into consideration when interpreting VHCN coverage data in the Digital Decade. 
(3) At least 75% of EU 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 

55 

EUDigital Decade target by 2030 2022202320242024(EU)Digital skillsAt least basic digital skills31%31%36%56%80%% individuals20212021202320232030ICT specialists (1)3.5%3.8%4.3%4.8%20 million% individuals in employment aged 15-7420212022202320232030Digital infrastructure/connectivityFixed very high capacity network (VHCN) coverage81%86%89%79%100%% households20212022202320232030Fibre to the premises (FTTP) coverage (2)81%86%89%64%-% households2021202220232023Overall 5G coverage40%67%71%89%100%% populated areas20212022202320232030Digitalisation of businessesSMEs with at least a basic level of digital intensity25%NA28%58%90%% SMEs2021202320232030Data analyticsNANA22%33%-% enterprises20232023Cloud10%10%14%39%-% enterprises2021202120232023Artificial intelligence3%3%4%8%-% enterprises2021202120232023AI or cloud or data analytics (3)NANA29%55%75%% enterprises202320232030Digitalisation of public servicesDigital public services for citizens59606779100Score (0 to 100)20212022202320232030Digital public services for businesses76819285100Score (0 to 100)20212022202320232030Access to e-health recordsNA777779100Score (0 to 100)2022202320232030Bulgaria 
 
     
 
 
 
 
 
 
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  transition  and  ensuring  long-
term competitiveness. 

Bulgaria  remains  an  ‘emerging  innovator’, 
with  an  innovation  performance  improving 
over time but at a pace slower than the EU’s. 
According  to  the  2023  edition  of  the  European 
Innovation  Scoreboard (91),  Bulgaria's  innovation 
performance  markedly  improved  between  2022 
and  2023.  Sustaining  this  positive  trend  will  be 
crucial for Bulgaria if the growing gap with the EU 
average is to be closed. 

Graph A11.1: Innovation performance 2016-2023 

Source: European Innovation Scoreboard, 2023 

in 

the 

lowest 

Public  and  private  R&D  investments  remain 
the  EU.  R&D 
amongst 
intensity (92) stood at 0.77% in 2022, remaining at 
the  same  level  from  2020  and  still  far  from  the 
(2.24%) (93).  While  R&D 
European  average 
investment  has  been  slowly  increasing  in  recent 
years,  in  2022  both  public  expenditure  on  R&D 
(0.24%  of  GDP)  and  business  enterprise 
expenditure  on  R&D  (0.52%  of  GDP)  decreased, 
with  both  indicators  remaining  significantly  below 
the EU averages of 0.73% and 1.48% respectively. 
Nevertheless,  in  2022  Bulgaria  had  increased  by 
almost 18% its R&D funding in terms of absolute 

(91)  2023 European Innovation Scoreboard (EIS), country profile: 
Bulgaria https://ec.europa.eu/assets/rtd/eis/2023/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). 

expenditure  (€647.119  million) (94).  The  national 
(RRP)  contains 
resilience  plan 
recovery  and 
measures  aimed  at  strengthening  public  and 
private  investment  in  research  and  innovation 
(R&I).  However,  the  plan’s  R&I  component  was 
downsized,  as  part  of  the  amendment  made  in 
September  2023 
the 
downward revision of the country’s RRF allocation. 
In addition, the RRP will be reinforced by targeted 
cohesion  policy 
than 
EUR 2 billion,  aimed  at  further  supporting  the  R&I 
ecosystem  in  Bulgaria.  Going  forward,  sustaining 
budget commitments for R&D funding (to achieve 
the national strategic goal of 2% R&D intensity by 
2025 (95)) will be key. 

investments  of  more 

into  account 

take 

to 

scientific 

Bulgaria’s 

Due  to  the  very  low  levels  of  public  R&D 
investment, 
and 
technological  potential  continues  to  remain 
largely  untapped.  Low  public  R&D  spending  is 
negatively  impacting  the  quality  of  the  public 
science  base  (as  measured  by  the  share  of 
scientific  publications  among  the  top  10%  most-
cited  publications  worldwide),  which  is  among the 
lowest  in  the  EU.  The  consequences  of  the  low 
levels  of  public  R&D  expenditure  are  further 
exacerbated  by  the  fact  that  the  limited  public 
R&D budget is distributed over a large number of 
higher  education 
research 
organisations,  owing  to  the  high  degree  of 
fragmentation of Bulgaria’s research ecosystem. 

institutions  and 

of 

This 

and 

implementing 

reforms 
fragmented 

Fragmented governance of the Bulgarian R&I 
system and ineffective coordination between 
ministries 
agencies 
hinders  effective  policy  development  and 
and  R&I 
implementation 
strategies. 
governance 
adversely  affects  the  efficiency  and  performance 
of  the  national  R&I  ecosystem.  To  address  this 
challenge,  the  authorities  have  introduced  an 
important reform: a new law on the promotion of 
research  and  innovation,  as  provided  for  by  the 
RRP.  The  law  sets  legislative  parameters  for  the 
development  and  financing  of  R&I  and  regulates 
the  role  and  responsibilities  of  each  of  the 
in  the  policy  cycle.  The 
institutions 
Bulgarian  government  plans  to  receive  practical 

involved 

(94)  https://ec.europa.eu/eurostat/databrowser/view/rd_e_gerdtot/

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

default/table?lang=en. 

percentage of GDP. 

(95)  https://www.strategy.bg/StrategicDocuments/View.aspx?lang

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

=bg-BG&Id=1231. 

56 

02040608010012020162017201820192020202120222023EUBG 
 
      
 
 
 
Table A11.1:Key innovation indicators 

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

to  design, 

support 
implement  and  evaluate 
reforms  that  address  the  fragmented  research 
resources  through  the  Horizon  Policy  Support 
Facility. 

is 
Systemic  loss  of  scientific  capacities 
hampering  Bulgaria’s  competitiveness  and 
transition  towards  a  knowledge  economy. 
Bulgaria’s  pool  of  available  human  resources  for 
R&I,  as  measured  by  the share  of  new  graduates 
in  science  and  engineering  in  the  population,  has 
been  on  a  declining  trend  since  2010  and  is  well 
below the EU average. This is further exacerbated 
by  one  of  the  lowest  shares  of  population  aged 
25-34  who  have  successfully  completed  tertiary 
education (33.8% against the EU average of 42%) 
(see also Annex 15) along with ageing (96) research 

(96)  https://www.nsi.bg/bg/content. 

57 

workers, of whom there are too few owing to poor 
career  prospects  This  is  reflected  in  the  low 
number  of  researchers  (full-time  equivalents) 
employed by the public sector per thousand of the 
active  population,  which  has  remained  constantly 
among  the  lowest  of  all  the  EU  countries  (2.6  in 
2021 compared to an EU average of 4.2). 

a 

to 

obstacle 

research 

Limited  academia-business  links  continue  to 
the 
be 
serious 
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,  5.4% 
compared  to  the  EU  average  of  7.6%.  Public 
expenditure on R&D financed by businesses is also 
well  below  the  EU  average,  which  suggests  that 
Bulgarian  businesses  have  little  incentive  to  work 
with  public  research  institutions,  thus  limiting 
technology transfer and innovation activities. 

EU2022average (1)R&D intensity (GERD as % of GDP)0.560.950.850.770.772.24Public expenditure on R&D as % of GDP0.280.250.270.260.240.73Business enterprise expenditure on R&D (BERD) as % of GDP0.280.700.570.510.521.48Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 3.22.62.34::9.6Patent Cooperation Treaty (PCT)  patent applications per billion GDP (in PPS)0.40.60.49::3.4Public-private scientific co-publications as % of total publications4.76.14.55.15.47.6Public expenditure on R&D financed by business enterprise (national) as % of GDP0.0160.0170.0290.026:0.054New graduates in science & engineering per thousand pop. aged 25-3411.411.48.08.7:16.9Total public sector support for BERD as % of GDP:0.024:0.011:0.204R&D tax incentives: foregone revenues as % of GDP   ::0.104Share of environment-related patents in total patent applications filed under PCT (%)10.228.722.0::14.7Venture capital (market statistics) as % of GDP0.0150.0110.0100.0200.0210.085Employment share of high growth enterprises measured in employment (%):18.614.16::12.51Finance for innovation and economic renewal2021Bulgaria201020152020Public 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 

level 

potential 

productivity 

the  2023  EU 
standards). 

Bulgaria’s  productivity  development  have 
been  favourable  in  recent  years,  although 
(geo)political uncertainty poses challenges to 
firms’ 
and 
competitiveness.  Real  labour  productivity  has 
shown a stable increasing trend since 2012, which 
is  driven  mainly  by  the  financial  and  insurance 
sector,  but  also  the  manufacturing  sector  (see 
Graph  A12.1).  According  to  Eurostat,  however, 
nominal  labour  productivity  per  hour  worked  only 
(in 
reached  56.8%  of 
factor 
purchasing  power 
labour 
is  accounted  mainly 
productivity 
productivity  growth  between  2021  and  2023, 
while  capital  deepening  (investment)  contributed 
to  a 
lesser  extent.  The  uncertain  economic 
environment,  shortage  of  labour  and  insufficient 
demand  (especially  in  manufacturing)  were  the 
most  important  factors  hampering  the  economic 
activity  of  firms  in  2023 (97).  The  contribution  of 
investment  to  overall  GDP  growth  remained 
substantially  subdued  in  2023,  although  private 
and public investment picked up slightly in the first 
half  of  the  year.  This  was  mainly  driven  by 
investment  in  machinery,  equipment  and  weapon 
systems,  as  well  as  national-funded  and  EU  co-
financed investments.  

Total 
to 

National 

institutions. 

Development 

(transport  and  digital  connectivity,  circular  and 
low-carbon  infrastructure)  are  carried  out  under 
the 
Programme 
BULGARIA2030  and  other  national  programmes. 
For  2024,  a  detailed  national 
investment 
programme  has  been  developed  by  central  and 
municipal 
In  addition,  EU-funded 
programmes  also  provide  sources  for  public 
investments. However, there is still a considerable 
gap when comparing government investment with 
peer  countries  such  as  Romania  and  Croatia  (see 
Graph  A12.2).  According 
IMF  Public 
Investment  Management  Assessment (98),  there  is 
a considerable efficiency gap, especially in project 
planning,  procurement  and  follow-up  audits.  The 
OECD  Public  Governance  Review 
provides 
recommendations  on  how  to  better  implement 
policies,  apply  public  funding  efficiently  and  find 
alternative ways of financing (OECD 2023) (99). 

the 

to 

Graph A12.2: Government investment, % of GDP 

Graph A12.1: Labour productivity (per hour 
worked) in different economic sectors 
(2015=100) 

Source: European Commission 

Source: European Commission. 

Public investment has slowly picked up after 
2021 and remains largely driven by national 
and  EU  funding.  Public  infrastructure  projects 

(97)  Bulgarian National Bank’s seasonally adjusted short-term 

indicator. 

Deflationary  developments  on  external 
markets have stabilised production costs for 
Bulgarian firms despite wage pressure due to 
in 
labour 
manufacturing  and  services.  According 
to 
Eurostat, the annual average of producer prices in 
industry  decreased  in  2023  (-9.1%  vs  37.8%  in 

shortages, 

especially 

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

(99)  OECD (2023), Public Investment in Bulgaria: Planning and 

Delivering Infrastructure, OECD Public Governance Reviews, 
OECD Publishing, Paris, https://doi.org/10.1787/b73ef3b4-en  

58 

6090120150180201520162017201820192020202120222023Industry (except construction)ConstructionWholesale & retail trade, transport, accommodation & food service activitiesInformation & communicationFinancial & insurance activitiesProfessional, scientific & technical activities; administrative/support servicesBulgaria0.01.02.03.04.05.06.07.0091011121314151617181920212223*24*25*BGHRROEU27 
 
     
 
     
 
 
2022), mainly driven by  declining energy prices (-
27% vs 81.6% in 2022)  and lower prices for raw 
materials. Together with favourable developments 
in the nominal  effective exchange rate of the lev, 
these  price  trends  offset  higher  compensation  of 
labour 
employees.  Although  material  and 
shortages remain higher than the EU average, the 
divergent  price  developments  stabilise  the  unit 
labour costs for firms on an aggregate level. On a 
sectoral level, unit labour costs increased strongly 
all  main  economic  sectors:    construction,  industry 
and services.  

