Recommendation for a 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

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   EUROPEAN COMMISSION  Brussels, 19.6.2024  COM(2024) 602 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Bulgaria {SWD(2024) 600 final} - {SWD(2024) 602 final}  
 
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies of Bulgaria 

THE COUNCIL OF THE EUROPEAN UNION, 

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

Having regard to Regulation (EU) 2024/1263 of the European Parliament and of the Council 
of  29  April  2024  on  the  effective  coordination  of  economic  policies  and  on  multilateral 
budgetary surveillance and repealing Council Regulation (EC) No 1466/971, and in particular 
Article 3 (3) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

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

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

(2) 

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3 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council2,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021. The Recovery and Resilience Facility provides financial support to the Member 
States  for  the  implementation  of  reforms  and  investment,  entailing  a  fiscal  impulse 
financed by the EU. In line with the European Semester priorities, it helps achieve the 
economic  and  social  recovery  and  implement  sustainable  reforms  and  investment,  in 
particular  to  promote  the  green  and  digital  transitions  and  make  the  Member  States’ 
economies  more  resilient.  It  also  helps  strengthen  public  finances  and  boost  growth 
and job creation in the medium and long term, improve territorial cohesion within the 
EU and support the continued implementation of the European Pillar of Social Rights.  
The  REPowerEU  Regulation3,  adopted  on  27  February  2023,  aims  to  phase  out  the 
EU’s  dependency  on  Russian  fossil  fuel  imports.  This  would  help  achieve  energy 

the  Recovery  and  Resilience  Facility 

OJ L, 2024/1263, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
(OJ  L  57,  18.2.2021,  p.  17),  ELI: 
establishing 
http://data.europa.eu/eli/reg/2021/241/oj. 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27  February  2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1), ELI: http://data.europa.eu/eli/reg/2023/435/oj. 

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(3) 

(4) 

(5) 

security  and  diversify  the  EU’s  energy  supply,  while  increasing  the  uptake  of 
renewables, energy storage capacities and energy efficiency. 

On  16  March  2023,  the  Commission  issued  a  Communication  on  the  ‘Long-term 
competitiveness of the EU: looking beyond 2030’4, in order to inform policy decisions 
and  create  the  framework  conditions  for  increasing  growth.  The  Communication 
frames competitiveness along nine mutually reinforcing drivers. Among these drivers, 
access to private capital, research and innovation, education and skills, and the single 
market  emerge  as  paramount  policy  priorities  for  reform  and  investment  to  address 
current productivity challenges as well as to build up the long-term competitiveness of 
the EU and its Member States.  On 14 February  2024, the Commission  followed this 
Communication  with  the  Annual  Single  Market  and  Competitiveness  Report5.  The 
report  details  the  competitive  strengths  and  challenges  of  Europe's  Single  Market, 
tracking yearly developments according to the nine competitiveness drivers identified. 

On 21 November 2023, the Commission adopted the 2024 Annual Sustainable Growth 
Survey6, marking the start of the 2024 cycle of the European Semester for economic 
policy  coordination.  The  European  Council  endorsed  the  priorities  of  the  survey 
around  the  four  dimensions  of  competitive  sustainability  on  22  March  2024.  On  21 
November 2023, on the basis of Regulation (EU) No 1176/2011, the Commission also 
adopted the 2024 Alert Mechanism Report, in which it did not identify Bulgaria as one 
of  the  Member  States  which  may  be  affected  or  may  be  at  risk  of  being  affected  by 
imbalances, and for which an in-depth review would be needed. The Commission also 
adopted a recommendation for a Council recommendation on the economic policy of 
the euro area, which the Council adopted on 12 April 2024, as well as the proposal for 
the 2024 Joint Employment Report analysing the implementation of the Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  the 
Council adopted on 11 March 2024.  

