COMMISSION STAFF WORKING DOCUMENT 2025 Country Report – Bulgaria Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Bulgaria
Date: 2025-06-04
Institutions: European Commission, Reform and Investment Task Force
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, 4.6.2025  SWD(2025) 202 final  COMMISSION STAFF WORKING DOCUMENT 2025 Country Report – Bulgaria Accompanying the document Recommendation for a COUNCIL RECOMMENDATION  on the economic, social, employment, structural and budgetary policies of Bulgaria    {COM(2025) 202 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

broad-based in terms of product categories. In 
terms  of  destination  countries,  sharp  declines 
in exports to some countries were registered.  

the 

contracted  after 
previous 
in 

strong 
Investment 
expansion 
years. 
Investment  in  2022  and  2023  held  up  well. 
However,  it  declined  in  2024  by  1.1%  due  to 
lower public spending, mitigated somewhat by 
roughly  constant  private  sector  borrowing. 
Firms accumulated more inventory in the form 
of unfinished production and goods in 2024, in 
parallel  with  the  country’s  increase in  imports 
and  a  decline  in  finished  construction.  Real 
GDP growth is forecast to slow down to 2% in 
2025 and 2.1% in 2026, due to precautionary 
savings  and  subdued  external  demand  in  the 
context of high uncertainty (see Graph 1.1). 

in 

both 

rates 

labour 

the  minimum  wage  at 

The  labour  market  continued  to  perform 
cost 
well  overall,  although 
pressures  have  been  significant.  The 
unemployment  rate  has  been  at  historically 
low levels, slightly above 4% since 2022, amid 
increasing 
labour-force 
of 
participation  and  employment.  The  tightness 
of  the  labour  market,  combined  with  the 
the 
increase 
beginning  of  2024  has  pushed  up  aggregate 
nominal  wages  well  beyond  inflation  and 
productivity  gains.  Nevertheless,  aggregate 
wage  growth  decelerated  throughout  2024. 
Manufacturing  firms  optimised  production 
costs 
to 
labour 
accommodate  the  sizeable  wage  increases  in 
the  sector.  Buoyant  domestic  demand  led  to 
intensified hiring and strong wage increases in 
the services sector. Nevertheless, wages in key 
service  sectors  (e.g.,  trade,  transport  and 
hospitality)  grew  much  more  moderately  in 
2024.  Domestic  cost  pressures  in  services 
sectors  that  saw  low-productivity  gains  in 
to  higher  value-added 
2024  contributed 
deflators  in  these  sectors.  Overall,  economy-
wide unit labour costs have increased strongly, 
costs 
although  growth 

shedding 

in  unit 

through 

labour 

Consumption-led growth amid 
growth in real wages in a tight 
labour market and rising house 
prices 

Economic  growth  accelerated  to  2.8%  in 
2024,  driven  by  private  consumption. 
Strong nominal income expansion in 2024 was 
underpinned  by  a  continued  upward  trend  in 
aggregate  employment,  wages  and  increased 
social  transfers.  Combined  with  a  decline  in 
inflation,  this trend  led to  growth  in  both  real 
disposable  income  and  private  consumption, 
further supported by strong lending activity. 

Graph 1.1: HICP and real GDP growth with 
contributions 

(1) Commission Spring 2025 Forecast 
Source: European Commission 2025 

Weak  external  demand  continued  to 
constrain  export  growth.  In  2024,  exports 
of  goods  and  services  contracted  in  both 
nominal  and  real  terms,  while  the  country’s 
terms  of  trade  deteriorated.  The  decline  in 
exports  was  most  pronounced 
in  cereals 
(owing  to  a  weak  harvest)  and  otherwise 

2 

-6-4-20246810121417181920212223242526Net exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)HICP (y-o-y%)forecast (1)pps  
 
   
in  2024.  Wage 
significantly  decelerated 
increases  in  the  public  sector  were  also  an 
important factor in the strong aggregate wage 
dynamics in 2023 and 2024. 

in 

the 

saw 

reflecting 

increases 

The  high  inflation  has  abated  further  in 
2024  but 
taxes  and 
regulated  prices  have  led  to  inflation 
picking  up  again  at  the  beginning  of 
2025. All components of the consumer basket 
(measured  by  HICP) 
considerable 
disinflation  in  2024.  Services-sector  inflation 
lower 
also  slowed  down, 
inflation  in  key  inputs,  such  as  food  and  fuel. 
Annual  HICP  inflation,  however,  rose  from 
2.1%  in  December  2024  to  3.8%  in  January 
2025 for several reasons. After the expiration 
of  VAT  reductions  at  the  end  of  2024  for 
bread,  flours  and  catering  services,  prices  in 
these categories increased. Other items in the 
food  basket  also  registered  high  month-on-
month increases, reflecting either international 
commodity prices (coffee, edible oils) or higher 
excise  duties  (cigarettes).  Electricity  and  gas 
prices for households also increased, reflecting 
regional  market  conditions.  Other  utilities 
prices,  like  water  supply,  sewerage  and  waste 
collection  also  increased  in  January  2025. 
Prices  of  telecommunication  services  reported 
an  increase  above  expectations.  In  parallel, 
unit  labour  cost  growth  slowed  in  2024  in 
favour of the deceleration in services inflation. 
As the hikes at the beginning of the year were 
related  mostly  to  administrative  decisions, 
they  are  regarded  as  one-time  events  and 
their effects are expected to wane toward the 
end of the year. In addition, the increases were 
partially  offset  in  April  by  lowered  hospital 
fees, other administered prices and lower gas 
and  fuel  prices.  Overall,  HICP  inflation  is 
projected  at  3.6%  in  2025  and  1.8%  in  2026 
(see Graph 1.1). 

House prices continue to grow in line with 
average  income  growth.  House  prices  have 
nearly  doubled  in  the  last  decade.  However, 
these  increases  have  been  offset  in  line  with 
growing  average  incomes.  Nevertheless,  risks 
for housing affordability could be elevated for 
lower-income  households.  Furthermore,  rising 
prices  and  high  demand  for  housing  may  be 
linked with the low level of financial literacy in 
(Annex  5).  The  growth  of 
the  country 

3 

households’  deposits  remains  strong.  At  the 
same time, interest rates on new time deposits 
offered  by  the  largest  banks  as  well  as  rates 
on outstanding amounts of time deposits have 
remained  close  to  0%,  unlike  the  increase  in 
deposit rates observed in other Member States 
during the ECB’s monetary tightening period.  