EU  countries  reached  about  61.9%  of  Bulgaria’s 
overall  trade  in  2020,  it  declined  to  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  products  and  glass 
products.  Only  18%  (13%)  of  Bulgaria’s  total  EU 
exports (imports) are in services (mainly travel and 
transport  services),  and  trade 
integration  for 
services,  with  a  share  of  6%,  is  low  compared  to 
the EU average of 15%.  

and 

and 

small 

labour 

uncertain 

experienced  managers 

Bulgarian 
medium-sized 
enterprises  (SMEs)  are  concerned  about  the 
shortage  of  (skilled)  labour.  According  to 
indicators  and 
different  short-term  business 
discussions  with  stakeholders,  the  shortage  of 
(skilled) 
economic 
development  were  among  the  most  cited  factors 
hampering  economic  activities  and  are  significant 
barriers  to  productivity  growth.  The  availability  of 
skilled  staff  represents  a  long-term  barrier  to 
investment for 88% of firms according to the EIB 
Investment Survey 2023 (100).  Finding skilled staff 
and 
as 
production/labour costs are the main problems for 
Bulgarian  SMEs  –  27%  and  11%  of  SMEs 
these  specific  difficulties 
respectively 
according  to  the  Survey  on  access  to  finance  of 
enterprises  (SAFE) (101).  Although  a  number  of 
foreign investors consider their current and short-
term  situation  to  be  good  and  are  optimistic 
according  to  a  survey  by  the  German  Foreign 
Chamber  of  Commerce,  only  14%  of  responding 
the  quality  of 
investors  are  satisfied  with 
academic education and only 15% with the quality 
of  vocational  education  and  training.  Some  firms 
have  started  developing  their  own  solutions,  such 
as  on-the-job  training,  increased  digitalisation, 
raising  wages  or  strengthening  their  cooperation 
with educational institutions (102). 

as  well 

report 

On  trade  in  goods,  Bulgaria  is  fairly  well 
integrated  into  the  single  market,  but  trade 
integration  for  services  is  lagging  behind. 
After the Bulgarian goods and services trade with 

(100) EIB Investment Survey 2023: Bulgaria overview.  

(101) European Commission (2023). Survey on access to finance 

for enterprises (SAFE), Analytical Report 2023.  

(102) AHK Bulgarian, Konjunkturumfrage 2023: Die Probleme der 

Wirtschaft in Bulgarien: Mangel an Fachkräften und 
Unzufriedenheit bei der Bekämpfung von Korruption (ahk.de) 

by 

the 

some 

transposition 

improvements,  Bulgaria 
Despite 
remains one of the low performing countries 
when  it  comes  to  completely  and  correctly 
implementing  single  market  legislation,  as 
and 
indicated 
conformity  deficits.  In  terms  of  implementing 
EU law, Bulgaria’s transposition deficit (percentage 
of  all  directives  not  transposed  into  national  law) 
improved  to  1.8%  in  2022  (2.1%  in  2021).  In 
addition,  the  conformity  deficit  (percentage  of  all 
directives 
incorrectly)  decreased 
slightly to 2.0% in 2022 (2.1% in 2021). However, 
Bulgaria  still  ranks  24th  among  EU  countries  for 
the 
the 
transposition  deficit  and  22nd  for 
conformity deficit. The picture as regards handling 
SOLVIT  cases  as  lead  centre  is  on  the  contrary 
better.  In  2023,  Bulgaria  solved  all  SOLVIT  cases 
(19)  it  handled  as  lead  centre,  above  the  EU 
average of 88.3%.   

transposed 

Administrative  burden  prevails  in  the  areas 
of  business  regulation  and  permitting  for 
installing renewable energy sources. Business 
regulations  and  administrative  barriers  are 
hampering  58%  of  firms in  long-term investment 
(EIB  2023),  while  ‘regulation’  (red  tape)  was 
named  as  one  of  the  most  pressing  problems  for 
SMEs  (SAFE  2023).  The  confidence  level  declined 
in  Bulgaria  –  only  42%  of 
investors 
surveyed (103)  (in  comparison  to  43%  in  2023)are 
confident  that  their  investments  are  protected  by 
law  and  courts  in  the  country.  More  than  half  of 
the 
that  are  not  confident  give 
'unpredictable,  non-transparent  administrative 
conduct, and difficulty to challenge administrative 
decisions  in  court’  as  reasons  for  their  concerns. 
Although new laws and initiatives were adopted to 
increase the renewable energy source capacity as 
envisaged in the Bulgarian recovery and resilience 

investors 

the 

(103) 2024 EU Justice Scoreboard. 

59 

 
 
 
Gateway  Regulation  (108),  the  system  will  enable 
the automated cross-border exchange of evidence 
between  competent  authorities,  improving  online 
access  to  information,  administrative  procedures 
and  assistance  within  the  EU.  The  onboarding  of 
Bulgarian  competent  authorities  is  crucial  for  the 
system  to  function  smoothly  and  to  reduce 
administrative burden. 

plan (RRP), administrative burden could be further 
improved.  Firms  are  specifically  concerned  about 
the  administrative  capacity  of  local  authorities  as 
well as the length of the permitting process.  

increased  to  37%. 

The  Bulgarian  public  procurement  system 
remains  a  concern,  despite  some  progress 
and  efforts  in  reforming  the  regulatory 
framework.  Competition  in  public  procurement 
was  further  decreasing  in  Bulgaria  in  2023,  as 
shown  by  several  indicators (104).  The  single  bids 
indicator  (number  of  procedures  where  a  contract 
was  awarded  to  the  tenderer  who  submitted  the 
single  received  offer) 
In 
addition, 28% of all procedures were unsuccessful 
as  no  offer  was  submitted,  and  20%  of  the 
contracts  were  awarded  without  competition,  i.e. 
based  on  a  negotiated  procedure  without 
publication. 
public 
general, 
procurement  law  remains  complex  and  relatively 
unstable.  In  the  last  year,  Bulgaria  revised  its 
public  procurement  law  to  improve  among  other 
things 
in  public 
level  of  competition 
procurement,  and  specifically  to  reduce  the 
number of contracts without a call for tender and 
single  bid  contracts.  We  should  actively  monitor 
whether the new law brings the desired effect. 

Bulgarian 

the 

In 

While  late  payments  affect  fewer  Bulgarian 
SMEs than the EU average, most firms worry 
about  the  impact  of  the  general  economic 
trend  on  their  own  payments  and  those  of 
their  customers.  According  to  the  SAFE  survey, 
31% of Bulgarian SMEs reported late payments as 
problematic,  which  is  well  below  the  average  of 
49% in the EU (105).  Firms consider rising inflation 
(65%)  to  be  the  main  barrier  to  their  customers 
paying  on  time.  Furthermore,  late  payment  has  a 
significant impact on firms in terms of generating 
income  (33%),  growth  (31%)  and  financing  costs 
(29%) (106).  

Bulgaria  is  in  the  preliminary  stage  of 
‘Once-Only’  Technical 
implementing 
System (OOTS) (107). As part of the Single Digital 

the 

(104) The currently available data is preliminary. Due to the 

technical preparation of a new public procurement platform, 
only the regular data available in Tenders Electronic Daily 
(TED) has been taken into account. 

(105) SAFE Survey (2023). 

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

(107) Implementing Regulation (EU) 2022/1463. 

(108) Regulation (EU) 2018/1724. 

60 

 
 
  
 
Table A12.1:Industry and the Single Market 

Source: (1) AMECO, (2) Eurostat, (3) Single Market Scoreboard, (4) OECD, (5) ECFIN BCS, (6) COMEXT and Commission 
calculations, (7) EIB Investment Survey, (8) Intrum Payment Report, (9) SAFE survey, (10) EIF SME Access to Finance Index.  
* Own Commission calculations for the EU27 aver 

61 

POLICY AREAINDICATOR NAME20192020202120222023EU27 average*Net Private investment, level of private capital stock, net of depreciation, % GDP14,54,62,94,23,13,8Net Public investment, level of public capital stock, net of depreciation, % GDP10,70,60,1-0,311,2Real labour productivity per person in industry (% yoy)20,1-5,44,714,72,2-1,24Cost competitivenessNominal unit labour cost in industry (% yoy)25,913,15-0,720,29,83Single Market integrationEU Trade integration, % (Average intra-EU imports + average intra EU exports)/GDP237,834,237,340,735,442,9Transposition deficit, % of all directives not transposed30,61,62,21,81,70,7Conformity deficit, % of all directives transposed incorrectly31,61,92,121,61,1SOLVIT, % resolution rate per country395,2100,095,0100,0100,088,3Number of pending infringement proceedings3212942383625,9RestrictionsEEA Services Trade Restrictiveness Index4-----0,05Single bids, % of total contractors3272632343728,6Direct Awards, %329292523208,1Material Shortage (industry), firms facing constraints, %53,54,47,312,311,617,2Labour Shortage using survey data (industry), firms facing constraints, %541,929,629,534,936,723,3Vacancy rate, % of vacant posts to all available ones (vacant + occupied)20,70,60,70,80,72,5Concentration in selected raw materials, Import concentration index based on a basket of critical raw materials60,150,150,150,150,20,22Installed renewables electricity capacity, % of total electricity produced246,347,848,549,70,050Investment obstaclesImpact of regulation on long-term investment, % of firms reporting business regulation as major obstacle728,120,624,919,021,022,2Bankruptcies, Index (2015=100)2129,3108,0116,0131,9109,1105,6Business registrations, Index (2015=100)293,770,979,880,681,6120,2Payment gap - corporates B2B, difference in days between offered and actual payment8-1714141715Payment gap - public sector, difference in days between offered and actual payment8-2510151916Share of SMEs experiencing late payments in past 6 months, %934,530,332,425,130,748,7EIF Access to finance index - Loan, Composite: SME external financing over last 6 months, index values between 0 and 1100,340,380,400,37-0,49EIF Access to finance index - Equity, Composite: VC/GDP, IPO/GDP, SMEs using equity, index values between 0 and 110 0,050,060,050,07-0,17ECONOMIC STRUCTUREShortagesStrategic dependenciesBUSINESS ENVIRONMENT - SMEsBusiness demographyLate paymentsAccess to financeBulgariaHEADLINE INDICATORSEconomic StructureSINGLE MARKETCompliancePublic procurement  
 
   
 
ANNEX 13: PUBLIC ADMINISTRATION 

Bulgaria’s  public  administration  is  essential 
for  the  economy’s  competitiveness  by,  in 
particular,  shaping  the  conditions  for  the 
twin  transitions  and  creating  a  favourable 
business  environment.  The  perception  of 
government  effectiveness  is  significantly  below 
the  EU  average  (Graph  A13.1).  Political  instability 
recent  years  delayed  significant  sectoral 
in 
to  address 
little 
reforms  and  gave 
administrative  underperformance.  The  recovery 
and resilience plan (RRP) focuses on priorities such 
as  consolidating  past  digitalisation  efforts  to 
provide  more  digital  services,  improving  public 
procurement,  the  governance  of  state-owned 
enterprises, and fighting corruption.  

room 

Graph A13.1: Government effectiveness 

Average value over 2018-2022 and change over 2018-2022. 
The GDP per head bar shows the mean value of the 
government effectiveness indicator for the group of EU 
countries belonging to the same GDP per head cluster as 
Bulgaria (EU countries are ranked in terms of their GDP per 
head and grouped into three equally sized clusters). 
Source: Worldwide Governance Indicators 

Bulgaria has taken several steps to advance 
its  e-government  services.  In  line  with  its  RRP, 
in  2023  Bulgaria  adopted  measures  to  better 
allocate  responsibilities  for  the  country's  digital 
transformation (109),  stimulate  the  digitalisation  of 
business  processes,  improve  the  management  of 
registers (110)  and  use  data  in  the  public  sector. 
However,  digital  skills,  the  share  of  internet  users 

(109)https://www.strategy.bg/PublicConsultations/View.aspx?lang=

bg-BG&Id=7881  

(110) Amendment of the E-Governance Act, 

interacting  with  the  government  via  websites  and 
the  overall  maturity  of  digital  public  services 
remain below the EU average (Graph A13.2).  

ex 

and 

post 

Bulgaria  is  taking  action  to  improve  its 
policymaking  by  strengthening  strategic 
planning (111) 
impact 
assessments. Communities of practice have been 
created to improve coordination and planning and 
promote innovation. A review of the existing legal 
framework and methodology for strategic planning 
complement  related  reforms  under  the  RRP.  Past 
efforts  to  improve  the  legislative  process  in 
Parliament, however, have not been sustained (112). 

of 

the 

attractiveness 

The 
public 
administration as an employer is decreasing. 
The  share  of  civil  servants  under  the  age  of  39 
has  been  falling  in  the  last  5  years,  and  close  to 
half the vacancies in the central government have 
remained  unfilled  for  more  than  6  months (113).  
The participation of civil servants in adult learning 
is  clearly  lower  than  the  EU  average.  This  is  a 
missed opportunity to improve skills in the context 
of  increasing  competition  for  talent  with  the 
private  sector.  There  is  also  a  clear  trend  of  civil 
servants skipping obligatory induction training.  