On  30  April  2024,  the  EU’s  new  economic  governance  framework  came  into  force. 
The  framework  includes  the  new  Regulation  of  the  European  Parliament  and  of  the 
Council  (EU)  2024/1263  on  the  effective  coordination  of  economic  policies  and 
multilateral  budgetary  surveillance  and  repealing  Council  Regulation  (EC)  No 
1466/97.  It  also  includes  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure  and  the  amended  Directive 
2011/85/EU  on  the  budgetary  frameworks  of  Member  States7.  The  objectives  of  the 
new  framework  are  public  debt  sustainability  and  sustainable  and  inclusive  growth 
through gradual  fiscal consolidation  as  well as reforms  and investments.  It  promotes 
national  ownership  and  has  a  greater  medium-term  focus,  combined  with  more 
effective and coherent enforcement. Each Member State should submit to the Council 
and  to  the  Commission  a  national  medium-term  fiscal-structural  plan.  National 
medium-term  fiscal-structural  plans  contain  the  fiscal,  reform  and  investment 
commitments  of  a  Member  State,  covering  a  planning  horizon  of  4  years  or  5  years 

4 
5 
6 
7 

COM(2023) 168 final. 
COM(2024) 77 final 
COM(2023) 901 final. 
Council  Regulation  (EU)  2024/1264  of  29  April  2024  amending  Regulation  (EC)  No  1467/97  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264, 
30.4.2024,  ELI:  http://data.europa.eu/eli/reg/2024/1264/oj)  and  Council  Directive  (EU)  2024/1265  of 
29  April  2024  amending  Directive  2011/85/EU  on  requirements  for  budgetary  frameworks  of  the 
Member States (OJ L, 2024/1265, 30.4.2024, ELI: http://data.europa.eu/eli/dir/2024/1265/oj). 

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depending on the regular length of the national legislature. The net expenditure8 path 
in  the  national  medium-term  fiscal-structural  plans  should  comply  with  the 
requirements of Regulation (EU) No 2024/1263, including the requirements to put or 
keep  general  government  debt  on  a  plausibly  downward  path  by  the  end  of  the 
adjustment period at the latest, or for it to remain at prudent levels below 60% of GDP, 
and to bring and/or maintain the government deficit below the 3% of GDP reference 
value  over  the  medium  term.  Where  a  Member  State  commits  to  a  relevant  set  of 
reforms and investments in accordance with the criteria set out in Regulation (EU) No 
2024/1263, the adjustment period may be extended by 3 years at most. For the purpose 
of supporting the preparation of those plans, on [21 June] 2024, the Commission is set 
to  provide  Member  States  with  guidance  on  the  content  of  the  plans  and  the 
subsequent  annual  progress  reports  that  they  will  need  to  submit  and,  in  accordance 
with  Article  5  of  Regulation  (EU)  No  2024/1263,  will  transmit  to  them  technical 
guidance  on  the  fiscal  adjustments  (reference  trajectories  and  technical  information 
where  applicable).  Member  States  should  submit  their  medium-term  fiscal-structural 
plans by 20 September 2024, unless the Member State and the Commission agree to 
extend the deadline by a reasonable period of time. Member States should ensure the 
involvement  of  their  national  parliaments,  and  the  consultation  of  independent  fiscal 
institutions, of social partners and other national stakeholders, as appropriate. 

In 2024, the European Semester for economic policy coordination continues to evolve 
in  line  with  the  implementation  of  the  Recovery  and  Resilience  Facility.  The  full 
implementation  of  the  recovery  and  resilience  plans  remains  essential  for  delivering 
the policy priorities under the European Semester, as the plans help effectively address 
all  or  a  significant  subset  of  challenges  identified  in  the  relevant  country-specific 
recommendations  issued  in  recent  years.  The  2019,  2020,  2022  and  2023  country-
specific  recommendations  remain  equally  relevant  also  for  recovery  and  resilience 
plans  revised,  updated  or  amended  in  accordance  with  Articles  14,  18  and  21  of 
Regulation (EU) 2021/241.  

On  15  October  2021,  Bulgaria  submitted  its  national  recovery  and  resilience  plan  to 
the  Commission,  in  accordance  with  Article  18(1)  of  Regulation  (EU)  2021/241. 
Pursuant  to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the 
relevance, effectiveness, efficiency and coherence of the recovery and resilience plan, 
in  accordance  with  the  assessment  guidelines  of  Annex  V  to  that  Regulation.  On  4 
May 2022, the Council adopted its Decision on the approval of the assessment of the 
recovery and resilience plan for Bulgaria9, which was amended on 8 December 2023 
following Article 18(2) of Regulation (EU) 2021/241 to update the maximum financial 
contribution  for  non-repayable  financial  support10.  The  release  of  instalments  is 
conditional on a decision by the Commission, taken in accordance with Article 24(5) 
of  Regulation  (EU)  2021/241,  that  Bulgaria  has  satisfactorily  fulfilled  the  relevant 

(6) 