Mortgages  continue  to  grow  amid  very 
low  borrowing  rates.  The  value  of  new 
housing loans increased by 43% in 2024, after 
growing  by  20%  in  2023.  This  was  supported 
by very low lending rates, as banks continue to 
have  ample  cheap  liquidity  from  deposits. 
Nevertheless, both the stock of mortgages and 
the  share  of  the  population  that  has  a 
mortgage remain very low. In 2024, Bulgaria’s 
central  bank  imposed  some  borrower-based 
limits on commercial banks. The limits appear 
targeted  at 
low-income,  higher-risk 
borrowers that would be the first and hardest-
hit by adverse economic conditions (see Annex 
5 for details).  

the 

is  continuing 

its  efforts  to 
Bulgaria 
integrate  more  within  the  EU.  Joining  the 
euro  area  remains  a  political  priority  of 
Bulgaria,  and  the  government’s  target  date  is 
to  join  in  2026.  In  February  2025,  Bulgaria 
asked  the  Commission  and  the  ECB  for  their 
convergence assessments. On 1 January 2025, 
Bulgaria  and  Romania  became  full  members 
of  the  Schengen  Area.  The  country  is  also 
working  towards  joining  the  Organisation  for 
Economic  Cooperation  and  Development 
(OECD) by implementing an action plan agreed 
with the OECD. 

Structural bottlenecks weigh on 
growth potential 

Moving  ahead  with  important  structural 
reforms,  including  those  in  the  recovery 
and  resilience  plan,  remains  challenging. 
Bulgaria  has  taken  measures  to  improve  its 
institutional  framework  and  the  business 
environment, notably in the four areas covered 
II  commitments. 
by 
However,  other 
to 
improve  the  business  environment,  reinforce 
the  rule  of  law  and  facilitate  the  green 

the  post-entry  ERM 

important  measures 

 
transition  have  faced  significant  delays.  A 
period  of  protracted  political  instability  has 
impeded  a  consistent  policy  approach  to 
implementing  these  measures,  which  remain 
country’s 
crucial 
competitiveness. 

improving 

the 

for 

Aggregate labour productivity growth has 
slowed  down  in  the  last  couple  of  years. 
For  the  economy  to  follow  a  higher  economic 
growth trajectory, it is necessary to adopt new 
technologies  and  boost  services  with  high 
value added. This requires putting in place the 
necessary  enabling 
factors.  Government 
policies  that  provide  the  enabling  conditions 
(such  as  infrastructure,  skilled  workers,  sound 
institutions  and  an  environment  conducive  to 
do  business  and  innovation)  are  necessary  to 
preserve  and 
increase  Bulgaria’s 
competitiveness. 

further 

To  become  more 
competitive  and 
converge  more  quickly  with  its  EU  peers, 
Bulgaria  needs  a  dynamic  business 
sector,  benefiting  from  fewer  barriers,  a 
level  playing  field,  and  the  rule  of  law. 
Businesses  in  the  country  say  that  the  most 
significant  hindrances  to  a  better  business 
environment  are  corruption,  frequent  changes 
in  regulations,  bureaucracy,  and  biased  public 
procurement  (1).  Regulatory  barriers  remain 
in  comparable 
higher 
countries  for  lawyers,  notaries,  architects  and 
civil  engineers  (see  Annex  4).  In  recent  years, 
supervisory  and  regulatory  authorities  have 
for 
operated  with  an  expired  mandate 
prolonged  periods  of  time.  Businesses  have 
consistently  complained  about  the  quality  of 
regulatory work (2) and the failure to ensure a 
level playing field (3).  

in  Bulgaria 

than 

Enabling factors need to improve 
to accelerate convergence with 
Bulgaria’s EU peers 

high 

energy 

intensity 

The 
and 
greenhouse-gas  emissions  of  Bulgarian 
industry  remain  key  obstacles  for  the 
modernisation  of  some  sectors.  Heavy 
industries  in  the  country,  such  as  metals  and 
chemicals  industries,  have  caused  increase  in 
emissions  since  2017,  even  as  average  EU 
emissions  have  dropped.  Transport  remains 
the  sector  with 
the  greatest  emissions. 
Notably,  emissions  have  increased  by  a  third 
since 2005 compared with a 5% drop EU-wide. 
The uptake of clean mobility in the country is 
low amid a lack of government incentives and 
investments in the sector.  

Investments 

in  renewables  could  boost 
Investing 
in 
solar 
competitiveness. 
in  2024,  and 
installations  slowed  down 
investment  in  wind  installations  has  been 
negligible  for  over  a  decade. 
Insufficient 
storage and grid capacities act as a barrier to 
the further roll-out of renewables and increase 
price volatility.  

to 

hinder 

Demographic  trends  and  skills  shortages 
Bulgaria’s 
continue 
competitiveness.  Bulgaria  lost  19.1%  of  its 
working  age  population  between  2011  and 
2021. This was mainly due to natural decrease 
of  the  population  and  migration  outflows  in 
the  early  part  of  this  period.  Despite  recent 
positive  net  migration  flows,  labour  force 
continued  to  decrease  as  a  result  of  the 
shrinking 
The 
ageing 
population  lacks  basic  digital  skills.  Efforts  to 
support up-skilling and re-skilling are ongoing, 
but more efforts are needed to increase adult 
participation  in  learning,  an  area  in  which  the 
country has the lowest ranking in the EU (see 
Annex 12).  

population. 

and 

(1)  Bulgarian Industrial Association – 2024 through the 

eyes of the business. 

(2)  EIB Investment Survey 2022 – EU overview.  

(3)  EC Rule of Law Report 2023, 2024. 

Disadvantaged  groups  are  less  likely  to 
find  work,  limiting  their  contribution  to 
economic output. The share of young people 
in 
(15-29)  neither 
education nor in training is still high despite a 
decrease recorded in recent years. Additionally, 

in  employment  nor 

4 

 
 
the gap in employment between persons with 
and without disabilities is much larger than in 
other Member States. Moreover, less than half 
of  Roma  are  in  some  form  of  employment 
(see Annex 10). 

fails 

some 

improvements, 

the 
Despite 
education  system 
to  prepare 
students  for  successful  entry  into  the 
labour  market.  According  to  the  latest  PISA 
test 
results,  about  half  of  15-year-old 
students  lack  basic  numerical  and  reading 
is  even  more 
competences.  The  problem 
from 
pronounced 
disadvantaged 
also 
translates 
into  higher  education,  where 
the  share  of 
low  with 
participation 
graduates  still  below  the  EU  average  (see 
Annex 12). 

backgrounds. 

students 

among 

This 

is 

in 

include  gaps 

Regional  disparities  remain  high.  In  terms 
of GDP per capita, the region that includes the 
capital Sofia stands at 97% of the EU average 
compared  with  40-56%  in  the  other  regions. 
labour 
Such  disparities 
productivity,  demographics,  education  and 
trainings, employment, activity rates, transport 
and  other  infrastructure,  competitiveness  and 
research  and  innovation.  Those  disparities  are 
especially  evident  in  the  north  of  the  country. 
In  addition,  the  lower  administrative  capacity 
in some regions further impairs their ability to 
absorb  funds  and  deliver  public  services  and 
policies (see Annex 17). 

significant 

The  labour  market  is  also  characterised 
disparities. 
by 
According  to  2024  data,  employment  rates 
vary  significantly  between  urban  and  rural 
areas,  at  81.1%  and  68.5%  respectively. 

regional 

Box 1: 

UN Sustainable Development Goals (SDGs) 

Bulgaria continues to improve in most indicators related to productivity (SDGs 4, 8 9) 
and  fairness  (SDGs  1,  3,  5,  7  and  10)  but  still  needs  to  catch  up  with  the  EU  on  all 
indicators. The gap between Bulgaria and the EU average is largest on the indicators for quality 
education (SDG 4), in particular, in adult learning and the share of low-achieving 15-year-olds in 
mathematics. 