The lack of data on the efficiency of civil and 
commercial cases does not allow for a proper 
evaluation  of  the  overall  efficiency  of  the 
judicial system. On the length of proceedings, in 
2022, administrative courts were among the most 
efficient  in  the  EU  (129  days  at  first,  57  days  at 
second  and  127  days  at third instance).  However, 
Bulgaria  needs  to  improve  the  digitalisation  of 
justice, even though court fees can be paid online 
in some situations and legal aid can be applied for 
online. 
judicial 
independence issues, but concerns remain (114). 

tackling 

country 

The 

is 

(111)https://www.strategy.bg/PublicConsultations/View.aspx?lang=

bg-BG&Id=8056 

(112) Study of the legislative activity of the 49th National 

assembly during the first two plenary sessions (Изследване 
на законодателната дейност на 49-то Народно 
събрание през първите две парламентарни сесии), 
https://www.parliament.bg/bg/ncpi. 

(113) Report on the state of the administration, 

https://www.strategy.bg/FileHandler.ashx?fileId=33243. 

https://www.parliament.bg/bg/desision/ID/164748 and 
Council of Ministers Decree 232, of 20 November 2023. 

(114) For a more detailed analysis, see the 2024 EU Justice 

Scoreboard and the 2024 Rule of Law Report (forthcoming). 

62 

-0.20.00.20.40.60.81.01.2BGEU27GDP perhead clusterChange 2022-18Average 2018-2022 
 
  
 
 
 
Table A13.1:Public administration indicators 

(1) High values denote a good performance, except for indicator # 6. (2) 2023 value. If unavailable, the latest value available 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: E-government activities of individuals via websites, 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). 

The  public  investment  management  system 
has  been  recently  reformed  in  Bulgaria.  The 
planning  of  public-private  partnerships  and 
transparency  in  project  selection  of  investments 
financed from the state budget were strengthened 
in  2018  and  2022,  respectively.  However,  project 
assessment  and  selection  based  on  objective 

value-for-money  indicators  are  not  in  place  yet. 
Moreover, in 2023 the government set up a central 
unit  in  the  Ministry  of  Finance  specialised  in 
evaluating  public  investment  management  and 
developing  guidelines  and  training,  but  it  still 
needs to become fully operational. 

Graph A13.2: a) Use of public authorities' websites or apps (left side); b) e-government maturity (centre); 
c) share of individuals with basic or above basic overall digital skills (right side) 

(1) 2023 data. Indicators a and c: % of individuals who used internet in the last year. 
Source: Eurostat and e-government benchmark report. 

63 

20%40%60%80%100%Interacting withauthoritiesDownloading  /printing officialformsMaking anappointmentReceive officialcommunications / documentsSubmit onlinetax declarationRequestdocuments,benefitsa) E-government usersBGEU-270%10%20%30%40%50%60%70%BGEU-27c) Digital skills202320210102030405060708090100BGEU-27b) E-government maturity (%) User centricityTransparencyKey enablersCross-border services2022BG20192020202120222023EU-27(2)1n/an/an/a31.735.475.02n/a59.861.462.669.775.830.60.80.80.80.70.8455.855.656.3 (b)57.3 (b)56.652.951.8 (u): (u)1.7 (bu)2.1 (bu)2.3 (u)17.968.28.819.011.010.49.271.92.01.9 (b)1.51.41.580.70.70.70.7n/a0.792.62.72.72.7n/a1.410n/an/a1.83n/an/a1.7Medium-term budgetary framework indexIndicator (1)E-government and open government dataShare of internet users within the last year that used a public authority website or appE-government benchmark overall score (3) Open data and portal maturity indexEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with higher 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 

Update of 25 April 2024. Members States are categorised 
based on the Social Scoreboard according to a methodology 
agreed with the EMCO and SPC Committees. Please consult 
the Annex of the Joint Employment Report 2024 for details on 
the methodology. 
Source: Eurostat 

Bulgaria’s labour market continued its strong 
performance  in  2023,  but  challenges  remain 
for  people  in  vulnerable  situations  such  as 
young  people  not  in  employment,  education 
or training (NEETs), persons with disabilities, 
and  the  Roma  population.  While  economic 
growth  continued  to  slow  down  in  2023,  the 
employment  rate  (20-64  age  group)  continued  to 
grow,  reaching  76.2%  in  2023,  which  is  0.9 
percentage  points  (pps)  above  the  EU  average. 
After falling for 4 consecutive years, the disability 
employment  gap  rose  to  29.5  pps  in  2022  and 
then to 39.5 pps in 2023 and is among the widest 
in the EU. The employment rate of the low-skilled 
(ISCED  0-2),  was  50.2%  in  2023,  below  the  EU 
average  (58.3%),  and  was  40  pps  lower  than  the 

64 

the  high-skilled 

rate  for 
(ISCED  5-8).  The 
unemployment  rate  remained  ostensibly  low  at 
4.3%  in  2023,  but  with  significant  variation 
between  regions,  as  well  as  urban  versus  rural 
areas.  Youth  unemployment  (age  15-24)  was 
12.1% in 2023, almost three times more than the 
overall  unemployment  rate.  The  proportion  of 
NEETs  (age  15-29)  was  at  13.8%  in  2023  (vs 
11.2%  in  the  EU).  Only  47%  of  the  Roma 
population was engaged in paid work in 2021 with 
an even lower rate for women (31%) (115).  

Labour  and  skills  shortages  remain  a 
significant  challenge  and  risk  worsening 
because of the negative demographic trends. 
Bulgaria lost 19.1% of its working-age population 
(age 15-64) between 2011 and 2021 (116), and the 
negative  trend  is  expected  to  continue.  This, 
combined  with  the  high  inactivity  rates  for  Roma 
people, NEETs and persons with disabilities, poses 
challenges  for  economic  growth  and  better  social 
outcomes.  However,  integrating  people  who  fled 
Russia’s  war  of  aggression  against  Ukraine  can 
help  overcome  labour  and  skills  shortages  in 
Bulgaria.  Employers  continue  to  report  difficulties 
in  finding  the  right  employees,  with  demand  in 
2024 expected to be the highest for workers with 
secondary  and  higher  education. 
In  2023, 
employers indicated they would need 20.8% more 
workers  compared  to  2022 (117).  The  employment 
rate  of  those  who  had  recently  completed 
vocational  education  and  training  (VET)  stood  at 
78.4% in 2023, which is below the EU average of 
81%.  With  the  support  of  the  European  Social 
Fund  Plus (ESF+),  a  large-scale  operation  called  ‘I 
start  work’  provides  a  comprehensive  package  of 
measures  to  get  people  from  vulnerable  groups 
into  work,  helping 
the  national 
to 
employment rate target of 79% by 2030. 

reach 

Skills  are  crucial  to  support  inclusive  labour 
market  outcomes  and  ensure  smooth  green 
and  digital  transitions  for  all.   The  low  levels 
of adult participation in learning (9.5% in Bulgaria 

(115) European Union Agency for Fundamental Rights (2022), 

Roma Survey 2021.  

(116) 2021 Census statistics 

(117) National Employment Agency, Employer Labour Needs 

Survey (2023)  

9.59.335.513.87.37.376.24.32.332.233.924.4229.515.117.41Critical situationTo watchWeak but improvingGood but to monitorOn averageDynamic labour markets and fair working conditionsEmployment rate(% of the population aged 20-64, 2023)Unemployment rate(% of the active population aged 15-74, 2023)Long term unemployment(% of the active population aged 15-74, 2023)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2022)Social protection and inclusionAt risk of poverty or social exclusion (AROPE) rate (% of the total population, 2022)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2022)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2022)Disability employment gap (percentage points, population aged 20-64, 2022)Housing cost overburden (% of the total population, 2022)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2022)Self-reported unmet need for medical care (% of the population aged 16+, 2022)Better than averageBest performersPolicy areaHeadline indicatorEqual opportunities and access to the labour marketAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Early leavers from education and training(% of  the population aged 18-24, 2023)Share of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2023)Young people not in employment, education or training(% of the population aged 15-29, 2023)Gender employment gap(percentage points, population aged 20-64, 2023)Income quintile ratio (S80/S20, 2022) 
 
 
 
  
 
 
 
challenges, 

various  demographic 

vs  39.5%  in  the  EU  in  2022,  with  a  decrease 
compared  to  2016) (118)  and  the  low  levels  of 
digital  skills (35.5% vs 55.5% in the EU  in 2023), 
have  an  impact  on  people’s  employability  and 
productivity. In an EU-wide survey in 2023, 79% of 
SMEs  in  Bulgaria  indicated  that  skills  shortages 
hindered  general  business  activities (119).  Together 
with 
this 
undermines  Bulgaria’s  potential  to  increase  its 
economic competitiveness. With the support by the 
Recovery  and  Resilience  Facility  and  the  ESF+,  a 
platform  for  adult  learning  is  currently  being 
developed and trainings in digital skills for at least 
660 000 people are underway. Spending on active 
labour  market  policies  (ALMPs)  is  among  the 
lowest  in  the  EU  and  is  highly  dependent  on 
external  funding  and  employment  subsidies. 
Substantial training needs must be met to achieve 
the  national 
target  of  35.4%  of  adults 
participating in learning every year by 2030.  

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

1. Adult Education Survey, special extraction: adults in 
learning in the past 12 months, special extraction excl. guided 
on-the-job training 
2. Change in the number of persons at risk of poverty or 
social exclusion (AROPE), reference year 2019 
Source: Eurostat, DG EMPL 

Despite  various  efforts,  there  are  important 
challenges  to  ensuring  good  quality  and 
inclusive  education.  The  worsening  rate  of 
students  underachieving  in  various  basic  skills,  as 
measured by the PISA test, is worrying - especially 
for  those  from  disadvantaged  backgrounds  (see 
Annex  15).  The  percentage  of  children  under  the 
age  of  3  in  formal  childcare  remains  very  low 
(17.4%  in  2023,  unchanged  from  2022  when  EU 
average  was  35.7%).  Early  school  leaving  is 
decreasing  (9.3%  vs  9.5%  EU  in  2023)  but  it 
remains particularly high in rural areas and in the 

Roma  population (120)  (see  also  Annex  15).  To 
tackle  some  of  these  challenges,  the  Bulgarian 
recovery  and  resilience  plan  (RRP)  supports  the 
creation  of  science,  technology,  engineering  and 
mathematics  (STEM)  centres  in  2 243  schools, 
while  the  training  of  38 962  teachers  will  be 
covered by the ESF+.  

especially 

inequality, 

Bulgaria  faces  high  levels  of  poverty  and 
income 
among 
vulnerable  groups.  In  2022,  the  income  of  the 
richest  20%  of  the  population  was  7.3  times 
higher than for the poorest 20% (vs 4.7 in the EU). 
In  2023  this  has  decreased  to  6.6  times  higher. 
The  proportion  of  people  at  risk  of  poverty  or 
social exclusion (AROPE) was 30% in 2023, slightly 
down  from  32.2%  in  2022,  among  the  highest  in 
the  EU  and  peaking  at  81%  for  the  Roma 
population (121).  Other  particularly  affected  groups 
are  persons  with  disabilities  (49.9%  AROPE  vs 
28.8% in the EU in 2022, down to 42.4% in 2023) 
and  older  people  (45.5%  AROPE  vs  20.2%  in  the 
EU  in  2022,  down  to  35.3%  in  2023),  with  a 
persistent  gap  for  older  women  (18.3  pps  higher 
than  for  men  in  2022).  In  terms  of  pensions,  the 
aggregate  replacement  ratio  is  among  the  lowest 
in  the  EU  and  significantly  below  the  EU  average 
(36% vs 58% in 2022), but it increased to 44% in 
2023. The AROPE rate for children is very high, at 
33.9%  in  2023,  unchanged  from  2022,  when  the 
EU  average  was  24.7%,  accompanied  by  a  high 
rate  of  severe  material  and  social  deprivation  in 
2022  (19.2%  vs  8.4%  in  the  EU).  The  risk  of 
poverty (AROP) rate was 77% for Roma children in 
2021 (122). In 2023, Bulgaria started implementing 
ESF+  funded  measures  as  part  of  the  Child 
Guarantee, to improve vulnerable children’s access 
to  social  and  health  services.  Poverty  risks  in 
Bulgaria have a strong regional dimension, with an 
AROPE rate in rural areas of 39.3% in 2023. At the 
same  time,  15.1%  of  the  population  in  Bulgaria 
was  overburdened  by  housing  costs  (8.7%  in  the 
EU) in 2022. Some progress was made in 2023, as 
the  rate  decreased  to  11.1%  overall,  and  to  40% 
for  people  at  risk  of  poverty.  Also,  22.5%  of  the 
population  was  unable  to  keep  their  homes 
adequately warm (13.2 pps above the EU average 
- see Annex 8). A definition of energy poverty has 
been  adopted,  but  the  precise  support  measures 

(118) In the last 12 months. - Adult Education Survey excluding on-

the-job training. 