(7) 

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Net expenditure as defined in Article 2 of Council Regulation (EU)2024/1263 of 29 April 2024 (OJ L 
2024/1263,  30.4.2024,  ELI:  http://data.europa.eu/eli/reg/2024/1263/oj).    Net  expenditure  means 
government  expenditure  net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii) 
expenditure  on  programmes  of  the  Union  fully  matched  by  Union  funds  revenue,  (iv)  national 
expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of 
unemployment benefit expenditure, and (vi) one-offs and other temporary measures. 
Council Implementing Decision of 4 May 2022 on the approval of the assessment of the recovery and 
resilience plan for Bulgaria (8091/22). 
Council  Implementing Decision of 8 December 2023 amending the Implementing Decision of 4 May 
2022 on the approval of the assessment of the recovery and resilience plan for Bulgaria (15837/2023). 

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(8) 

(9) 

milestones  and  targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory 
fulfilment  presupposes  that  the  achievement  of  preceding  milestones  and  targets  has 
not been reversed. 

On  30  April  2024,  Bulgaria  submitted  its  2024  National  Reform  Programme  and  its 
2024  Convergence  Programme,  in  line  with  Article  8(1)  of  Regulation  (EC)  No 
1466/97.  In  accordance  with  Article  27  of  Regulation  (EU)  2021/241,  the  2024 
National  Reform  Programme  also  reflects  Bulgaria’s  biannual  reporting  on  the 
progress made in achieving its recovery and resilience plan.  
The Commission published the 2024 country report for Bulgaria11 on 19 June 2024. It 
assessed  Bulgaria’s  progress 
relevant  country-specific 
in  addressing 
recommendations  adopted by the Council  between 2019  and  2023 and  took stock of 
Bulgaria’s implementation of the recovery and resilience plan. Based on this analysis, 
the  country  report  identified  gaps  with  respect  to  those  challenges  that  are  not 
addressed  or  only  partially  addressed  by  the  recovery  and  resilience  plan,  as  well  as 
new  and  emerging  challenges.  It  also  assessed  Bulgaria’s  progress  on  implementing 
the  European  Pillar  of  Social  Rights  and  on  achieving  the  EU  headline  targets  on 
employment, skills and poverty reduction, as well as progress in  achieving the UN’s 
Sustainable Development Goals.  

the 

(10)  Based  on  data  validated  by  Eurostat12, Bulgaria’s  general  government  deficit 
decreased from 2.9% of GDP in 2022 to 1.9% in 2023, while the general government 
debt rose from 22.6% of GDP at the end of 2022 to 23.1% at the end of 2023.  
(11)  On  12  July  2022,  the  Council  recommended13that  Bulgaria  take  action  to  ensure  in 
2023 that the growth of nationally financed primary current expenditure is in line with 
an  overall  neutral  policy  stance14,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and to 
people fleeing Ukraine. Bulgaria was recommended to adjust current spending to the 
evolving  situation.  Bulgaria  was  also  recommended  to  expand  public  investment  for 
the  green  and  digital  transitions,  and  for  energy  security  taking  into  account  the 
REPowerEU  initiative,  including  by  making  use  of  the  Recovery  and  Resilience 
Facility and other Union funds. In 2023, according to the Commission estimates, the 
fiscal stance15was broadly neutral, at 0.0% of GDP. The growth in nationally financed 
primary current expenditure (net of discretionary revenue measures) in 2023 provided 
a broadly neutral contribution to the fiscal stance of 0.2% of GDP.  This includes the 
reduced  costs  of  the  emergency  support  measures  (targeted  and  untargeted)  to 

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SWD(2024) 602 
Eurostat-Euro Indicators, 22.4.2024. 
Council  Recommendation of 12  July  2022  on  the  2022  National  Reform  Programme  of  Bulgaria  and 
delivering a Council opinion on the 2022 Convergence Programme of Bulgaria, OJ C 334, 1.9.2022, p. 
11. 
Based on the Commission Spring 2024 Forecast, the medium-term potential output growth of Bulgaria 
in 2023, which is used to measure the fiscal stance, is estimated at  10.1% in nominal terms, based on 
the 10-year average real potential growth rate and the 2023 GDP deflator. 
The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure  net  of  discretionary  revenue  measures  (and  excluding  temporary  emergency  measures 
related to the COVID-19 crisis) and including expenditure financed by non-repayable support (grants) 
from the Recovery and Resilience Facility and other Union funds. 