The  country  has  almost  reached  the  EU  average  on  affordable  and  clean  energy  (SDG  3)  and 
clean water and sanitation (SDG 6). Despite some progress on indicators  for peace, justice and 
strong  institutions  (SDG  16),  more  efforts  are  needed  to  converge  with  the  EU  in  the  area  of 
macroeconomic stability (SDGs 8 and 16). 

Regional disparities and inequality 
remain high 

Bulgaria  has  long-standing  challenges  in 
all  areas  of  the  social  sphere,  such  as 
poverty, social exclusion, inequality, healthcare 
and regional disparities. 

inequality 

inequality 

Income 
is  decreasing  but 
remains  among  the  highest  in  the  EU. 
is  also  uneven  across 
Income 
regions.  Another  persistent  challenge 
is 
insufficient  access  to  long-term  care.  Some 
groups  continue  to  be  left  behind,  especially 
Roma, but also young people and people with 
disabilities (see Annex 11).  

Employment  rates  also  vary  greatly  across 
regions,  with  the  highest  employment  rate  in 
the  southern  region  of  Bulgaria  (home  to  the 
capital  city  of  Sofia)  at  79.9%,  compared  to 
the  north-western  region,  bordering  Romania, 
where the employment rate stood at 69.3%. 

Public finance developments are 
marked by expenditure increases 
not matched by equally stable 
revenues 

The general government deficit increased 
to 3% of GDP in 2024. Recent reforms have 
helped  to  improve  the  adequacy  of  pensions. 
As a result, increases in spending are expected 

5 

 
 
until  2027.  Public  sector salaries  grew  in  part 
due to the higher minimum wage, and in part 
due  to  additional  increases  in  some  areas, 
such  as  for  education  staff.  Further  increases 
in  spending  came  from  an  increase  in  social 
benefits.  In  2024,  these  spending  pressures 
were  not  accompanied  by  fully  compensatory 
measures.  Revenues  were  supported  through 
measures to strengthen revenue collection and 
fight tax evasion and avoidance.  

6 

 
 
Box 2: 

Barriers to private and public investment 

Private  investment  in  Bulgaria  has  consistently  been  lower  than  what  is  needed  to 
ensure  fast  economic  convergence  with  its  EU  peers  and  keep  up  with  technological 
progress. This has been a result of political instability, the lack of a level playing field, and the 
slow uptake of clean-energy technologies, especially in energy-intensive industries and transport. 
Income taxes for both businesses and employees are low, and the overall tax burden (including 
all social contributions) is relatively attractive for investors. Nevertheless, several main barriers 
limit  private  investment,  the  three  most  significant  of  which  are  set  out  in  the  bullet  points 
below. 

•  High regulatory barriers, frequently changing regulations and bureaucracy make the 

investment process difficult. 

•  A  widespread  perception  among  businesses  of  corruption  erodes  trust  and  makes  it 

less attractive to do business in the country. 

•  The  slow  deployment  of  renewables  and  decarbonisation  measures,  including  those 

from the RRP, hold back the modernisation of transport and industry. 

Bulgaria  has  a  track  record  of  disciplined  public  finances,  but  public  investment 
management  needs  improvement.  Recent  reforms  have  improved  the  planning  of  public 
investment, including via the recently introduced investment programme for nationally financed 
investments  and  capital  budget  ceilings  (Annex  1).  Nevertheless,  barriers  to  efficient  public-
investment spending remain. Three of the most significant of these barriers are set out below. 

•  A  lack  of  objective  value-for-money  assessments  of  projects.  Although  criteria  to 
prioritise ongoing projects against new projects are in place, standardised methods to assess 
benefits and costs are missing (Annex 1). 

•  A lack of competitive and effective public procurement combined with difficulty in 
implementing investments. Implementing investments has been difficult and significantly 
delayed due to: (i) slow procurement; (ii) many – often successful – complaints by candidates; 
and (iii) the resulting lack of time for implementation. A reform in the plan to reduce some of 
those procurement issues is being implemented.  

•  The  limited  use  of  ex  post  reviews.  Bulgaria  does  not  carry  out  ex  post  reviews 
systematically, thereby limiting the possibility of learning from past mistakes and improving 
planning and implementation in the future. 

The  implementation  of  Bulgaria’s  RRP  is  significantly  delayed.  At  present,  Bulgaria  has 
fulfilled 23% of the milestones and targets in its RRP. In addition to the challenges  above, the 
main  bottlenecks  to  EU  funds  implementation  are  delays  in  procurement,  political  instability, 
ineffective governance and insufficient administrative capacity. In April 2025, Bulgaria submitted 
a comprehensive revision of its RRP, including a REPowerEU chapter, with a view to bringing the 
plan back on track and achieving its ambitious objectives. 

It remains important to accelerate the implementation of cohesion policy programmes. The mid-
term review offers opportunities to speed up progress and better address EU strategic priorities 
related to competitiveness, defence, housing, water resilience and the energy transition. 

While  Bulgaria  has  signalled  interest  in  leveraging  the  Strategic  Technologies  for  Europe  Platform  under 
cohesion policy, Bulgaria can further support the development or manufacturing of critical technologies in the 
areas of digital and deep tech, clean and resource efficient technologies, and biotechnologies. 

7 

 
 
 
 
 
 
The  general  government  deficit  is  set  to 
remain  at  a  level  close  to  3%  of  GDP 
going  forward.  Bulgaria  only  adopted  its 
2025  budget  on  21 March 2025.  The  budget 
targets  a  deficit  of  2.9%  of  GDP  in  2025, 
consistent  with  the  country’s  medium-term 
fiscal structural plan. In its latest forecast, the 
Ministry  of  Finance  expects  a  deficit  of  2.2 % 
in  2026,  4.1 %  in  2027  and  1.9 %  of  GDP  in 
2028. The statistical recording of past military 
purchases will have an impact of 0.5% of GDP 
in 2025 and 1.6 of GDP in 2027. According to 
the Commission’s Spring forecast, the deficit is 
expected  to  amount  to  2.8%  of  GDP  in  2025 
and 2.8% of GDP in 2026. The planned budget 
balance  for  2025  mainly  relies  on  the 
revenue-side  on  taking  all  of  the  profits  of 
state-owned companies and further measures 
against tax evasion and avoidance. Revenue is 
further  supported  by:  (i)  increases  in  excise 
duties 
the 
normalisation  of  several  VAT  rates;  and  (iii) 
increases in maximum and minimum insurable 
income. On the expenditure side, public sector 
salaries  are  expected  to  continue  to  grow,  in 
line with recent trends, with especially marked 
increases 
the  defence  sector.  Public 
investment  is  set  to  increase,  in  line  with  the 
efforts  to  advance  the  implementation  of  the 
RRP  and  also  driven  by  strong  increases  in 
defence  investment  due  to  the  accrual  of 
planned  deliveries  of  military  equipment.  The 
general  government  debt-to-GDP  ratio 
is 
forecast  to  increase  from  24.1%  in  2024  to 
25.1%  in  2025  and  further  up  to  27.1%  by 
2026 

products; 

tobacco 

(ii) 

on 

in 

Net  expenditure  is  expected  to  grow  in 
line  with  the  commitments.  In  2024,  net 
expenditure (4) in Bulgaria grew by 10.4% (see 
Annex  1).  This  increase  is  mainly  driven  by 
increases 
in  pensions  and  public  sector 
salaries.  The  revenue-increasing  impact  of 
discretionary  revenue  measures,  notably  on 