(119) Report Flash Eurobarometer 529 European Year of Skills: 

Skills shortages, recruitment and retention strategies in small 
and medium-sized enterprises (europa.eu). 

(120) European Union Agency for Fundamental Rights (2022) 

(121) Bulgaria National Statistical Institute 

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

65 

IndicatorsLatest dataTrend            (2016-2022)2030 targetEU target 76.2(2023)9.5(2022)-391(2023)Poverty reduction2 (thousands)-787-15,000Employment (%)7978Adult learning1 (%)35.460 
 
   
 
 
 
are  still  to  be  decided.  Tackling  these  challenges 
will  contribute  to  reaching  the  national  target  of 
787 000  fewer  people  at risk  of  poverty  or  social 
exclusion  by  2030,  of  which  close  to  197 000 
children. 

Access to social services remains challenging 
for  vulnerable  groups  despite  measures  to 
strengthen  the  social  protection  system.  The 
reform of the minimum income scheme, effective 
as of June 2023, is expected to strengthen social 
protection, linking the minimum support to 30% of 
the at-risk-of-poverty threshold. With the phasing-
out  of  COVID-19  relief,  Bulgaria  recorded  an 
increase  in  the  impact  of  social  transfers  (other 
than  pensions)  on  poverty  reduction  to  27.7%  in 
2023,  vs  24.4%  in  2022,  when  the  gap  with  the 
EU  average  was  10.6  pps.  The  long-term  care 
system  has  one  of  the  lowest  coverage  rates  in 
the  EU.  The  available  quantitative  and  qualitative 
evidence  and  the  policy  response  undertaken  and 
planned  analysed  in  the  second-stage  analysis  of 
the  Social  Convergence  Framework  of  May  2024 
(SWD(2024)132)  point  to  challenges  for  Bulgaria 
that  may  affect  social  convergence  in  relation  to 
social  protection  and  inclusion,  education  and 
skills. 

66 

 
 
ANNEX 15: EDUCATION AND TRAINING 

This  Annex  outlines  the  main  challenges  of 
Bulgaria’s  education  and  training  system 
based on the 2023 Education and Training Monitor 
and  the  2022  OECD  Programme  for  International 
Student Assessment (PISA) results. 

The  lack  of  basic  skills  among  young  people 
is  a  barrier  for  skills  development  and 
competitiveness.  The  2022  PISA study (123) 
showed  that  53.6%  of  Bulgaria’s  15-year-olds  do 
not  have  a  minimum  level  of  proficiency  in 
mathematics, 52.9% struggled in reading and 48% 
were low achievers in science. The proportions are 
among  the  highest  in  the  EU  and  around  double 
the  EU  averages,  which  have  also  deteriorated 
substantially  (29.5%  in  mathematics,  26.2%  in 
reading,  24.2%  in  science).  Compared  with  2012, 
the  proportion  of  young  Bulgarians  without  basic 
skills  increased  by  more  than  the  EU  average,  i.e. 
by 13.5 pps in reading (EU: 8.2 pps), by 11.1 pps in 
science  (EU:  7.4 pps)  and  9.8 pps  in  mathematics 
(EU:  7.3 pps).  These  results  may  reflect,  for 
teaching 
linked 
example,  challenges 
profession, 
in 
curricula, 
education,  social  segregation  in  the  Bulgarian 
education system, and the strong impact of socio-
economic  factors  on  performance.  Results  may 
also reflect challenges linked to school climate and 
discipline and the impact of school closures due to 
the pandemic.  

to 
the 
underfunding 

the 

in  PISA 

top  performers 

High rates of low achievement combined with 
few 
reflect 
challenges  for  the  quality  and  equity  of 
education.  Only  3.1%  of  Bulgarian  15-year-olds 
demonstrated advanced skills in mathematics (EU: 
7.9%),  2.2%  in  reading  (EU:  6.5%)  and  1.4%  in 
science  (EU:  6.9%).  The  low  percentages  of  top-
performing  students 
represent  an  additional 
obstacle for increasing productivity  and Bulgaria’s 
innovation capacity going forward. 

Socio-economic  background  has  a  major 
impact on students’ performance. According to 
the  PISA  test,  Bulgaria  has  one  of  the  highest 
underachievement rates in the EU among students 
a 
from 
staggering  77.2%  lacking  a  minimum  proficiency 
level  in  mathematics  (EU:  48%).  Nevertheless, 
underachievement is also high among advantaged 
between 
performance 
students. 

backgrounds,  with 

disadvantaged 

gap 

The 

(123) OECD (2023), PISA 2022 Results (Volume I): The State of 

Learning and Equity in Education 

67 

are 

advantaged and disadvantaged students is one of 
the highest in the EU (48 pps, EU: 37.2 pps). These 
trends 
national 
also 
standardised  exams,  which  show 
large  and 
growing inequalities of outcomes and strong social 
education 
segregation 
system (124). 

confirmed 

Bulgarian 

the 

by 

in 

Interest  in  teacher  education programmes  is 
increasing  but  entry  into  the  profession  is 
low  and  retention  difficult.  About  50%  of 
schoolteachers are at least 50 years old (EU: 39%) 
and  31.3%  are  at  least  55  (EU:  24.4%).  Teacher 
shortages  already  exist,  particularly  in  primary 
education  and  in  certain  subjects.  Salaries  were 
substantially  raised  and  measures  were  taken  to 
increase the attractiveness of the profession. As a 
result,  between  2018  and  2022,  the  number  of 
students  in  bachelor  programmes  in  education 
increased by 25.2%, and by 40% at master’s level. 
However,  between  40-60%  of  graduates  do  not 
become 
the  highest-
performing  graduates  from  upper  secondary  are 
not usually attracted to teaching (125). Many novice 
teachers leave the profession. 

teachers.  Furthermore, 

Participation  in  early  childhood  education 
remains  low.  In  2021,  only  79.4%  of  Bulgarian 
children  between  3  and  the  starting  age  for 
compulsory  primary  education  were  enrolled, 
significantly  below  the  EU  average  of  92.5%. 
Nevertheless,  more  recent  national  data  suggests 
that the figure could be understated, possibly due 
to  emigration (126).  The  participation 
is 
especially low among Roma (127). Lack of places in 
Sofia  and  other  large  urban  areas  also  affect 
participation. 

rate 

Early school leaving continues to decrease. In 
2023,  the  percentage  of  early  leavers  from 
education and training among 18-24-year-olds fell 
to 9.3%. The rate has been improving following 

(124) Ministry of Education and Science (2022), АНАЛИЗ НА 

РЕЗУЛТАТИТЕ НА НАЦИОНАЛНИТЕ ВЪНШНИ ОЦЕНЯВАНИЯ 
В ЧЕТВЪРТИ И СЕДМИ КЛАС ЗА 2017-2021 Г. 

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

Note and Recommendations. 

(126) Based on the revised 2021 census figures, the participation 
rate jumped to 88.8% in the 2022-2023 school year 
(National Statistical Institute). 

(127) Fundamental Rights Agency (FRA), 2022, Headline indicators 
for the EU Roma strategic framework for equality, inclusion 
and participation for 2020–2030. 

 
 
 
 
 
Table A15.1:EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Notes: b = break in time series; d = definition differs; e = estimated; p = provisional; u = low reliability; : = data not available. 
Source: 1,3,4,5,7,8,9,10,12=Eurostat; 11= Eurostat, Adult Education Survey; 2,6=OECD, PISA. 

Graph A15.1: Underachievement rates in 
mathematics by socio-economic background, PISA 
2022 

Source: OECD (2023). 

efforts to prevent and reduce early school leaving, 
but  is  still  above  the  EU-level  target  of  9%  by 
2030.  It  remains  particularly  high  in  rural  areas 
(18.8%) and for the Roma (128).  

(128) ibid. 

68 

in 

Tertiary educational attainment is improving 
but  remains  low.  In  2023,  35.8%  of  Bulgarians 
aged  25-34  had  a  tertiary  degree,  significantly 
below  the  EU  average  (43.1%).  The  gender  gap 
remains substantial, with 28.7% of men holding a 
tertiary  degree  compared  with  43.3%  of  women. 
The  percentage  of  graduates 
science, 
technology,  engineering  and  mathematics  (STEM) 
tends to be rather low (20.3% compared with the 
EU  average  of  25.4%).  In  the  period  2018-2022, 
student  numbers  dropped  sharply 
in  several 
programmes  that  could  support  Bulgaria’s  green 
transition.  Student  numbers  have 
increased 
significantly in ICT (19.5%), education (25.2%) and 
health  (5.9%).  Nevertheless,  they  dropped  by 
28.8%  in  environmental  programmes,  8.8%  in 
physical,  chemical  and  earth  sciences,  and  12.9% 
in engineering. These figures are a challenge in the 
context  of  existing  skills  shortages  and 
low 
participation  in  adult  learning  (see  Annex  14). 
Nevertheless,  efforts  to  improve  the  quality  and 
labour  market  relevance  of  higher  education 
continue, 
including  with  the  support  of  the 
European Social Fund Plus. 

0102030405060708090BGEUBGEUBGEUTotalAdvantagedstudentsDisadvantagedstudents%2030 EU target96%83.8%201391.8%201379.8%92.2%79.4%202192.5%2021,dReading< 15%39.4% 18.0%47.1% 22.5%52.9%202226.2%2022Mathematics< 15%43.8% 22.1%44.4%22.9%53.6%202229.5%2022Science< 15%36.9% 16.8%46.5%22.3%48.0%202224.2%2022< 9 %12.5%12.6%12.7%10.5%9.3%9.5%Men12.1%14.5%12.6%12.1%9.4%11.3%Women13.0%10.6%12.8%8.7%9.2%7.7%Cities5.3%b11.2%5.9%9.4%4.2%8.6%Rural areas26.8%b14.0%26.2%11.0%18.8%9.9%5By country of birthNative12.6%11.3%12.7%9.2%9.4%8.2%EU-born:26.2%:u22.4%:u21.0%Non EU-born:u30.1%:u23.0%:u21.6%6Socio-economic gap (percentage points)50.5:42.729.548.0202237.220227Exposure of VET graduates to work-based learning≥ 60% (2025) ::: :: 64.5%45%27.2%34.1%34.0%38.7%35.8%43.1%Men20.9%29.1%27.3%33.3%28.7%37.6%Women34.0%39.2%41.1%44.2%43.3%48.8%Cities37.4%b43.5%46.2%49.0%49.1%53.3%Rural areas10.8%b24.8%13.7%27.7%15.1%31.7%Native27.2%35.4%33.9%39.7%35.8%44.2%EU-born:29.3%:u36.7%:40.2%Non EU-born:u24.2%:u31.0%:u37.1%11Participation in adult learning (age 25-64)≥ 47% (2025) ::11.8%201637.4%20169.5%202239.5%202224.3%201322.7%201330.7%23.8%31.3%202124.5%2021201220182023IndicatorTargetBulgariaEU-27BulgariaEU-27BulgariaEU-271Participation 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 urbanisationTertiary educational attainment (age 25-34)8Total8By gender9By degree of urbanisation10By country of birth12Share of school teachers (ISCED 1-3) who are 55 years or over 
 
   
 
 
  
 
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  recovered  partly 
in 2022 after a sharp decline in the previous 
2 years.  The  decline  was  mostly  due  to  the 
COVID-19  pandemic.  As  mortality  from  COVID-19 
fell  in  2022  from  its  2021  level,  life  expectancy 
increased  again,  although  not  to  pre-pandemic 
levels (129), and it continues to be the lowest in the 
EU.  In  2021,  the  leading  causes  of  death  were 
diseases  of  the  circulatory  system  followed  by 
COVID-19 and cancer. The treatable mortality rate 
was well above the EU average in 2021. However, 
the cancer mortality rate was slightly below the EU 
average.  Mortality  in  economically  active  age 
groups,  as  a  proportion  of  total  mortality  and 
relative  to  the  workforce  size,  was  among  the 
highest in the EU. 

Graph A16.1: Life expectancy at birth, years 

Source: Eurostat 

Health  spending  relative  to  GDP  in  Bulgaria 
was  8.6%  in  2021,  well  below  the  EU 
average  of  10.9%.  Adjusted  for  purchasing 
power,  health  spending  per  capita  in  2021  was 
amongst  the  lowest  in  the  EU,  less  than  half  the 
EU average. Despite a consistent increase in recent 
years,  public  health  spending  as  a  proportion  of 
total  health  expenditure  was  64.7%  in  2021,  still 
well  below  the  EU  average  of  81.1%.  The  high 
share  of  out-of-pocket  payments  for  healthcare 
(34%  in  2021,  more  than  double  the  EU  average 
of  14.5%)  remains  a  major  challenge.  Bulgaria 

(129) Based on data provided directly by Member States to the 

European Centre for Disease Prevention and Control, under 
the European Surveillance System. 