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households and firms in response to energy price hikes (by 1.3% of GDP). This also 
includes higher costs to offer temporary protection to displaced persons from Ukraine 
(by 0.3% of GDP). The main drivers of growth in nationally financed primary current 
expenditure (net of discretionary revenue measures) were recently legislated increases 
in  pensions  and  wages.  In  sum,  the  growth  of  nationally  financed  primary  current 
expenditure in 2023 was in line with the Council recommendation.  Expenditure 
financed by Recovery and Resilience Facility grants and other EU funds amounted to 
1.2 % of GDP in 2023. Nationally financed investment amounted to 2.7 % of GDP in 
2023, representing an annual increase of 0.8 percentage points as compared to 2022. 
Bulgaria financed additional investment through the Recovery and Resilience Facility 
and  other  EU  funds.  Bulgaria  financed  public  investment  for  the  green  and  digital 
transitions,  and  for  energy  security,  such  as  investments  in  facilities  and  business 
models  for  using  waste  as  a  resource  in  support  of  the  circular  economy,  as  well  as 
investments  to  increase  energy  efficiency  and  to  support  the  effective  protection  of 
natural  habitats  and  protected  species,  which  are  partly  funded  by  the  Recovery  and 
Resilience Facility and other EU funds. 

(12)  The  key  projections  in  the  2024  Convergence  Programme  can  be  summarised  as 
follows. The macroeconomic scenario underpinning the budgetary projections foresees 
real GDP to grow by 3.2% in 2024 and 2.7% in 2025, while it projects HICP inflation 
at  2.4%  in  2024  and  2.8%  in  2025.  The  general  government  deficit  is  expected  to 
increase to 3% of GDP in both 2024 and 2025, while the general government debt-to-
GDP ratio is set to increase to 25% by the end of 2024 and 27.3% by the end of 2025. 
After 2025, the general government deficit is projected to decrease to 2.8% of GDP in 
2026 and increase again to 3.0% in 2027. Therefore, the general government balance 
is planned to not exceed the 3% of GDP deficit  reference value over the programme 
horizon. In turn, after 2025, the general government debt-to-GDP ratio is projected to 
increase gradually to 30% in 2026 and 30.7% in 2027.  

(13)  The  Commission  Spring  2024  Forecast  projects  real  GDP  to  grow  by  1.9%  in  2024 
and 2.9% in 2025, and HICP inflation to stand at 3.1% in 2024 and 2.6% in 2025. 

(14)  The Commission Spring 2024 Forecast projects a government deficit of 2.8% of GDP 
in 2024, while the general government debt-to-GDP ratio is set to increase to 24.8% 
by the end of 2024. The increase of the deficit in 2024 mainly reflects expenditure on 
pensions  and  wages.  Based  on  the  Commission’s  estimates,  the  fiscal  stance  is 
projected to be contractionary, by 0.3% of GDP, in 2024. 

(15)  Expenditure amounting to 0.4% of GDP is expected to be financed by non-repayable 
support  (“grants”)  from  the  Recovery  and  Resilience  Facility  in  2024,  compared  to 
0.1%  of  GDP  in  2023,  according  to  the  Commission  Spring  2024  Forecast. 
Expenditure  financed  by  Recovery  and  Resilience  Facility  grants  will  enable  high-
quality investment and productivity-enhancing reforms without a direct impact on the 
general government balance and debt of Bulgaria.  

(16)  On  14  July  2023,  the  Council  recommended16that  Bulgaria  ensure  a  prudent  fiscal 
policy,  in  particular  by  limiting  the  nominal  increase  in  net  nationally  financed 

16 

Council  Recommendation  of  14  July  2023  on  the  2023  National  Reform  Programme  of  Bulgaria  and 
delivering a Council opinion on the 2023 Convergence Programme of Bulgaria, OJ C 312, 1.9.2023, p. 
13. 