(4)  Net expenditure is defined in Article 2(2) of Regulation 
(EU) 2024/1263 as government expenditure net of (i) 
interest expenditure, (ii) discretionary revenue 
measures, (iii) expenditure on programmes of the Union 
fully matched by revenue from Union funds, (iv) 
national expenditure on co-financing of programmes 
funded by the Union, (v) cyclical elements of 
unemployment benefit expenditure, and (vi) one-off 
and other temporary measures. 

in 

fighting  tax  collection  and  avoidance,  as  well 
as  one-off  expenditure  to  settle  outstanding 
liabilities worth 0.5% of GDP were netted from 
the    expenditure.  In  2025,  net  expenditure  is 
forecast by the Commission to grow by 9.2%, 
which  is  above  the  maximum  growth  rate  as 
reported  by  Bulgaria 
its  medium-term 
fiscal-structural  plan (5).  This  is  due  to  the 
combination  of  expenditure  increases  due  to 
pensions  and  public  sector  salaries  and  of  a 
marked  increase  in  expenditure  on  defence, 
including  investment,  as  well  as  to  higher 
public  investment.  The  one-off  treatment  of 
the settlement in 2024 also contributes to the 
growth,  as  it  creates  a  lower  starting  base  in 
2024. 
projections 
for defence  spending,  the  projected  deviation 
in 2025 is allowed under the conditions of the 
national escape clause that Bulgaria requested 
to activate on 2 May 2025.  

current 

Based 

on 

the  need 

Public  investment  management  remains 
inconsistent  and  lacks  predictability,  and 
this  negatively  affects  businesses.  The 
IMF  (2022)  estimates  that  Bulgaria's  public 
capital  stock  levels  are  among  the  lowest  in 
the  EU,  underlining 
to  more 
efficiently allocate public resources for priority 
areas  (6).  There  are  significant  discrepancies 
between  plans  and  actual  spending  on  public 
investment,  and  underspending  on  capital 
expenditure execution appears to be structural. 
Capital  expenditure  serves  as  an 
implicit 
budget  buffer,  but  this  under-execution  also 
suggests  potential  issues  in  the  capacity  of 
investment 
public  agencies  to 
projects  within  planned  timelines.  This 
is 
compounded  by  weaknesses 
capital 
budgeting, including a rigid budgeting rule that 
prevents  state  bodies  from  carrying  forward 
unspent  funds  from  year  to  year.  This  rigid 
budgeting rule hinders long-term planning and 

implement 

in 

(5)  The medium-term plan has been positively assessment 
by the Commission (Commission recommendation for a 
Council recommendation endorsing the national 
medium-term fiscal-structural plan of Bulgaria, 
COM/2025/238 final).  

(6)  Hallaert, J. J., and K. Primus (2022). ‘Strengthening 
Public Expenditure Efficiency Investment and Social 
Spending in Bulgaria’, IMF, Strengthening Public 
Expenditure Efficiency: Investment and Social Spending 
in Bulgaria.  

8 

 
 
 
creates  inefficiencies  (7).  Bulgaria  has  started 
a  process  to  improve  its  public-investment 
management, 
including  by  setting  up  a 
dedicated fund in the 2024 State Budget Law. 
Nevertheless,  weaknesses  in  this  area  remain 
(see Box 2). 

(7)  OECD (2023), ‘Public Investment in Bulgaria: Planning 
and Delivering Infrastructure’, OECD Public Governance 
Reviews, OECD Publishing, Paris, 
https://doi.org/10.1787/b73ef3b4-en.  

9 

 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

in 

for 

and 

business 

incentives 

Academia-business  links  in  Bulgaria  are 
limited.  Science-business  cooperation  as 
reflected 
the  share  of  public-private 
scientific  co-publications  is  well  below  the  EU 
average. Progress is also hampered by the lack 
cooperation  between 
of 
academia 
the 
and 
underdeveloped 
technology-transfer 
ecosystem.  As  part  of  the  reforms  under  the 
Recovery  and  Resilience  Facility  (RRF),  the 
Research and Innovation Act  adopted in 2024 
lays  down  plans  for  the  creation  of  a 
government  advisory  council  on  research  and 
innovation.  This  advisory  council  aims  to 
promote 
links  between  academia  and 
business.  Improving  those  links  could  help  to 
further  close  the  innovation  gap  in  certain 
areas of applied research (see Annex 3). 

The  uptake  of  digital  technologies  in 
Bulgaria  is  very  low.  In  2024,  only  half  of 
the  country’s  SMEs  had  at  least  a  basic  level 
of  digital  intensity,  far  below  the  EU  average 
of 73% and putting it last among EU Member 
States.  This  further  exacerbates  Bulgaria’s 
innovation  challenges.  The  RRF  is  supporting 
the deployment of digital technologies in SMEs 
and  the  improvement  of  their  readiness  for 
the  subsequent  adoption  of  ‘Industry  4.0’ 
technologies (see Annex 3). 

Business environment – 
administrative burden and 
simplification 

Bulgaria’s  public  procurement  system 
lacks competition. Bulgaria  has made  some 
progress in reforming its regulatory framework 

The role of research & innovation 
in the competitiveness landscape  

Bulgaria  has  one  of  the  lowest  levels  in 
the  EU  of  public  and  private  R&D 
investment. According to the 2024 European 
Innovation  Scoreboard,  Bulgaria's  innovation 
performance  has  increased  over  time,  but 
more slowly than that of the EU, and Bulgaria 
remains  only  an  ‘emerging  innovator’.  Both 
public  and  private  R&D  investment  remain  at 
very 
In  2023,  public  R&D 
expenditure was 0.28% of GDP compared with 
0.72% in the EU. Private R&D expenditure was 
0.51% of GDP compared with 1.49% in the EU. 
Furthermore,  innovation  output  in  Bulgaria  is 
low, as evidenced by the country’s low patent 
intensity and its below-EU-average number of 
scientific publications and citations (see Annex 
3).  

levels. 

low 

Bulgaria’s  public  research  landscape  is 
highly  fragmented,  hindering  innovation 
and  competitiveness.  Bulgaria  has  many 
higher  education  institutions  and  research 
organisations, making it difficult to coordinate 
and 
implement  effective  R&D  policies. 
Bulgaria's  low  levels  of  R&D  expenditure  are 
exacerbated  by:  (i)  a  lack  of  coordination  at 
the  government  level;  and  (ii)  the  practice  of 
spreading  limited  funds  across  many  higher 
education 
research 
organisations.  This  also  prevents  researchers 
from  achieving  a  critical  mass,  ultimately 
impacting  the  quality  of  the  public  science 
base (8), which is the lowest in the EU. 

institutions 

and 

(8)  As measured in scientific publications of the country 
within the top 10% most cited scientific publications 
worldwide as a percentage of the country’s total 
scientific publications. This was 3.3 (2021) in Bulgaria 
vs 9.6 (2023) in the EU (see Annex 3). 