69 

also  ranks  among  the  countries  with  the  highest 
proportion of households experiencing catastrophic 
health  spending.  Based  on  the  age  profile  of  the 
Bulgarian  population,  public  spending  on  health is 
projected  to  increase  by  0.2  percentage  points 
(pps) of GDP by 2070, compared to 0.6 pps for the 
EU overall (see Graph A16.2 and Annex 21). 

Graph A16.2: Projected increase in public 
expenditure on healthcare over 2024-2070 

Baseline scenario 
Source: European Commission / EPC (2024) 

Spending  on  inpatient  care  made  up  the 
in 
largest  share  of  health  expenditure 
Bulgaria. Around 40% of health spending went to 
inpatient care in 2021, well above the EU average 
of  25%.  Together  with  the  highest  number  of 
hospital  beds 
in  the  EU  (792  per  100 000 
population  in  2021),  this  points  towards  a  highly 
hospital-centred  care  model.  Correspondingly, 
spending on outpatient care in Bulgaria, at 19% of 
total  spending,  was  well  below  the  EU  average. 
Spending 
(mainly 
pharmaceuticals)  in  outpatient  settings  accounts 
for almost a third of health expenditure, amongst 
the highest in the EU. 

on  medical 

goods 

Spending on prevention in Bulgaria amounted 
to  3.3%  of  total  healthcare  spending  in 
2021,  compared  to  6%  for  the  EU  overall. 
Between  2019  and  2021,  spending  on  prevention 
in Bulgaria increased by around 10%, much lower 
than  the  106%  increase  for  the  EU  overall. 
Between  2019  and  2021,  Bulgaria  reported  a 
proportional 
on 
epidemiological  surveillance,  risk  and  disease 
control  and  early  disease  detection  programmes. 
Proportionally, budget shares for prevention across 
the  EU  increased  most  for  emergency  response, 
disease  detection  and  immunisation  programmes. 
In  2022,  the  consumption  of  antibacterials  in 
Bulgaria  reached  25.7  daily  defined  doses  per 
1 000  population  a  day  –  24%  higher  than  in 
2019  and  well  above  the  EU  average  of  19.4  (in 

spending 

increase 

in 

74.875.075.173.671.474.280.981.081.380.480.180.6201720182019202020212022BulgariaEU6.64.50.60.202468EUBulgaria% of GDP20242070increase 
 
   
 
 
   
 
Table A16.1:Key health indicators 

Note: The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used. Doctors’ density data refer to practising doctors in all countries except Greece, Portugal (licensed to practise) and 
Slovakia (professionally active). Nurses’ density data refer to practising nurses in all countries except Ireland, France, Portugal, 
Slovakia (professionally active) and Greece (hospital only). 
Source: Eurostat Database; except: * OECD, ** Joint Questionnaire on non-monetary healthcare statistics, *** ECDC, **** Council 
Recommendation on stepping up EU actions to combat antimicrobial resistance in a One Health approach. 

2022).  This  raises  public  health  concerns  about 
antimicrobial resistance. 

The Bulgarian health system faces shortages 
of  nurses  and  general  practitioners.  The 
number of nurses per 1 000 population was 4.2 in 
2021, much lower than  the  EU  average  of  7.9.  In 
addition, Bulgaria has a comparatively low number 
of  nursing  graduates  in  relation  to  its  population, 
while  around  40%  of  nursing  staff  are  55  years 
old  or  older.  The  number  of  doctors  per  1 000 
population was 4.3 (in 2021), slightly above the EU 
average  of  4.1.  However,  general  practitioners 
comprised  only  13.4%  of  all  physicians  in  2021, 
down  from  16.5%  in  2011,  one  of  the  lowest 
levels  in  the  EU.  Over  half  of  physicians  are  55 
years  old  or  older.  Furthermore,  the  Labour  Force 
Survey  recently  showed  that  employment 
in 
healthcare  dropped  by  3%  between  the  first 
quarter  of  2020  and  the  second  quarter  of  2023 
(while it increased in the EU on average by 9%). 

Self-reported  unmet  needs  for  medical  care 
in  Bulgaria  have  declined  markedly.  Around 
1%  of  the  Bulgarian  population  reported  such 
unmet  needs  in  2022,  down  from  15%  in  2008. 
However, there are significant disparities in unmet 
needs by income group. Unmet needs reported by 
low-income  households  (3.1%)  were  roughly  30 
times  higher  than  those  among  high-income 
households  (0.1%).  Furthermore,  comparatively 
higher unmet needs for medical care in rural areas 
were  reported.  The main  factors  for  unmet  needs 
include  high  out-of-pocket  payments,  insurance 
referral  quotas  and  uneven 
coverage  gaps, 
distribution of facilities and human resources. 

investment 

in  healthcare 

Historically, 
in 
Bulgaria  has  lagged  behind  the  EU  average, 
but  EU  funds  are  providing  substantial 
support.  Among  EU  countries,  a  comparatively 
low  percentage  of  Bulgarian  GDP  has  been 
invested  in  gross  capital  formation  in  healthcare. 
Through  its  recovery  and  resilience  plan  (RRP), 
Bulgaria  plans  to  invest  EUR 287 million  (5%  of 
the  RRP’s  total  value)  in  healthcare.  The  reforms 
contained  in  the  RRP’s  health  component  include 
an  update  of  the  strategic  framework  for  the 
health  sector,  and  measures  to  upgrade  e-health 
and  the  National  Health  Information  System  and 
challenges. 
to 
health  workforce 
address 
the 
Investments 
modernisation  of  medical  facilities  providing 
paediatric,  oncological  and  psychiatric  care.  Other 
measures  support  the  construction  of  outpatient 
care  units,  a  new  national  digital  platform  for 
medical  diagnostics  and  a  new  air  ambulance 
system.  Furthermore,  complementary investments 
of  EUR 220  million  are  planned  under  the  EU 
cohesion  policy  funds  for  2021-2027,  mainly  in 
health  infrastructure,  health  equipment,  health 
mobile assets and digitalisation of healthcare (130). 
In  general,  such  investments  may  help  Bulgaria 
its  slow  uptake  of  digital  health 
overcome 
solutions,  as  evidenced,  for  example,  by  the 
relatively  low  number  of  individuals  accessing 
personal  health 
in  Bulgaria, 
compared with the EU average. 

records  online 

the  RRP 

include 

under 

(130) The EU cohesion policy data reflect the status as of 13 May 

2024. 

70 

20182019202020212022EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)188,3189,0213,0225,1NA93.3 (2021)Cancer mortality per 100 000 population232,5242,2245,3229,4NA235.4 (2021)Current expenditure on health, % GDP 7,37,18,58,6NA10.9 (2021)Public share of health expenditure, % of current health expenditure59,160,663,164,7NA81.1 (2021)Spending on prevention, % of current health expenditure 2,83,02,83,3NA6.0 (2021)Available hospital beds per 100 000 population757774782792NA525 (2021)Doctors per 1 000 population4,24,24,34,3NA4.1 (2021)*Nurses per 1 000 population4,44,44,24,2NA7.9 (2021)Total consumption of antibacterials for systemic use, daily defined dose per       1 000 inhabitants per day ***21,120,722,724,425,719.4 (2022) 
 
 
  
 
ANNEX 17: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

Graph A17.1: GDP per capita (2012) and GDP 
growth (2013-2022), Bulgaria (NUTS-2 regions) 

Annex 17 showcases the economic and social 
regional  dynamics  in  Bulgaria.  It  provides  an 
analysis  of  economic,  social  and 
territorial 
cohesion  in  the  Bulgarian  regions  and  assesses 
emerging 
investment  needs  and  subnational 
reform  needs  to  foster  economic  growth,  social 
development and competitiveness in the country. 

of 
Overview 
performance at regional level 

economic 

and 

social 

and 

and 

training 

In  2022, 

competitiveness 

(Graph  A17.1). 

Regional  disparities  in  terms  of  GDP  per 
capita remain very high in Bulgaria despite a 
perceived  convergence  towards  the  EU 
average 
regional 
disparities  remained  at  the  same  level  as  in  the 
previous  decade.  They  are  characterised  in  terms 
of  GDP  and  labour  productivity,  demographics, 
employment, 
education 
infrastructures, 
R&I 
performance.  These  indicators  were  all  typically 
worse  in  the  northern  parts  of  the  country  (table 
A17.1). GDP per capita in the Yugozapaden region 
corresponds to 96% of the EU average, mainly due 
to  the  contribution  of  the  country's  capital,  Sofia. 
The  other  regions  lag  far  behind  and  score  40-
56%  of  the  EU  average,  although  the  country’s 
average  stands  at  62%.  The  Yugozapaden  region 
generates  half  of the  national  GDP, despite  being 
home  to  just  31%  of  the  population.  While 
performing  significantly  better  than  the  other 
Bulgarian  regions,  the  Yugozapaden  region  is 
characterised 
intra-regional 
disparities  and  the  development  gap  between  the 
capital  city and the rest of the region remains an 
issue. 

substantial 

by 

While 
labour  productivity  has  steadily 
increased  in  Bulgaria,  it  is  still  lagging 
behind  the  EU  and  significant  regional 
disparities  persist  (Graph  17.2).  Bulgaria  has 
lowest labour productivity that equated in 2022 to 
around 55% of EU average. Labour productivity is 
the  highest  in  the  Yugozapaden  region  at  71%, 
almost twice as high as in Severen Tsentralen, the 
least productive region. The Severoiztochen region 
showed the lowest growth (1.5%). 

Source: DG REGIO calculations based on JRC (ARDECO) and 
Eurostat data 

Overall, the unemployment rate in Bulgaria is 
lower  than  in  the  EU,  but  there  are  wide 
regional variations. In 2023, the unemployment 
rate was as low as 3.1% in Yuzhen Tsentralen and 
3.5% in the capital region, and as high as 7.8% in 
regions, 
one 
Severozapaden,  where  the  employment  rate  was 
also  particularly  low  (67.2%  against  the  national 
average of 76.2%).  

developed 

least 

the 

of 

Graph A17.2: Labour productivity (real GVA per 
worker), EU-27, Bulgaria (NUTS 2 regions), 2000-
2022 

Source: ARDECO, DG REGIO elaboration 

Bulgaria  and  some  of  its  less  developed 
regions rapidly lose population. Between 2013 
and  2021,  Bulgaria's  population  declined  by 
almost 7.0%. Population decline is extremely high 
in  Severozapaden  (population  shrank  by  17.6%), 
and in Severen Tsentralen (13.1%). In contrast, the 
Yugozapaden  region's  population  declined  by  only 
3.1%, which is again due to the contribution of the 
capital city, Sofia. 

71 

 
 
 
 
 
Table A17.1:Selected indicators at regional level in Bulgaria 

Source: Eurostat, EDGAR database 

Except  for  the  Bulgarian  capital  region,  all 
regions  are  in  a  talent  development  trap. 
These  regions  are  faced  with  a  sharp  drop  in  the 
working age population and a low and stagnating 
share  of  people  with  a  tertiary  education  (post-
secondary  education/higher  education).  In  some 
Bulgarian  regions,  less  than  one  in  four  people 
aged  25-64  held  a  tertiary  degree  in  2023: 
Severozapaden  (21%),  Yugoiztochen  (22.9%),  and 
Yuzhen tsentralen (24.9%).  

in  many  of  the  country’s 

Endowment  in  key  assets  such  as  transport 
infrastructure  and  human  capital  is  still 
less 
lacking 
developed regions. In the capital region, 74% of 
the population in a 120 km radius can be reached 
in  less  than  90  minutes  by  car.  This  ratio  is 
considerably lower in the three northern regions of 
Severozopaden  (30%),  Severen  Tsentralen  (36%), 
and Severoiztochen (46%). 

Map A17.1:  Competitiveness in Bulgarian regions 

Source: DG REGIO, JRC 

All  Bulgarian  regions  rank  below  the  EU 
average  in  terms  of  competitiveness  (Map 

72 

A17.1).  The  Regional  Competitiveness  Index  (RCI) 
value  is  highest  in  the  capital  region  (85)  and 
lowest  in  Yugoiztochen  (53)  and  Severozopaden 
(49).  The  divide  is  particularly  striking  for  the 
innovation  sub-index,  where  the  capital  region’s 
in 
value  reaches  75,  compared  to  only  28 
Yugoiztochen and Severozopaden.  

There 
is  an  urgent  need  to  promote 
convergence  between  the  capital  and  the 
other  regions.  Further  to  these  inter-regional 
disparities, the intra-regional disparities within the 
Yugozapaden  region  also  need  to  be  addressed. 
Public  policies  and  targeted  investments  are  to 
aim at boosting upward convergence, enabling less 
developed  regions  to  improve  their  performance 
and narrow the gap. It is crucial that regional and 
into  account  the  specific 
local  policies  take 
territorial  characteristics  and  demands  of  each 
region. Tailoring investments will create conditions 
for  better  absorption  capacity  at  local  level  and 
ensure more efficient measures in addressing the 
regional disparities. 