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primary  expenditure17in  2024  to  not  more  than  4.6%.  When  executing  their  2023 
budgets  and  preparing  their  Draft  Budgetary  Plans  for  2024,  Member  States  were 
invited  to  take  into  account  that  the  Commission  would  propose  to  the  Council  the 
opening  of  deficit-based  excessive  deficit  procedures  based  on  the  outturn  data  for 
2023.  According  to  the  Commission  Spring  2024  Forecast,  Bulgaria’s  net  nationally 
financed primary expenditure is projected to increase by 6.2% in 2024, which is above 
the recommended maximum growth rate. This excess spending over the recommended 
maximum growth  rate in  net  nationally financed  primary expenditure  corresponds  to 
0.6% of GDP in 2024. However, net expenditure in 2023 was lower than expected at 
the time of the recommendation (by 3.3% of GDP). Therefore, as the recommendation 
for 2024 was formulated as a growth rate, the assessment of compliance also needs to 
take  into  account  the  base  effect  from  2023.  Had  net  expenditure  in  2023  been  the 
same as expected at the time of the recommendation, the resulting growth rate of net 
expenditure in 2024 would have been below the maximum recommended growth rate 
by 2.7% of GDP. Overall, net nationally financed primary expenditure is assessed as at 
risk of being not fully in line with the recommendation.  

(17)  Moreover,  the  Council  recommended  that  Bulgaria  take  action  to  wind  down  the 
emergency energy support measures in  force, using the related savings to  reduce the 
government  deficit,  as  soon  as  possible  in  2023  and  2024.  The  Council  further 
specified  that,  should  renewed  energy  price  increases  necessitate  new  or  continued 
support  measures,  Bulgaria  should  ensure  that  these  were  targeted  at  protecting 
vulnerable  households  and  firms,  fiscally  affordable,  and  preserve  incentives  for 
energy savings. According to the Commission Spring 2024 Forecast, the net budgetary 
cost18of emergency energy support measures is estimated at 0.0% of GDP in 2023 and 
projected at 0.0% in 2024 and in 2025. The emergency energy support measures were 
wound  down  as  soon  as  possible  in  2023  and  2024.  This  is  in  line  with  what  was 
recommended by the Council.  

(18) 

In addition, the Council also recommended that Bulgaria preserve nationally financed 
public  investment  and  ensure  the  effective  absorption  of  Recovery  and  Resilience 
Facility  grants  and  other  EU  funds,  in  particular  to  foster  the  green  and  digital 
transitions.  According  to  the  Commission  Spring  2024  Forecast,  nationally  financed 
public  investment  is  projected  to  decrease  to  2.1%  of  GDP  in  2024  (from  2.7%  of 
GDP  in  2023).  This  decrease  is  partly  driven  by  the  end  of  the  2014-2020 
programming  period  of  EU  structural  funds,  for  which  funds  were  available  until 
2023,  but  exceeds  the  decrease  that  can  be  explained  by  the  share  of  national  co-
financing.  Hence,  nationally  financed  public  investment  risks  being  not  in  line  with 
what  was  recommended  by  the  Council.  In  turn,  public  expenditure  financed  from 
revenues  from  EU  funds,  including  Recovery  and  Resilience  Facility  grants,  is 
expected  to  decrease to  0.8%  of  GDP  in  2024  from  1.2%  of  GDP  in  2023.  This 
decrease is driven by the end of the 2014-2020 programming period of EU structural 
funds, for which funds were available until 2023. 

(19)  Based on policy measures known at the cut-off date of the forecast and on a no-policy-
change  assumption,  the  Commission  Spring  2024  Forecast  projects  a  government 

17 

18 

Net primary expenditure is defined as nationally financed expenditure net of  (i) discretionary revenue 
measures, (ii) interest expenditure, (iii) cyclical unemployment expenditure, and (iv) and one-offs and 
other temporary measures. 
The figure represents the level of the annual budgetary cost of those measures, including revenue and 
expenditure and, where applicable, net of the revenue from taxes on windfall profits of energy suppliers. 

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deficit of 2.9% of GDP in 2025. The general government debt-to-GDP ratio is set to 
increase to 24.6% by the end of 2025.  

(20)  There is scope to increase the efficiency of public investment management by stepping 
up the implementation  of key measures. Bulgaria still has shortcomings in key areas 
such as the alignment between investment decisions and long-term strategic goals, and 
the  timely  execution  of  capital  expenditure.  Standardised  procedures  for  project 
selection  and  evaluation  based  on  objective  value-for-money  criteria  are  not  yet  in 
place. 