10 

 
 
 
 
 
 
 
on  public  procurement.  Nevertheless,  as  part 
of  the  reforms  under  the  RRF,  the  high  (and 
increasing)  share  of  procurement  procedures 
with  a  single  bidder  (36%  in  2024)  and  the 
share  of  negotiated  procedures  without  prior 
publication  remain  a  concern  (see  Annex  4). 
Corruption  risks  in  public  procurement  remain 
high. This results in businesses being deterred 
from participation, citing biased conditions and 
evaluations. The World Bank (2023) estimates 
public 
that  addressing  weaknesses 
procurement 
non-
competitive  practices  and  corruption,  could 
potentially save about 5.3% of the total value 
of  contracts,  or  approximately  BGN 1.3  billion 
(9). 

in 
including 

processes, 

The  perception  among  businesses  that 
corruption  is  widespread  remains  high. 
88%  of  companies  consider  that  corruption is 
widespread  (against  an  EU  average  of  65%) 
and 57% consider that corruption is a problem 
when  doing  business  (EU  average:  36%)  (10). 
Moreover, only 14% of companies believe that 
people and businesses caught bribing a senior 
official are appropriately punished (against an 
EU  average  of  31%)  (11).  Under  the  RRF, 
Bulgaria  has  planned  a  reform  to  further 
combat  corruption  at  all  levels  of  public 
administration  and 
justice  and 
in 
prosecution  systems.  Full  implementation  of 
this  reform  would  help  address  those  issues 
and  improve  corruption  perceptions  among 
businesses.  Bulgaria  has  also  adopted 
legislative  amendments  to  put  in  place  a 
mechanism  that  would  ensure  the  effective 
accountability  and  criminal  liability  of  the 
Prosecutor  General  and  their  deputies. 
It 
remains crucial  for Bulgaria to continue these 
efforts  to  fully  finalise  and  implement  the 
reform. 

the 

Political 
public 
procurement  weighs  on  productivity  and 

favouritism 

in 

(9)  World Bank (2023). Bulgaria - Public Finance Review. 
The  World  Bank  Group.  Available:  World  Bank 
Document 

(10)  See 2024 Rule of Law Report, country chapter on 

Bulgaria, p. 15. 

(11)  See 2024 Rule of Law Report, country chapter on 

Bulgaria, p. 15. 

competitiveness.  A recent World Bank study 
(12) shows that politically connected companies 
in Bulgaria are much more likely to win public 
contracts,  having  preferential  access 
to 
uncompetitive tenders. This is shown to result 
in  lower  productivity  and  employment  growth 
for  those  companies  as  well  as  higher 
corporate  profits.  Addressing  these 
issues 
would  help  to  support  fair  competition,  the 
efficient 
and, 
ultimately, economic growth.  

allocation 

resources 

of 

businesses 
about 

agreed), 
frequently 

Administrative  burden  and  regulatory 
barriers in Bulgaria remain high. According 
to  a  national  survey,  businesses  cited 
bureaucracy  as  a  major  obstacle  (60%  of 
alongside 
surveyed 
concerns 
changing 
regulations (47% agreed) and corruption (47% 
agreed).  These  issues  are  reflected  in  low 
rankings in the OECD's economy-wide indicator 
on  the  regulation  of  product  markets  in  the 
sub-component  ‘administrative  requirements 
for limited liability companies’, where Bulgaria 
ranks  second  lowest.  This  could  be  improved 
by  digitalising  administrative  processes  and 
reducing 
for  starting  a  business. 
Regulatory  barriers  remain  higher  in  Bulgaria 
than  in  comparable  countries  for  lawyers, 
notaries,  architects  and  civil  engineers.  World 
Bank 
regulatory 
barriers to trade and business operations (see 
Annex 4).  

indicators  also  highlight 

fees 

below 

years-old 

adequate 

administrative 
Ensuring 
remains  difficult.  Attracting 
capacity 
graduates  is  difficult  with  the  share  of  civil 
servants 
falling 
40 
consistently  over  the  last  few  years.  Also, 
nearly  half  of  central  government  posts  have 
remained  unfilled  for  over  6  months.  Better 
talent  management,  more 
training  and 
exchange  programs  could  be  considered  to 
increase  the  attractiveness  of  working  in  the 
public administration.  

political 
Resource 
influence  reduce  the  quality  of  work  of 

limitations 

and 

(12)  Procuring Low Growth : The Impact of Political 

Favoritism on Public Procurement and Firm Performance 
in Bulgaria. 

11 

 
 
 
information 

Capital  ‘deepening’,  or  the  overall  increase  in 
capital  available  per  worker,  is  making  a  low 
contribution  to  labour  productivity  in  Bulgaria. 
To increase potential growth, it is important to 
increase  investment  in  productive  sectors  like 
and 
and 
manufacturing 
technologies.  Among 
communication 
the 
obstacles 
that  Bulgarian 
investment 
for 
companies  point  to,  those  that  stand  out  as 
being  worse  than  the  EU  average  are:  (i)  the 
lack  of  skilled  workers;  (ii)  uncertainty  about 
the future; and (iii) the country’s poor transport 
infrastructure.  Public  policy  could  address 
these  obstacles  via  reforms  and  investments 
and  by  reducing  uncertainty  through  better 
planning.  

in 

Increases 
labour  productivity  are 
largely due to the sectoral reallocation of 
workers,  and  this  needs  to  be  sustained. 
The sectors that have seen the highest growth 
in  productivity  have  increased  their  share  in 
the  overall  Bulgarian  economy.  These  sectors 
include  financial  services,  information  and 
communication 
technology,  manufacturing, 
and trade. Companies in these sectors are also 
able to attract more investment, often foreign, 
which may also enable them to introduce new 
technologies, 
their 
productivity.  A  more  supportive  business 
environment could help speed up this process. 
including 
Labour-intensive 
construction,  transport  and  agriculture  have 
lost  market  share  and  seen  average  labour 
productivity  stall  –  or  even  turn  negative  – 
over  the  past  20  years,  as  workers  who  are 
able  to  increase  their  productivity  relocate  to 
other sectors. Supporting a well-educated and 
skilled  labour  force  and  providing  suitable 
conditions  for  the  development  of  growth 
industries  would  be  crucial  for  productivity 
growth.  