It  is  necessary  to  accelerate  the  smart  and 
digital  transition  and  increase  the  capacity 
for  companies  to  deliver  in  less  developed 
regions. Investments need to strengthen research 
infrastructure,  stimulate  innovation  ecosystems, 
facilitate  the  integration  of  digital  technologies 
across  all  sectors  of  the  economy,  business  and 
society.  It  is  necessary  to  provide  support  for  the 
innovative  and  productive  investments  of  small 
and  medium  sized  enterprises  (SMEs),  and  in 
particular for the uptake of advanced technologies 
tailored to  the  regional  potential  for  development 
outlined  in  the  innovation  strategy  for  smart 
specialisation.  

NUTS region nameGDP per head (PPS)Productivity (GVA (PPS) per person employed)Population growthLife expectancy at birthInfant mortalityUnemployment ratePopulation aged 30-34 with high educational attainmentR&D expenditureTransport performance by carEU Regional Competitiveness Index 2.0 - 2022 editionIndex, EU27 = 100 (2022)Index, EU27 = 100 (2022)Average annual change per 1 000 residents (2013 - 2021)Years (2022)Deaths under 1 year of age per 1 000 births (2021)% of labour force (2023)% of population aged 30-34 (2023)% of GDP (2021)% of population in a 120 km radius that can be reached within 1h30 (2021)Index, EU-27 = 100European Union (27 MS)1001001.93.36.143.92.377.2100Bulgaria6254.9-774.25.64.3350.855.166Severozapaden4045.8-17.672.37.17.8230.430.349Severen Tsentralen4240.3-13.173.26.4630.60.335.662.4Severoiztochen4846.3-5.274.15.84.532.70.446.458.9Yugoiztochen  5654.1-6.273.79.64.624.30.355.253.4Yugozapaden9770.7-3.175.23.13.547.11.274.485.4Yuzhen Tsentralen4340.5-5.674.65.13.131.10.554.561.6 
 
 
 
 
 
  
 
Bulgarian  regions  need  support  to  reach 
green  transition  objectives.  It  is  necessary  to 
ensure  the  seamless  deployment  of  technologies 
easing  the  transition  to  a circular  and  low-carbon 
economy.  This  requires  investments  in  energy 
efficiency measures, and the promotion of a more 
sustainable  use  of  resources.  Further  focus  is 
needed  on  waste  recycling  targets,  disaster  risk 
protection. 
management 
Additionally,  Bulgaria  could  also  benefit  from 
facilitating  investments  in  net-zero  technologies, 
by  making  use  of  the  Strategic  Technologies  for 
Europe Platform (STEP) initiative.  

biodiversity 

and 

The  density  and  quality  of  rail  and  road 
infrastructure  in  Bulgaria  are  below  the  EU 
average, and the northern regions lag behind the 
southern  ones.  There 
to  boost 
investments  in  the  country’s  railway  network  and 
sustainable  urban  transport.  Bulgaria  needs  to 
the 
strengthen 
implementation  of  sustainable  urban  mobility  at 
local level. 

the  planning  and  step  up 

is  a  need 

territorial 

Ensuring support tailored to the needs of the 
local  and  regional  beneficiaries  will  improve 
their  capacity  and  will  contribute  to  the 
convergence. 
Bulgaria's 
Beneficiaries  need  help  to  develop  long-term 
partnerships for the implementation of EU-funded 
projects.  This  will  create  conditions  for  better 
absorption capacity at all levels. It is necessary to 
support  small  business  (micro-enterprises  and 
SMEs). Due to their limited administrative capacity, 
they  face  challenges  in  applying  for  EU  funding 
and successfully implementing projects. 

Partnership  Agreement 

Addressing  territorial  disparities  is  one  of 
the  high-level  objectives  laid  down  in  the 
of 
2021-2027 
Bulgaria.  The  implementation  of  the  integrated 
territorial  approach  could  help  advance  this 
priority, 
collective  efforts  on  all 
governance and administrative levels. 

requiring 

for 

Urban municipalities need to strengthen their 
integrated  planning  and 
capacity 
programming,  including  sustainable  urban 
implementation  of 
mobility  planning.  The 
integrated 
requires 
promoting  the  territorial  approach  at  regional 
level. Better coordination mechanisms between the 
managing  authorities  of  different  EU  co-funded 
the  Regional  Development 
programmes  and 

investments 

territorial 

(RDCs)  are  necessary.  RDCs 

Councils 
can 
participate  in  the  decision-making  process  and 
facilitate  cross-jurisdiction  cooperation. 
is 
important  to  explore  the  means  for  empowering 
the  RDCs  and  connecting  them  both  to  the  local 
and national administrations. 

It 

up 

and 

speeding 

Bulgaria’s 

governance 
Strengthening 
the 
mechanism 
implementation of measures financed by the 
Just  Transition  Fund  to  facilitate  the  clean 
energy  transformation  and  the  transition  to 
a  climate-neutral  economy  need  to  be 
prioritised. The Territorial Just Transition Plans in 
the  three  regions  of  Stara  Zagora, Kyustendil  and 
Pernik  should  enable  Bulgaria  to  address  the 
socio-economic  impacts  of  the  transition  and  the 
gradual phase-down of coal. 

Both the cohesion policy programmes and the 
RRP  for  Bulgaria  invest  in  the  water  and 
sanitation  sector,  where  substantial  needs 
have  been  identified  and  despite the  efforts 
underway some still remain to be addressed. 
Agglomerations in a number of regions continue to 
lack  adequate  infrastructure  for  the  collection, 
disposal  and  treatment  of  wastewaters  while 
infrastructure  negatively 
ageing  water  supply 
affects  both  the  water  quality  and  its  efficacy, 
because  of  substantial  water  losses  caused  by 
leakages.  Further  action  is  needed  to  ensure  that 
the  necessary  conditions  are  put  in  place  on  the 
ground  to  ensure  that  regional  water  operators 
can  be  established  and  effectively  take  up  their 
functions 
remaining  non-consolidated 
regions  and  to  ensure  quality  water  supply  and 
urban waste-water treatment. 

the 

in 

efforts 

in 
Bulgaria  must 
intensify 
local  support 
establishing  regional  and 
innovation,  and 
networks  for  research, 
entrepreneurship.  Regional  and 
local-level 
support  should  aim  to  raise  awareness,  improve 
technical capabilities, and strengthen collaboration 
among  local  stakeholders,  which  is  crucial  for 
aligning funds with regional needs (see Annex 11). 
Leveraging  regional  information  centres  can  also 
improve effectiveness. 

Moreover,  creating  an  enabling  environment 
for technology transfer is vital to unleashing 
the  full  potential  of  centres  of  competence 
and  excellence,  positioning  them  as  key 
drivers  for  regional  development  and  high-

73 

 
among 

value  job  creation.  This  involves  encouraging 
research 
collaboration 
organisations,  and  the  business  sector  while 
overcoming  fragmentation  in  the  research  and 
innovation ecosystem. 

universities, 

74 

 
 
MACROECONOMIC STABILITY 
ANNEX 18: KEY FINANCIAL SECTOR DEVELOPMENTS 

total  loans  and  advances  in  the  middle  of  2023 
(compared with 6.8% a year earlier). In 2023, the 
share  of  ‘Stage  2’  (loans  that  have  deteriorated 
initial 
since 
significantly 
recognition  under 
International  Financial 
Reporting  Standard  (IFRS)  9)  was  among  the 
highest  in  the  EU  and  indicated  increased  credit 
risk. 

credit  quality 

the 

in 

Graph A18.1: Evolution of credit activity 

Source: ECB 

Lending activity was very strong in 2022 and 
remained  buoyant  in  2023,  especially  in  the 
household  sector.  So  far,  increases  in  interest 
rates  have  mainly  been  observed  for  new  NFC 
lending,  reflecting  the  dynamics  of  benchmark 
indices  on  the  euro  area  interbank  market.  In 
2023,  interest  rates  on  new  loans  to  households 
remained  broadly  unchanged  year-on-year,  for 
both consumer and mortgage loans. By the end of 
2023,  year-on-year  growth  in  lending  to  non-
financial  corporations  was  8.5%  (Graph  A18.1) 
while  lending  to  households  grew  by  16.8%.  The 
slowdown  in  corporate  lending  growth  in  the 
second  half  of  2023  was  due  to  tightening 
financing  conditions  and  moderate  demand  for 
working capital. At the same time, credit activity in 
the  household  sector  was  supported  by  the 
favourable  credit  conditions  offered  by  banks, 
which resulted in additional credit demand. 

despite 

Bulgaria  has  a  small  financial  sector 
dominated  by  banks,  as  well  as  a  rapidly 
growing  fintech  industry.  The  ratio  of  banks’ 
total  assets  to  GDP  was  close  to  95%  in  2023, 
with  the  top  five  lenders  holding  approximately 
68% of total banking-sector assets in 2022 (Table 
A18.1).  Bulgaria’s  banking  sector  is  dominated  by 
subsidiaries  and  branches  of  euro  area  banks. 
Domestic  banks  accounted  for  only  27%  of  total 
assets  in  2023,  somewhat  higher  than  pre-
pandemic  levels.  The  number  of  bank  branches 
relative to the population is more than double the 
EU  average.  At  the  same  time,  Bulgaria’s  fintech 
relatively 
sector, 
still 
strong 
underdeveloped, 
expansion,  mainly  driven  by  growth  in  the  digital 
payments  sector  and  supported  by  developments 
in the alternative-credit, data-analytics and digital-
capital 
asset-exchange 
markets remain comparatively small and play only 
a limited role in financing local firms. In particular, 
the market-funding ratio has been on a downward 
path in recent years, and stood at 11.9% in 2022, 
well  below  the  EU  average  of  50.8%.  Thus, 
companies’  access  to  non-bank  funding,  notably 
the  use  of  listed  shares  and  debt  securities, 
finance 
remains 
initiatives in Bulgaria remain mainly supported by 
public policies and public investment funds. 

being 
continued 

segments.  Bulgaria’s 

limited.  Sustainable 

very 

has 

its 

In an environment of high inflation and rising 
net  interest  income,  the  banking  sector’s 
profitability  and  solvency  have  remained 
robust.  The  system-wide  capital  adequacy  ratio 
was  22.5%  in  September  2023,  above  the  EU 
average of 19.6%. After the profitability of banks 
in  Bulgaria  reached  pre-pandemic  levels  in  2022, 
additional  strong  increases  in  return  on  equity 
were  recorded  in  2023.  The  cost-to-income-ratio, 
at 36.1% in September 2023, was well below both 
its  levels  in  recent  years  and  the  EU  average 
(52.8%).  The  loan-to-deposit  ratio  increased  to 
74.3% 
in 
December  2022,  driven  by  continued  growth  in 
lending.  At  3.2%  in  Q3-2023,  non-performing 
loans  (NPLs)  remained  comparatively  high,  and 
stood above the EU average of 1.8%, as the pace 
of  NPL  reduction  in  Bulgaria  has  slowed  down. 
Since  2017,  the  overall  NPL  ratio  has  been  on  a 
individual  banks  and 
downward  trend  across 
lending  segments,  due  to  loan  write-offs  and 
sales. NPLs to non-financial corporations have also 
fallen  in  recent  years,  but  still  stood  at  5.7%  of 

in  September  2023,  from  69.5% 

75 

-505101520Total privateNFCHH% 
 
 
  
 
Table A18.1:Financial soundness indicators 

(1) Last data: Q3 2023. 
(2) Data are annualised. 
(3) Data available for EA countries only, EU average refers to EA area. 
Source: ECB, Eurostat. 

The  accumulation  of  potential  risks  to  the 
resilience  of  Bulgaria’s  banking  system  has 
triggered  a  policy  response.  Higher  energy 
prices  and  adverse  economic  developments  in 
Bulgaria’s  main  trading  partners  may  adversely 
affect  the  real  economy  and  the  debt-servicing 
ability  of  borrowers.  High  liquidity  and  strong 
competition  in  the  banking  sector  during  2023, 
resulted in a slow transmission of the tighter euro 
area  monetary  policy  stance  to  the  interest  rates 
on deposits and loans in Bulgaria, especially in the 
household  sector.  The  persistence  of these trends 
and  the  associated  potential  risks  prompted  the 
Bulgarian  National  Bank 
(BNB)  to  raise  the 
percentage of minimum required reserves (MRR) in 
two steps (131), with the aim of absorbing some of 
the  excess  liquidity  in  the  banking  system  and 
limiting banks’ resources to extend loans. 