(21) 

In accordance with Article 19(3), point (b), and Annex V, criterion 2.2 of Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. These are expected 
to  help  effectively  address  all  or  a  significant  subset  of  challenges  identified  in  the 
relevant  country-specific  recommendations.  Within  this  tight  timeframe,  proceeding 
swiftly  with  the  effective  implementation  of  the  plan  is  essential  to  boost  Bulgaria’s 
long-term  competitiveness  through  the  green  and  digital  transition,  while  ensuring 
social  fairness.  To  deliver  on  the  commitments  of  the  plan  by  August  2026,  it  is 
essential  for  Bulgaria  to  significantly  accelerate  the  implementation  of  reforms  and 
investments by improving the functioning of the public administration and improving 
public  investment  management.  Further  efforts  are  necessary  in  the  digitalisation  of 
administrative processes and to improve the quality of procurement procedures. Staff 
recruitment,  training  and  retention  of  talented  personnel  are  key  to  building  a 
competent administration at both central and local level. Business regulation continues 
to  be  a  key  problem  for  companies,  half  of  which  identify  it  as  a  main  barrier  to 
making  long-term  investments.  Some  53%  of  investors  are  not  confident  that  their 
investments  are  being  protected  by  law  and  courts.  All  these  elements  would  also 
improve the business environment in Bulgaria. The rapid inclusion of a REPowerEU 
chapter  in  the  recovery  and  resilience  plan  will  allow  additional  reforms  and 
investments to be financed in support of Bulgaria’s and EU strategic objectives in the 
field  of  energy  and  the  green  transition.  The  systematic  involvement  of  local  and 
regional  authorities,  social  partners,  civil  society  and  other  relevant  stakeholders 
remains essential to ensure broad ownership for the successful implementation of the 
recovery and resilience plan. 

(22)  As  part  of  the  mid-term  review  of  the  cohesion  policy  funds,  in  accordance  with 
Article  18  of  Regulation  (EU)  2021/1060,  Bulgaria  is  required  to  review  each 
programme  by  March  2025,  taking  into  account,  among  other  things,  the  challenges 
identified in the 2024 country-specific recommendations, as well as its national energy 
and climate plan. This  review  forms the basis for the definitive allocation of the EU 
funding  included  in  each  programme.  Bulgaria  has  made  progress  in  implementing 
cohesion  policy  and  the  European  Pillar  of  Social  Rights,  but  challenges  remain. 
Bulgaria  is  experiencing  a  population  decline  and  significant  regional  disparities, 
especially  with  the  three  northern  regions  still  lagging  behind.  Accelerating  the 
implementation  of  cohesion  policy  programmes  and  strengthening  administrative 
capacity at all levels is crucial. The priorities agreed in the programmes continue to be 
relevant.  Regional  and  local  actors’  capacity  to  apply  integrated  approaches  to 
investments at local level remains key. It is particularly important to promote regional 
and  local  support  networks  for  research,  innovation  and  entrepreneurship  through 
targeted  measures  for  technology  transfer  and  commercialisation.  Investments  in 
sustainable transport, including the development of rail and road infrastructure as well 
as intramodality remain priorities. The implementation of the territorial just transition 

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plans  deserves  specific  attention,  also  in  terms  of  effective  governance,  coordination 
and capacity of the national, regional and local actors. It is also necessary to continue 
green investments, particularly to improve water management, drinking water supply 
and  wastewater  treatment,  and  to  ensure  efficient  waste  and  resource  management. 
Labour  shortages  persist,  affecting  in  particular  professions  related  to  social  services 
such  as  nurses.  Although  unemployment  is  generally  low,  it  remains  much  higher 
among vulnerable groups (young people, persons with disabilities and the Roma) and 
in some regions, suggesting that there is potential to increase the labour force. Active 
labour  market  policy  measures,  especially  for  groups  further  away  from  the  labour 
market,  and  investment  in  skills  acquisition,  particularly  for  the  green  and  digital 
transitions,  remain  priorities.  Quality  and  inclusive  education  system,  including  the 
implementation  of the European Child Guarantee  is  still  pertinent.  Despite a gradual 
decline, Bulgaria has one of the highest shares of the population at risk of poverty or 
social  exclusion,  including  more  than  1  in  3  children  and  over  1  in  3  older  (65+) 
people.  The  share  is  also  significantly  higher  for  persons  with  disabilities  and  the 
Roma.  In  addition,  income  inequalities  are  significant.  Addressing  these  challenges 
would  also  contribute  to  supporting  upward  social  convergence,  in  line  with  the 
Commission  services’  second-stage  country  analysis  based  on  the  features  of  the 
Social  Convergence  Framework19.  Bulgaria  could  also  make  use  of  the  Strategic 
Technologies  for  Europe  Platform  initiative,  including  in  increasing  investments  in 
digitalisation,  clean  and  resource  efficient  technologies  and  in  the  green  industrial 
transformation.  This initiative could enable Bulgaria to implement its commitments to 
clean tech, circular and low-carbon economy with its smart specialisation strategy and 
ensure a cohesive approach to advance industrial sustainability. 