increasing 

sectors, 

further 

regulatory  bodies.  Most  regulators  rely  on 
state  budget  funding  and  their  staff  is  bound 
by  the  civil  service  code,  making  it  more 
difficult to attract talent and experts from the 
there  are 
sectors.  Moreover, 
regulated 
significant discrepancies between the levels of 
salary  across  and  within  regulators  (13),  and 
this  affects  the  quality  of  regulation.  Political 
independence is often limited to the executive 
branch, while the Parliament plays: (i) a direct 
role  in  the  work  of  regulatory  bodies  by 
selecting and appointing regulators; and (ii) an 
indirect  role  in  the  work  of  regulatory  bodies 
via  the  funding  approved  through  the  state 
budget.  As  a  result  of  the  protracted  political 
instability 
regulatory 
in  Bulgaria,  many 
authorities  have  operated  –  or  continue  to 
operate  –  with  an  expired  mandate.  This 
further 
and 
administrative  uncertainty  –  one  of  the  main 
obstacles  cited  by  Bulgaria’s  businesses  (see 
above).  Existing  legislation  does  not  provide 
for  the  independence  of  regulatory  bodies 
from  market  participants,  including  in  sectors 
like energy where state-owned companies play 
a significant role (14). 

contributes 

regulatory 

to 

How to boost productivity? 

Productivity  growth  remains  low  despite 
ongoing  convergence  with  EU  peers. 
Growth  in  labour  productivity  in  Bulgaria  has 
been consistently above the EU average in the 
past  decade,  indicating  ongoing  convergence 
with  the  EU.  Nevertheless,  growth  in  labour 
productivity  remains  considerably  below  that 
of peers, and was only half of that observed in 
Croatia  and  Romania  over  the  past  three 
years. 

Investment stands out as a crucial factor 
to  boost  productivity,  but  is  limited  in 
Bulgaria  due  to  structural  obstacles. 

(13)  Analysis on the compensation of civil servants 

https://jobs.government.bg/PJobs/publExtData.jsf?idPubl
=801 

(14)  Assessing the independence and effectiveness of 

national regulatory authorities in the field of energy - 
Publications Office of the EU. 

12 

 
 
 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

Decarbonisation and sustainability 
as a driver for competitiveness 

use  of  green  hydrogen.  It  is  important  that 
Bulgaria  keep  the  implementation  of  these 
measures on track.  

firms  have 

Efforts  to  enhance  the  integration  of 
Bulgarian  firms  in  clean  tech  sectors 
within  the  domestic  ecosystem  could 
strengthen the country’s competitiveness. 
Bulgarian  firms  in  clean  tech  value  chains 
display limited integration within the domestic 
economy  and  heavy  reliance  on  foreign 
suppliers,  with  only  25%  of  their  supplier 
network  being  domestic.  At  the  same  time, 
Bulgarian 
in 
international buyer and supplier networks, with 
only  overall  17  distinct  supplier  countries  and 
buyers from only 7 buyer countries (15). There 
is  therefore  a  potential  for  Bulgaria  to 
enhance its connectivity and weight within the 
richer  domestic 
network  by  building  a 
ecosystem.  In  addition  to  maintaining  the 
possibility  for  support  under  the  Investment 
Promotion  Act,  streamlining  the  permitting 
to  attracting 
processes  could  contribute 
investments 
technologies 
Net-Zero 
manufacturing.  

limited 

links 

in 

Clean  transport  technologies  display  a 
limited  uptake  in  the  Bulgarian  market. 
Transport represents the most emitting sector 
in  Bulgaria.  Greenhouse-gas  emissions  from 
road transport increased significantly between 
2005  and  2023  in  Bulgaria,  even  as  they 
decreased in the EU overall. In 2023, electricity 
accounted for only a small share of Bulgaria’s 
final  energy  consumption  in  the  transport 
sector, and battery electric vehicles correspond 
to  only  0.2%  of  all  passenger  cars  (16), 
showing  the  limited  market  penetration  of 
electric  mobility.  The  country’s  recharging 

(15)  Clean Tech Value Chains : Using Trade Data to Guide a 

Complex Policy Space - Part Two, World Bank.  

(16)  European Alternative Fuels Observatory. 

The  energy  intensity  and  the  energy-
related  greenhouse-gas  emissions  of 
manufacturing  in  Bulgaria  remain  high. 
The  energy 
intensity  of  manufacturing 
decreased  between  2017  and  2022  to  2.45 
GWh/EUR  of  gross  value  added 
(GVA). 
However,  it  remains  significantly  higher  than 
the  EU  average  (1.05  GWh/EUR  of  GVA). 
Between  2017  and  2022,  greenhouse 
emissions  from 
industrial  processes  and 
product  use declined  in  Bulgaria more than  in 
the  EU  as  a  whole.  At  the  same  time,  the 
energy-related  greenhouse-gas  emissions  of 
Bulgaria’s  manufacturing  industry  increased 
by 6% since 2017, while in the EU it decreased 
by 11% in the same period (see Annex 7). The 
production  of  metals  and  chemicals  are  key 
contributors to this increase. Consistent efforts 
the  decarbonisation  of 
to 
in 
manufacturing 
particularly 
energy-intensive  sectors,  and 
reduce 
(ii) 
industry,  can  be 
energy  consumption 
expected to provide lasting environmental and 
productivity gains to the economy.  

activities, 

support 

(i) 

in 

the 

The decarbonisation of energy production 
is  a  significant  challenge  for  Bulgaria, 
and 
regions  of  Stara  Zagora, 
Kyustendil and  Pernik in  particular.  These 
three  regions  face  significant  socio-economic 
challenges  linked  to  the  phasing  out  of  coal 
and  reductions  in  greenhouse-gas  emissions. 
The  measures  planned  under 
the  Just 
Transition  Fund  are  expected  to  help  tackle 
some  of  these  challenges.  These  measures 
include:  (i)  the  development  of  photovoltaic 
parks with electrolysers and/or energy storage 
systems;  (ii)  the  establishment  of  industrial 
parks  for  clean  technologies;  (iii)  the  creation 
of  hydrogen-based  value  chains;  and  (iv)  the 

13 

 
 
 
of 

rapidly  grown,  and  further 
network  has 
expansion 
is  expected.  Further  efforts  to 
increase  grid  capacity  and  ensure  an  even 
geographical 
charging 
distribution 
infrastructure have the potential to strengthen 
the  business  case  for  the  uptake  of  clean-
transport  technologies  in  Bulgaria.  Together 
with  measures  to  facilitate  a  modal  shift  to 
is 
less-polluting 
expected  to  help  reduce  transport-related 
emissions  and  mitigate the  economic impacts 
of  ETS2,  the  EU’s  new  emissions  trading 
system. 

transport  modes, 

this 

needs. 