The  booming  housing  market  and  strong 
growth  in  mortgage  lending  continued  in 
2023.  Eurostat’s  house  price  index  for  Bulgaria 
has 
increased  by  around  90%  since  2015, 
reflecting  a  low  interest  rate  environment  in  the 
past  decade  coupled  with  income  growth.  Annual 
growth 
lending  has  accelerated 
significantly  in  recent  years,  peaking  at  18.9% 
year-on-year  in  Q3-2023.  This  growth,  and  the 
from  possible  unfavourable 
risks  stemming 
the  economic  outlook  and 
in 
developments 

in  mortgage 

(131) As of 1 June 2023, the percentage of the MRR on funds 

attracted by banks from non-residents was raised from 5% 
to 10%; and as of 1 July 2023, the MRR on funds from both 
residents and non-residents was raised to 12%. 

76 

potential increases in lending rates, prompted BNB 
increase  the  countercyclical  capital  buffer 
to 
(CCyB) from 1.5% to 2% from 1 October 2023.  

to 

the 

improve 

covering 

assessments 

taken  action 

Bulgaria  has  taken  steps  to  strengthen  its 
anti-money  laundering  (AML/CFT)  framework 
but  more  work  remains  to  be  done.  Bulgaria 
has 
the  AML/CFT 
framework  by  (i)  amending  the  Law  on  Measures 
Against  Money  Laundering; 
(ii)  updating  the 
national risk assessment of money laundering and 
terrorist  financing;  and  (iii)  issuing  three  sectoral 
non-profit 
risk 
organisations’  sector,  virtual  assets  and  the 
investor  citizenship  scheme.  Steps  are  also  being 
taken  to:  (i)  improve  the  functioning  of  the 
beneficial  ownership  registers  in  the  country  by 
improving  the  adequacy  and  accuracy  of  the 
information  contained  therein;  (ii)  strengthen  the 
analytical  capacity  of  the  country’s  Financial 
Intelligence Unit to make better use of suspicious 
transaction  reports;  (iii) 
increase  the  use  of 
financial intelligence; and (iv) improve cooperation 
with  investigative  and  prosecutorial  authorities  to 
increase  the  usefulness  of  financial  intelligence. 
Further efforts are needed to improve the capacity 
of competent authorities to effectively investigate 
and  prosecute  money  laundering  and  related 
framework  was 
crimes.  Bulgaria’s  AML/CFT 
assessed  against 
international 
standards  in  2022  by  MONEYVAL,  covering  the 
in 
period 
recommended action-plan items developed by the 
Financial  Action  Task  Force  (FATF)  in  coordination 
with Bulgaria which have to be addressed.  

2014-2021, 

relevant 

resulted 

which 

the 

2017201820192020202120222023EUMedianTotal assets of the banking sector (% of GDP)101.6101.7100.0107.8101.395.694.8257.0184.6Share (total assets) of the five largest banks (%)56.559.762.567.167.267.6--69.6Share (total assets) of domestic credit institutions (%)123.622.122.322.828.427.627.1-62.9NFC credit growth (year-on-year % change)4.88.67.64.05.711.18.5-2.4HH credit growth (year-on-year % change)8.99.110.67.614.516.016.8-1.4Financial soundness indicators:1        - non-performing loans (% of total loans)10.27.76.55.94.83.73.21.81.8- capital adequacy ratio (%)21.820.619.523.122.921.322.519.620.1- return on equity (%)210.211.811.24.98.811.217.39.913.2Cost-to-income ratio (%)145.145.346.847.245.044.136.152.844.9Loan-to-deposit ratio (%)172.675.578.069.768.869.574.393.380.2Central bank liquidity as % of liabilities0.00.0-0.00.00.00.0-0.7Private sector debt (% of GDP)98.795.090.892.184.074.6-133.0118.4Long-term interest rate spread versus Bund (basis points)128.549.668.276.556.338.9131.9107.7104.2Market funding ratio (%)17.115.515.413.712.411.9-50.839.8Green bonds outstanding to all bonds (%)3-------4.02.71-34-1011-1718-2424-27Colours 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 

from 

labour 

investment  and 

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  benefits  economic  activity  because  it 
encourages 
supply. 
Table A19.1  shows  that  Bulgaria’s  tax  revenue  as 
a  percentage  of  GDP  was  considerably  below  the 
EU  aggregate  in  2022,  with  a  slight  increase  by 
0.3  pps,  and  almost  the  same  as  in  2020 
(+0.6 pps).  The  share  of  consumption  taxes  as  a 
proportion  of  total  tax  revenue  was  significantly 
above  the  EU  aggregate  (41.4%  compared  with 
27.3%),  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 A19.1).  

Environmental  taxes  are  higher  than  the  EU 
average  but  could  still  be  expanded.  They 
represented  15.3%  of  total  taxation  in  2022, 
which was the highest rate in the EU-27. This was 

Table A19.1:Taxation indicators 

mostly  due  to  energy  taxes  (for  more  on  policies 
to  environmental  sustainability,  see 
related 
Annex 6). For example, the Recovery and Resilience 
Facility  includes  a  measure  to  promote  electric 
mobility by warranting lower registration costs for 
electric  vehicles.  Nevertheless,  pollution  and 
resources taxes only account for 0.1% of total tax 
revenue,  indicating  that  there  is  potential  to 
strengthen  the  application  of  the  ‘polluter  pays’ 
principle. Bulgaria has implemented one of the six 
possible types of pollution and resources taxes (i.e. 
taxes  on  NOx  emissions)  but  not  yet  the  other 
types  (i.e.  taxes  on  incineration  and  landfilling, 
waste  discharge  into  water,  fertilisers,  pesticides 
and plastic products). 

is  below  the  EU  average  for 
Bulgaria 
property  and  corporate  taxation.  Revenue 
from  property  taxes  was  relatively  low  as  a 
percentage of both GDP and of total  tax  revenue. 
The  same  holds  for  revenues  from  recurrent 
property taxes, which are considered a particularly 
growth-friendly type of taxation. There is therefore 
room  to  increase  recurrent  property  taxes  to  help 
address  potential  fiscal  sustainability  challenges. 
The average forward-looking effective tax rate on 
corporate  income  was  considerably  below  the  EU 
average  in  2022.  In  December  2023,  Bulgaria 
adopted  the  Pillar  2  global  minimum  tax  of  15% 
for  large  Bulgarian  companies  and  branches  of 
large  multinationals,  applicable  from  January 

(1) Forward-looking effective tax rate (OECD).       
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2022, if available. For more details on the VAT gap, see European Commission, Directorate-General for 
Taxation and Customs Union, VAT gap in the EU, 2023, https://data.europa.eu/doi/10.2778/911698.  
For more data on tax revenues as well as the methodology applied, see the Data on Taxation webpage: 
https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en 

Source: European Commission and OECD 

77 

BG2010202020212022202320102020202120222023Total taxes (including compulsory actual social contributions) (% of GDP)25.430.530.831.137.940.040.440.2Labour taxes (as % of GDP)8.411.511.110.420.021.320.720.3Consumption taxes (as % of GDP)13.414.014.112.910.810.711.211.0Capital taxes (as % of GDP)3.65.05.67.87.18.08.68.9Of which, on income of corporations (as % of GDP)2.02.22.93.02.42.53.03.4Total property taxes (as % of GDP)0.50.70.80.71.92.32.22.1Recurrent taxes on immovable property (as % of GDP)0.30.30.30.21.11.21.11.0Environmental taxes as % of GDP2.73.02.84.82.42.22.32.0Tax wedge at 50% of average wage (Single person) (*)32.534.934.934.934.933.931.732.131.831.7Tax wedge at 100% of average wage (Single person) (*)32.534.934.934.934.941.040.139.940.040.2Corporate income tax - effective average tax rates (1) (*)9.29.29.219.519.019.0Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)3.64.14.74.48.68.18.27.9Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)100.881.040.935.5VAT Gap (% of VAT total tax liability, VTTL)(**)24.37.34.95.69.75.4BulgariaEU-27Tax structureProgressivity & fairnessTax administration & compliance 
 
 
 
      
 
 
Graph A19.1: Tax revenues from different tax types, % of total revenue 

Source: European Commission 

2024. (132) 

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 
lowest  personal  income  tax  rates  in  the  EU  (only 
10%).  Unlike  some  Member  States  with  a  flat 
income  tax  rate,  there  is  no  basic  tax  allowance, 
which  further  limits  the  progressivity  of  the  tax 
system (133).  The  tax  wedge  is  therefore  relatively 
high for low-income earners and relatively low for 
high-income  earners  (Graph  A19.2).  This  may 
reduce labour demand for low-skilled workers. The 
lack  of  progressivity  in  the  tax  system  also 
contributes to the low ability of the tax and benefit 
system to redistribute income. The tax and benefit 
system reduced the Gini coefficient (a measure of 
income inequality) in 2022 by only 4.4 pps, which 
was  well  below  the  EU  average  of  7.9  pps 
(see Table A19.1). EUROMOD simulations based on 
2017  data  and  policies  suggest  that  an  annual 
basic tax allowance of EUR 2 800 for low incomes 
financed  by  an  increase  in  the  statutory  tax  rate 

(132)https://dv.parliament.bg/DVWeb/showMaterialDV.jsp?idMat=2

01970 

(133) The maximum monthly social security contribution was 

increased from BGN 3 ,400 (EUR 1,738) to BGN 3,750 since 
the start of 2024, meaning that the marginal tax rate is 
regressive, and the tax wedge is then relatively high for low-
income earners. However, the income tax base of employees 
can be reduced by BGN 6 ,000 (EUR 3 ,067) annually per 
child, up to BGN 12, 000 for two children and BGN 18 ,000 
for three children or more children. The tax relief for disabled 
children is increased by an additional BGN 12, 000 (EUR 
6,135.5). The income tax base of any person who has lost 50 
per cent and more than 50 per cent of the working capacity 
can be reduced by BGN 7, 920 (EUR 4 ,049) annually.  

could  reduce  relative  poverty  by  around  0.6 pps 
and inequality by 0.8 Gini points (134). 

Graph A19.2: Tax wedge for single and second 
earners as a % of total labour costs, 2023 

The second earner tax wedge assumes a 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 

2021 

persist. 

administration 

Some  challenges  regarding  the  efficiency  of 
tax 
tax 
compliance  (the  gap  between  revenues  collected 
and the theoretical tax liability) is below the EU-27 
average, as in previous years. Overall, there is still 
considerable  room  for  improvement  as  concerns 
the  efficiency  of 
tax  administration. 
the 
Outstanding tax arrears decreased by 19.8 pps to 
81% of total revenue collected between 2020 and 
2021  but  remained  among  the  highest  in  the  EU 
(the  EU  average  is  35.5%).  Bulgaria  is  lagging 

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

78 

34.934.934.934.934.92025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - BGSingle earner - EU averageSecond earner -  BGSecond earner -  EU average50.627.322.133.541.425.1Tax revenue shares in 2022, Bulgaria (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital14.43.90.80.90.10.20.72.51.52.705101520Bulgaria -environmentaltaxationEU -environmentaltaxationBulgaria -propertytaxationEU - propertytaxationEnvironmental and property taxation as % of total tax revenue, Bulgaria and the EUEnergy taxesTransport taxesResource/pollution taxesRecurrent property taxesOther property taxes 
 
     
 
      
behind  other  Member  States  in  terms  of  the 
degree  to  which  tax  returns  are  pre-filled,  which 
may  be  considered  as  an 
indicator  of  the 
compliance  costs  that  taxpayers  face  (135).  The 
electronic  filing  rates  for  personal  income  tax 
returns  have  improved  but  are  still  lower  than  in 
other  Member  States.  Bulgaria’s  Recovery  and 
Resilience  Plan  does  not  include  tax  reforms, 
despite  2019  and  2020  CSRs  related  to  taxation. 
However,  there  are  some  measures  to  prevent 
providing 
money 
by 
professional 
(including 
accountants and tax advisors) and others providing 
incentives for electric mobility.  

persons 
services 

laundering 

company 

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

Table DM2. 

79 

 
 
 
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) NIIP excluding direct investment and portfolio equity shares. 
Source: Eurostat and ECB as of 2024-5-17, where available; European Commission for forecast figures (Spring forecast 2024). 