(23)  Bulgaria  faces  several  challenges  related  to  the  decarbonisation  of  the  economy  and 
energy  production,  sustainable  transport  as  well  as  quality  of  education  and  skills. 
These could be further addressed beyond the scope of the recovery and resilience plan 
and cohesion policy programmes. 

(24)  Access  to  clean  and  affordable  energy  continues  to  be  a  priority  issue  in  Bulgaria. 
While the country has made limited progress, further structural challenges remain. In 
particular,  the  postponed  electricity  market  liberalisation  –  one  of  the  essential 
decarbonisation  reforms  under  the  recovery  and  resilience  plan  –  impedes  the 
transition  to  clean  and  affordable  energy.  Further,  the  district  heating  systems  in 
Bulgaria  are  often  in  poor  technical  condition,  and  most  of  them  are  predominantly 
based  on  natural  gas  or  coal.  In  2023,  the  deployment  of  solar  photovoltaics  saw  a 
significant increase with over 1.2 GW in newly installed capacity, bringing the total to 
nearly 3 GW. However, the installed wind capacity has stagnated over the past decade, 
with a total of 700 MW in onshore installations. This is despite wind power’s potential 
to boost the electricity system’s balancing capacity during off-peak periods. Untapped 
technical potential of offshore wind energy is estimated at 26 GW20. At the same time, 
the  lack  of  sufficient  energy  storage  is  increasingly  evident,  especially  during  sunny 
hours,  posing  a  risk  to  the  continuous  deployment  of  grid-scale  renewables  in 
Bulgaria.  Despite  strong  electricity  interconnection  with  its  neighbours,  including  a 
new  400  kV  line  with  Greece  (PCI  Maritsa  East-Nea  Santa),  bottlenecks  to  the 
transmission and distribution grids persist. Further action to improve the management 
of grids by introducing smart grid elements, including a roll-out of smart meters and 

19 
20 

SWD(2024)132 final. 
World Bank, Offshore Wind Energy Potential in the Black Sea, Washington, D.C., March 2020. 

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demand-side  response  measures  could  improve  the  situation.  While  there  have  been 
slight  improvements  in  energy  poverty  indicators  in  Bulgaria,  significant  challenges 
persist. The share of the population unable to adequately heat their homes was 22.5% 
in 2022, the highest rate within the EU, well above the EU average of 9.3%. Although 
Bulgaria  has  adopted  an  official  definition  for  energy  poverty,  concrete  support 
schemes  are  yet  to  be  fully  developed,  with  the  current  targeted  heating  allowance 
remaining limited in both duration and coverage. 

(25)  Greenhouse  gas  emissions  from  transport  are  a  significant  concern  for  Bulgaria, 
particularly from road transport, where greenhouse gas emissions increased by 29% in 
2022 (compared to 2005 levels). The use of passenger cars continues to be high, while 
the  share  of  battery  electric  vehicles  s  still  very  low.  In  addition,  the  charging 
infrastructure is still insufficient, with just one charging point for every three electric 
vehicles,  which  impedes  the  uptake  of  electric  mobility.  Moreover,  Bulgaria's  rail 
infrastructure lags behind the EU average,  with  specific  disparities between northern 
and southern regions. Strengthening investments in the country's railway network and 
increasing  the  number  of  sustainable  urban  transport  initiatives  is  crucial,  ensuring 
transport connectivity between northern and southern regions, large urban centres and 
rural and peripheral areas, as well as completion of connections to TEN-T network. 