Bulgaria  has  the  potential  to  make 
competitiveness  gains  while  contributing 
to the EU’s independence in the supply of 
critical raw materials. Bulgaria has deposits 
of  primary  metals  and  other  elements, 
including  some  on  the  EU’s  list  of  critical  raw 
materials. This means that it would be possible 
for the country to help meet some of the EU’s 
critical-raw-material 
However, 
Bulgaria’s  implementation  of  the  EU’s  Critical 
Raw  Materials  Act  is  delayed.  Timely  delivery 
of obligations under the Critical Raw Materials 
Act  (such  as  preparing  a  database  on  critical 
raw  materials  and  setting  up  an  information 
and  project  support  unit)  would  provide  an 
opportunity  for  Bulgaria  to:  (i)  strengthen  its 
position as a supplier of critical raw materials; 
and  (ii)  further  integrate  in  European  value 
chains.  Furthermore,  while  Bulgaria’s  level  of 
import dependency for raw materials is below 
the 
the 
diversification of Bulgaria’s supply sources for 
imported raw materials (for example, iron and 
non-alloy steel, aluminium and fertilisers) and 
(ii)  the  circular  use  of  materials,  has  the 
potential  to  further  reduce  dependence  on 
single  supply  sources  and  strengthen  the 
resilience of EU value chains (see Annex 7).  

enhancing 

average, 

EU 

(i) 

Bulgaria  records  sizeable  fossil  fuel 
subsidies  with  no  planned  phase-out 
before  2030,  representing  0.82%  of 
Bulgaria’s  GDP  (see  also  Annex  8).  Scaling 
down and phasing out these subsidies is in line 
with  EU  commitments  and  can  contribute  to 
more  fiscal  space.  Fossil  fuel  subsidies  that 
address  neither  energy  poverty  in  a  targeted 
way  nor  respond  to  genuine  energy  security 
concerns,  hinder  electrification  and  are  not 

14 

crucial  for industrial  competitiveness could  be 
for  priority  phase-out. 
considered 
The 
remaining 
that  are 
fossil-fuel  subsidies 
particularly  harmful  from  an  economic  and 
environmental  perspective  include:  (i)  feed-in-
tariffs for combined heat and power (CPH) and 
district  heating;  and  (ii)  the  systematically 
renewed order of the state for the purchase of 
electricity  from  the  Maritsa  East  II  thermal 
power plant. 

Energy affordability and 
competitiveness 

for  prices 

High  electricity  prices  pose  a  significant 
challenge  to  Bulgaria’s  economy  and 
undermine  its  competitiveness.  Bulgaria 
does not yet benefit from liberalised electricity 
markets,  in  particular  a  liberalised  wholesale 
market,  in  which  demand  and  supply  meet  in 
an  unconstrained  way.  Such  markets  typically 
reflect  short-term 
to 
allow 
dispatching  constraints,  interconnector  flows, 
and flexible demand, so that the allocation of 
electricity  and  associated  revenues  provides 
the  best  incentives  to  all  market  participants. 
In  2024  Bulgaria  had  the  fourth-highest 
wholesale electricity prices in the EU. The high 
prices  are  driven  partially  by  the  continued 
reliance  on  fossil  fuels,  with  coal  still 
for  approximately  25%  of 
accounting 
electricity  generation,  and 
limited 
availability  of  non-fossil  flexibility  (see  Annex 
8).  Bulgaria  has  imposed  a  windfall  tax  on 
traders’  sales, 
electricity  generators’  and 
directing  part  of 
the 
Electricity  System  Security  Fund  (ESSF).  This 
tax  on  market  revenues  negatively  affects 
investment incentives, particularly for new RES 
capacities.  In  addition,  an  electricity  price  cap 
for  non-household  consumers  (renewed  in 
2024)  removes  incentives  for  demand-side 
flexibility  –  including  energy  efficiency  –  once 
day-ahead  prices  exceed  EUR 90  MWh.  This 
leads  to  increased  peak  demand,  ultimately 
driving  up  peak  prices  on  the  day-ahead 
market.  Moreover,  the  electricity  price  cap  on 
non-household 
the 
consumers 
development  of  long-term  contracting.  The 
Bulgarian RRP includes an important reform to 
liberalise  electricity  markets.  For  wholesale 

their  revenues 

hinders 

the 

to 

 
and 

therefore 

markets,  this  reform  aims  to  facilitate  the 
entry  of  new  renewable  energy  sources, 
including  flexible  assets  such  as  storage 
installations, 
decrease 
wholesale  prices,  ultimately  improving  the 
competitiveness  of  the  Bulgarian  industry.  On 
the  forthcoming  liberalisation  of  the  retail 
market,  Bulgaria  has  not  yet 
launched 
awareness  campaigns,  nor  has  it developed  a 
system  to  identify  energy-poor  and  energy-
vulnerable  households,  which  is  essential  for 
targeted 
the 
liberalised  retail 
compensation  system.  A 
market  will  allow  for  the  introduction  of 
competitive pricing determined on the basis of 
market conditions. 

implementation 

of 

a 

has 

been  a 

slowdown 

There 
in 
installations  of  solar  photovoltaics  (PV), 
while  wind 
installations  continue  to 
stagnate.  In  2024,  Bulgaria  added  1  GW  of 
new  renewable  energy  capacity  (mostly  solar 
PV),  contributing  to  a  34%  year-on-year 
increase  in  total  capacity,  down  from  67%  in 
2023  (see  Annex  8).  In  more  than  a  decade, 
almost  no  new  onshore  wind  capacity  has 
been installed in Bulgaria, due to complex and 
lengthy  permitting  procedures.  Furthermore, 
Bulgaria’s  estimated  offshore  wind  potential 
of  26  GW  of  fixed  and  floating  installations 
remains 
regulatory 
framework,  including  a  maritime  spatial  plan, 
still  missing  (17).  Wind  installations  can  help 
balance  the  country’s  electricity  system  when 
solar  PV  and  hydropower  generation  is  not 
available, helping to reduce electricity prices. 

untapped,  with 

a 

Insufficient  storage  and  grid  capacity 
create significant bottlenecks for scaling 
up  renewables  and  exacerbate  price 
fluctuations.  Bulgaria’s  grid 
connection 
capacity  for  renewable  energy  installations  is 
very limited, especially at the distribution level, 
requiring  additional 
the 
network  for  the  continuous  integration  of 
renewables.  Furthermore,  due  to  the  lack  of 
sufficient short-term storage capacity and the 
need 
fossil-fuel 
rely  on  expensive 
generators,  Bulgaria  experiences  one  of  the 

investments 

to 

in 

highest wholesale price swings in the EU with 
a  daily,  average  variation  in  wholesale  prices 
of 185 EUR/MWh in 2024 (18). The delay in the 
implementation  of  the  RESTORE  investment 
under the RRP, which would add at least 3 000 
MWh  of  usable  energy  storage  capacity, 
further prolongs this issue. 