80 

2004-072008-122013-2020212022202320242025Real GDP (y-o-y)6.81.41.87.73.91.81.92.9Potential growth (y-o-y).1.82.42.42.52.32.72.1Private consumption (y-o-y)9.21.42.68.53.85.42.72.9Public consumption (y-o-y)2.5-0.33.40.45.5-0.43.55.0Gross fixed capital formation (y-o-y)16.5-4.21.8-8.36.53.33.53.0Exports of goods and services (y-o-y)15.02.92.611.211.6-1.91.53.2Imports of goods and services (y-o-y) 19.7-1.14.110.715.0-6.33.24.3Contribution to GDP growth:Domestic demand (y-o-y)10.5-0.32.53.44.33.62.93.2Inventories (y-o-y)0.7-0.70.23.81.4-4.80.00.2Net exports (y-o-y)-4.52.2-0.90.4-1.83.0-0.9-0.5Contribution to potential GDP growth:Total Labour (hours) (y-o-y).-1.00.1-0.3-0.3-0.40.1-0.4Capital accumulation (y-o-y).1.70.80.50.60.60.70.7Total factor productivity (y-o-y).1.11.62.22.22.01.91.8Output gap1.50.7-1.20.01.41.00.21.0Unemployment rate11.110.38.05.34.24.34.34.0GDP deflator (y-o-y)7.54.03.77.116.27.53.32.5Harmonised index of consumer prices (HICP, y-o-y)6.84.60.52.813.08.63.12.6HICP excluding energy and unprocessed food (y-o-y)6.54.40.71.910.49.83.43.0Nominal compensation per employee (y-o-y)8.69.87.311.314.213.310.49.4Labour productivity (real, hours worked, y-o-y)3.53.22.06.54.40.82.42.8Unit labour costs (ULC, whole economy, y-o-y)4.76.65.53.69.512.37.96.4Real unit labour costs (y-o-y)-2.62.51.7-3.3-5.84.54.43.8Real effective exchange rate (ULC, y-o-y)2.84.53.83.75.44.62.93.8Real effective exchange rate (HICP, y-o-y)3.92.10.21.03.23.1..Net savings rate of households (net saving as percentage of net disposable income).-2.6......Private credit flow, consolidated (% of GDP)28.08.42.84.95.9...Private sector debt, consolidated (% of GDP)86.7134.7102.184.074.6...of which household debt, consolidated (% of GDP)18.027.923.423.822.5...of which non-financial corporate debt, consolidated (% of GDP)68.7106.878.760.152.1...Gross non-performing debt (% of total debt instruments and total loans and advances) (1)3.314.79.34.03.2...Corporations, net lending (+) or net borrowing (-) (% of GDP).-0.6......Corporations, gross operating surplus (% of GDP).28.6......Households, net lending (+) or net borrowing (-) (% of GDP).-2.7......Deflated house price index (y-o-y)24.8-6.53.22.5-2.12.7..Residential investment (% of GDP)3.93.42.42.82.82.8..Current account balance (% of GDP), balance of payments-14.6-6.51.5-1.7-1.4-0.30.4-0.2Trade balance (% of GDP), balance of payments-15.4-6.72.51.80.23.3..Terms of trade of goods and services (y-o-y)2.81.22.1-0.90.20.5-0.50.3Capital account balance (% of GDP)0.21.11.80.70.91.6..Net international investment position (% of GDP)-51.2-88.5-45.3-18.6-12.9-7.6..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (2)..31.447.444.446.4..IIP liabilities excluding non-defaultable instruments (% of GDP) (2)..49.039.335.634.0..Export performance vs. advanced countries (% change over 5 years)..13.015.919.416.7..Export market share, goods and services (y-o-y)6.3-0.22.04.48.5-2.9-2.0-0.4Net FDI flows (% of GDP)-18.5-6.1-2.3-1.8-2.4-3.3..General government balance (% of GDP)1.5-1.8-0.7-3.9-2.9-1.9-2.8-2.9Structural budget balance (% of GDP)..0.1-3.9-3.3-2.2-2.8-3.2General government gross debt (% of GDP)24.914.724.823.922.623.124.824.6forecast 
 
 
 
  
 
 
 
ANNEX 21: DEBT SUSTAINABILITY ANALYSIS 

This  annex  assesses  fiscal  sustainability 
risks for Bulgaria over the short, medium and 
long  term. 
It  follows  the  multi-dimensional 
approach  of  the  European  Commission’s  2023 
Debt Sustainability Monitor, updated based on the 
Commission 2024 spring forecast. 

1  –  Short-term  risks  to  fiscal  sustainability 
low.  The  Commission’s  early-detection 
are 
indicator  (S0)  does  not  point  to  any  major  short-
term  fiscal  risks  (Table A21.2) (136).  Government 
gross financing needs are expected to decrease to 
around  4%  of  GDP  on  average  over  2024-2025 
(Table A21.1, Table 1).  The  sovereign  credit  rating 
has  been  steadily  improving  and  has  returned  to 
investment grade at three of the four major rating 
agencies by the cut-off date of this report.  

2  –  Medium-term  fiscal  sustainability  risks 
appear  medium.  The  DSA  baseline  shows  that 
the government debt ratio is expected to increase, 
but  remain  at  a  low  level  over  the  medium  term 
(around  41%  of  GDP  in  2034)  (Graph 1,  Table 
1) (137).  The  debt  reduction  is  supported  by  the 
(excluding 
assumed  structural  primary  deficit 
changes  in  cost  of  ageing)  of  2.3%  of  GDP  as  of 
2024.  Compared  to  historical  data,  this  appears 
plausible as all the past fiscal positions were more 
stringent  than  the  one  assumed  in  the  baseline 
(Table  A21.2) (138).  The  debt  decline  also  benefits 

(136) The S0 is a composite indicator of short-term risk of fiscal 
stress. It is based on a wide range of fiscal and financial-
competitiveness indicators that have proven to be a good 
predictor of emerging fiscal stress in the past.  

(137) The assumptions underlying the Commission’s ‘no-fiscal 

policy change’ baseline include in particular: (i) a structural 
primary surplus, before changes in ageing costs, of 2.3% of 
GDP from 2024 onwards; (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 ahead); (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; (iv) real GDP growth rates 
from the Commission 2024 spring forecast, followed by the 
EPC/OGWG ‘T+10 methodology projections between T+3 and 
T+10 (average of 1.8%); (v) ageing costs in line with the 
2024 Ageing Report (European Commission, Institutional 
Paper 279, April 2024). For information on the methodology, 
see the 2023 Debt Sustainability Monitor (European 
Commission, Institutional Paper 271, March 2024). 

(138) This assessment is based on the fiscal consolidation space 

indicator, which measures the frequency with which a tighter 
fiscal position than assumed in a given scenario has been 
observed in the past. Technically, this consists in looking at 
the percentile rank of the projected SPB within the 

from  a  slightly  favourable  but  declining  snowball 
effect  of  around  -0.3  pp.  of  GDP  annually  on 
average  over  2025-2034,  which  is  supported  by 
the impact of Next Generation EU.  

the 

four 

interest-growth 

The  baseline  projections  are  stress-tested 
against 
deterministic 
alternative 
scenarios to assess the impact of changes in 
key  assumptions  relative  to  the  baseline 
(Graph 1).  Under  the  historical  structural  primary 
balance  (SPB)  scenario  (i.e.  the  SPB  returns  to  its 
historical  15-year  averageof  -0.5%  of  GDP)  the 
debt ratio would be lower than under the baseline 
by  about  16 pps.  in  2034.  However,  under  the 
adverse  interest-growth  rate  differential  scenario 
(i.e. 
differential 
deteriorates by 1 pp. compared with the baseline), 
the  debt  ratio  would  be  higher  than  under  the 
baseline  by  around  3 pps.  in  2034.  Under  the 
financial  stress  scenario 
rates 
temporarily  increase  by  1  pp.  compared  with  the 
baseline)  the  government  debt  ratio  would  be 
broadly unchanged compared with the baseline in 
2034.  Finally,  under  the  lower  structural  primary 
balance  scenario  (i.e.  the  projected  cumulative 
improvement  in  the  SPB  over  2023-2024  is 
halved) the debt ratio would be higher than under 
the baseline by 3 pps. in 2034. 

interest 

rate 

(i.e. 

The  stochastic  projections  indicate  medium 
risk,  pointing  to  the  moderate  sensitivity  of 
these  projections  to  plausible  unforeseen 
events  (139). These stochastic simulations indicate 
a 65% probability that the debt ratio will be higher 
in 2028 than in 2023, implying low risks given the 
the  uncertainty 
low  debt 
surrounding  the  baseline  debt  projections  (as 
measured by the difference between the 10th and 
90th debt distribution percentiles), is high, reaching 
around  50  pps.  of  GDP  in  five  years’  time 
(Graph 2).  

level.  However, 

3  –  Long-term  fiscal  sustainability  risks 
appear  overall  medium.  This  assessment  is 
based  on  the  combination  of  two  fiscal  gap 
indicators,  capturing  the  required  fiscal  effort  to 

distribution of SPBs observed in the past in the country, 
taking into account all available data from 1980 to 2023. 

(139) The stochastic projections show the joint impact on debt of 

10,000 different shocks affecting the government’s 
budgetary position, economic growth, interest rates and 
exchange rates. This covers 80% of all the simulated debt 
paths and therefore excludes tail events. 

81 

 
 
 
 
 
 
 
residents. Contingent liability risks stemming from 
the banking sector pose additional  fiscal  risks. On 
the other hand, risk-mitigating factors are related 
to  the  low  share  of  short-term  government  debt 
and  the  favourable  net  international  investment 
position.  

stabilise  debt  (S2  indicator)  and  bring  to  60%  of 
GDP  (S1  indicator)  over  the  long  term (140).  This 
assessment  is  driven  by  the  unfavourable  initial 
budgetary  position,  partly  offset  by  a  projected 
decline in ageing costs. 

The  S2  indicator  points  to  medium  fiscal 
sustainability  risks.  The  indicator  shows  that, 
relative  to  the  baseline,  the  SPB  would  need  to 
improve by 2 pps. of GDP in 2025 to ensure debt 
stabilisation  over  the  long  term.  This  result  is 
underpinned  by  an  unfavourable  initial  budgetary 
position (+2.5 pps.), slightly offset by the projected 
decline  in  ageing-related  costs  (contribution  of  -
-0.5 pps.).  Ageing 
costs’  developments  are 
primarily  driven  by  a  projected  decrease  in  public 
pension expenditure (--1 pp), only partly offset by 
a  projected  increase  in  health-care  (+0.3  pp.)  and 
long-term  care  spending  (+0.2 pp.)  (Table A21.1, 
Table 2).  

indicator  points  to 

The  S1 
low  fiscal 
sustainability risks. The indicator shows that the 
country  would  need  to  further  improve  its  fiscal 
position  by  1.3  pps.  of  GDP  to  reduce  its  debt  to 
60% of GDP by 2070. This result is mainly driven 
by  the  current  unfavourable  initial  budgetary 
position (contribution of +2.4 pps.), partly offset by 
in  age-related  public 
the  projected  decline 
spending  (--0.4  pp.).  The  current  distance  of  the 
Bulgarian  government  debt  ratio  from  the  60% 
reference  value  increases  the  fiscal  room  for 
manoeuvre 
-0.7 pp.) 
(Table A21.1, Table 2).  

(contribution 

of 

4  –  Finally,  several  additional  risk  factors 
need to be considered in the assessment.  On 
the one hand, risk-increasing factors are related to 
the  structure  of  the  government  debt,  particularly 
the  high  share  of  debt  denominated  in  foreign 
currency  and  the  moderate  share  held  by  non-

(140)The S2 fiscal sustainability indicator measures the 

permanent SPB adjustment in 2025 that would be required 
to stabilise public debt in the long term. It is complemented 
by the S1 indicator, which measures the permanent SPB 
adjustment in 2025 to bring the debt ratio to 60% 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 % of GDP, ‘medium risk’ 
if it is between 2% and 6% of GDP, and ‘low risk’ if the effort 
is negative or below 2% of GDP. The overall long-term risk 
classification combines the risk categories derived from S1 
and S2. S1 may notch up the risk category derived from S2 if 
it signals a higher risk than S2. See the 2023 Debt 
Sustainability Monitor for further details. 

82 

 
 
 
Table A21.1:Debt sustainability analysis – Bulgaria 

Source: Commission services. 

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

Source: Commission services. 

83 

Table 1. Baseline debt projections20212022202320242025202620272028202920302031203220332034Gross debt ratio (% of GDP)23.922.623.124.824.626.628.630.632.534.336.237.939.741.4Changes in the ratio-0.6-1.40.51.8-0.21.92.12.01.91.81.81.81.71.7of whichPrimary deficit3.52.51.42.32.42.42.52.42.22.12.12.01.91.8Snowball effect-2.8-3.7-1.5-0.7-0.7-0.5-0.4-0.4-0.4-0.3-0.2-0.2-0.1-0.1Stock-flow adjustments-1.3-0.20.60.2-1.90.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)3.24.44.04.72.94.85.05.15.25.25.35.45.45.5S1S2Overall index  (pps. of GDP)1.32.0of which Initial budgetary position2.42.5Debt requirement-0.7Ageing costs-0.4-0.5of which    Pensions-0.9-1.0     Health care0.30.3     Long-term care0.10.2Education0.00.0Table 2. Breakdown of the S1 and S2 sustainability gap indicators0510152025303540455020212022202320242025202620272028202920302031203220332034Graph 1. Deterministic debt projections Historical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioBaseline% of GDPp10p20p40p60p80p90010203040506020212022202320242025202620272028% of GDPGraph 2. Stochastic debt projections 2024-2028MedianBaseline