(26)  Despite  some  amendments  to  the  regulatory  framework  as  part  of  the  recovery  and 
resilience  plan,  educational  outcomes  in  Bulgaria  are  poor  and  have  further 
deteriorated.  The  country  has  recorded  lower  results  in  the  latest  editions  of 
international  assessments  compared  to  previous  years.  The  shares  of  low  achieving 
students  in  mathematics, reading and sciences  – as  shown by the OECD Programme 
for International Student Assessment– are among the most alarming in the EU. 53.5% 
of  15-year-olds  lack  a  minimum  proficiency  level  in  mathematics,  52.9%  in  reading 
and  48%  in  sciences,  with  very  high  rates  among  students  from  disadvantaged 
backgrounds.  National  standardised  exams  show  large  and  growing  inequalities  of 
outcomes and strong social segregation in the Bulgarian education system. About 50% 
of schoolteachers are at least 50 years old and teacher shortages are emerging. Despite 
some  improvements,  challenges  remain  to  improving  initial  teacher  education  and 
continuous  professional  development  to  facilitate  improvements  in  the  quality  and 
equity of education. The rate of early leavers from education and training improved in 
recent  years  but  remains  particularly  high  among  the  Roma  and  in  rural  areas. 
Furthermore,  the  low  participation  of  adults  in  learning  (9.5%  compared  to  the  EU 
average  of  39.5%)  translated  into  insufficient  or  inadequate  skills,  therefore  creating 
bottlenecks  to  employability  and  overall  competitiveness.  The  Vocational  Education 
for 
and  Training 
environmental protection as a part of general professional training for all professions. 
On  top  of  that,  the  just  transition  plans  for  coal  regions  include  several  measures 
covering the reskilling of the workforce and job creation in such regions in Bulgaria. 
The levels of digital skills remain much lower than the EU average (35.5% vs 55.5% 
in 2023) and influence employability. To tackle these challenges, there is an ambitious 
project  funded  by  the  Recovery  and  Resilience  Facility  that  aims  to  improve  the 
upskilling  and  reskilling  of  the  workforce,  focusing  on  digital  skills,  but  its 
implementation has been delayed.  

introduces  obligatory  competences 

framework 

regulatory 

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HEREBY RECOMMENDS that Bulgaria take action in 2024 and 2025 to:  

1. 

2. 

3. 

4. 

Submit  the  medium-term  fiscal-structural  plan  in  a  timely  manner.  In  line  with  the 
requirements  of  the  reformed  Stability  and  Growth  Pact,  limit  the  growth  in  net 
expenditure21  in  2025 to  a rate  consistent  with  maintaining  the general  government 
deficit  below  the  3%  of  GDP  Treaty  reference  value  and  keeping  the  general 
government debt at a prudent level over the medium term.    

Significantly accelerate the implementation of cohesion policy programmes and the 
recovery  and  resilience  plan,  ensuring  completion  of  reforms  and  investments  by 
August 2026, by improving the functioning  and boosting the capacity of the public 
administration, including at the regional level, increasing the quality of procurement 
procedures  and  strengthening  the  independence  and  functioning  of  regulators. 
Rapidly finalise the REPowerEU  chapter.  In the  context of the mid-term  review  of 
cohesion  policy  programmes,  continue  focusing  on  the  agreed  priorities,  while 
considering  the  opportunities  provided  by  the  Strategic  Technologies  for  Europe 
Platform initiative to improve competitiveness.      

Improve  education  and  training,  including  for  disadvantaged  groups,  by  enhancing 
teacher training and implementing competence-based teaching and learning. Address 
labour  shortages  and  improve  workers’  skills  to  boost  competitiveness  and  support 
the green transition.  

Reduce reliance on fossil fuels and accelerate the clean energy transition, particularly 
by shifting to renewable energy in district heating and deploying wind installations. 
Ensure  sufficient  storage capacities to  increase the flexibility  of the  energy system. 
Strengthen the electricity grid infrastructure by introducing smart grid elements and 
increasing  interconnection  with  neighbouring  countries.  Address  energy  poverty  by 
implementing  targeted  measures  to  reduce  the  share  of  population  unable  to  keep 
their  homes  adequately  warm.  Promote  the  deployment  and  uptake  of  sustainable 
urban  and  railway  transport,  including  by  accelerating  the  development  of  the 
necessary infrastructure.  

Done at Brussels, 

For the Council 
The President 

21 

According  to  Article  2(2)  of  Regulation  (EU)  2024/1263,  ‘net  expenditure’  means  government 
expenditure net of interest expenditure, discretionary revenue measures, expenditure on programmes of 
the  Union  fully  matched  by  revenue  from  Union  funds,  national  expenditure  on  co-financing  of 
programmes funded by the Union, cyclical elements of unemployment benefit expenditure, and one-offs 
and other temporary measures. 

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