Climate adaptation and 
preparedness 

to 

vulnerability 

Bulgaria  faces  significant  challenges  in 
climate  adaptation, 
including  a  wide 
climate-insurance  coverage  gap  and 
increased 
extreme 
weather  events  such  as  heatwaves  and 
heavy  rainfall.  The  country  has  a  medium 
level  of  vulnerability  to  floods,  and  its  water-
management system is under strain. It has the 
highest  rate  of  water  loss  in  the  EU  (over 
60%) and a deteriorating supply infrastructure 
for  public  water.  Furthermore,  the  compliance 
rate  with  the  Urban  Wastewater  Treatment 
Directive is only 31%, and the country has not 
yet  reported its  third  river  basin management 
plan.  Additionally,  while 
common 
agricultural  policy  plan  for  Bulgaria  includes 
measures  to 
improve  water  quality  and 
sustainable water use, current water quality in 
Bulgaria is also a concern, with a high level of 
nutrients  leached  from  agriculture  affecting 
water status and causing the country’s failure 
the  Water 
the  objectives  of 
to  meet 
Framework Directive (Annex 9). 

the 

The  country’s  water  resilience  is  further 
compromised  by  its  high  vulnerability  to 
droughts,  with  9.3%  of  ecosystems 
suffering  from  severe  drought  in  2020. 
impact  of  droughts  on 
The  average 
ecosystems  is  significantly  higher  in  Bulgaria 
than  in  other  EU  countries.  Bulgaria  has 
already  taken  some  steps  to  address  its 
water-resilience  challenges.  For  example, 
Bulgaria has implemented measures to reduce 
water  losses,  with  a  focus  on  improving  the 

(17) 2020 Offshore wind technical potential in Bulgaria,    

(18)  Key developments in European electricity and gas 

World Bank document. 

markets, ACER 2025 Monitoring Report. 

15 

 
 
 
country’s 

improved 

Fostering  the  transition  to  a  circular 
economy  would  have  many  benefits, 
including 
competitiveness. 
Bulgaria  is  progressing  slowly  in  its  circular 
economy  transition,  with  a  circular  material 
use rate of 4.9% in 2023. This is far below the 
EU average and also poses significant risks to 
the 
sustainability. 
long-term 
Bulgaria’s  resource  productivity  is  also  below 
the  EU  average,  with  EUR  0.38  generated  per 
kg of material consumed in 2023. To improve 
circularity,  Bulgaria  has  adopted  a  strategy 
and action plan for the transition to a circular 
economy.  This  action  plan  includes  measures 
to 
increase  recycling,  reduce  waste,  and 
promote  sustainable  patterns  of  production 
and  consumption.  However,  the  plan  appears 
insufficient to: (i) address the country’s below-
EU-average  circular  material  use  rate;  and (ii) 
address  the  significant  investment  gap  to 
meet  circular  economy  objectives.  Bulgaria 
would  need  to  increase  its  circular  economy 
investment  by  an  estimated  EUR  126  million 
per year, with an additional EUR 21 million for 
action  on  waste  management,  to  close  the 
circular  economy  gap  and  unlock  the  full 
potential of a circular economy (Annex 7). 

efficiency  of  its  water  supply  system.  The 
country has also reported its second flood-risk 
management plan. However, further efforts to 
address  the  significant  investment  gaps  in 
water  management  would  be  beneficial,  with 
an estimated EUR 439 million per year needed 
to  meet  the  requirements  of  the  Water 
Framework Directive and the Floods Directive.  

climate-related 

Bulgaria  faces  significant  economic  risks 
from 
events,  with 
substantial  potential  losses  and  limited 
protection,  highlighting  the  need  for 
better  water-management  and  climate-
resilience measures. The economic losses in 
Bulgaria  from  weather-  and  climate-related 
extreme events, including floods and droughts, 
are  significant,  with  EUR  5.2  billion  in  losses 
between  1980  and  2023,  of  which  only  2% 
(EUR  93  million)  was  insured.  This  makes 
Bulgaria  one  of  the  EU  countries  with  the 
lowest  levels  of  protection  against  economic 
losses  from  climate-related  extreme  events, 
as  the  country’s  insurance  coverage  in  this 
area is well  behind the EU  average of around 
18.5%.  This  shows  that  Bulgaria  needs  to 
improve  its  water  management  and  climate 
resilience,  for  example  by:  (i)  investing  in 
sustainable water practices; (ii) reducing water 
losses;  and  (iii)  promoting  the  more  efficient 
use  of  water  resources  (Annex  9).  To  respond 
to  these  challenges,  Bulgaria  has  put  several 
national  governance  structures 
in  place, 
including:  (i)  a  national  climate  adaptation 
plan;  (ii)  a  2030  climate  adaptation  strategy; 
(iii)  a  national  expert  council  on  climate 
change;  (iv)  a  climate-change  coordination 
council;  and  (v)  a  unified  rescue  system  and 
focal  point  for  the  collection  and  reporting  of 
environmental  data.  However,  the  country’s 
institutional  capacity  to  address  climate-
change  and  water-management  challenges  is 
still limited, and more efforts are needed to: (i) 
strengthen 
the 
competent  national  authorities;  (ii)  develop 
monitoring  and  modelling  tools;  and 
(iii) 
improve reporting and planning at subnational 
level.  Furthermore,  the  country  needs  to 
increase  its  institutional  capacity  to  address 
the  social  and  economic  impacts  of  climate 
change, including by  developing early warning 
systems,  emergency  response  plans,  and 
social-protection programmes (Annex 9).  

coordination 

between 

16 

 
 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

Increasing skills by addressing 
challenges in the education system 
and strengthening adult learning 

The  availability  of  high  skilled  labour  is 
scarce due to structural challenges in the 
education  system.  Participation 
in  early 
childhood  education  is  still  among  the  lowest 
in the EU (21.1% vs an EU  average of 39.2% 
in 2024 for children under 3 and 87.8% vs an 
EU  average  of  93.3%  for  children  aged  3  to 
the  age  of  compulsory  education)  and  is 
especially 
low  for  disadvantaged  children. 
Bulgaria also has one of the highest shares of 
15-year-olds  in  the  EU  that  do  not  have  a 
minimum  level  of  proficiency  in  mathematics 
(53.6%  vs  an  EU  average  of  29.5%),  reading 
(52.9%  vs  an  EU  average  of  26.2%)  and 
science (48% vs an EU average of 38.3%). The 
lack  of  basic  skills  is  also  a  very  significant 
barrier  for  later  skills development.  The  share 
of  top-performing  students  is  also  very  low. 
These challenges are linked to school curricula, 
which are still heavily knowledge-based. There 
is  insufficient  focus  on  competences,  and 
teaching quality is inadequate (see Annex 12). 
The  challenges  for  improving  teaching  quality 
stem  mainly  from:  (i)  the  inability  to  attract 
high-performing  high-school  graduates  to  the 
profession; (ii) the insufficient quality of initial 
teacher  education;  and 
lack  of 
continuous professional development based on 
a  robust  assessment  of  teachers’  training 
needs.  Socio-economic  factors  also  severely 
impact  educational  outcomes  leading  to  large 
inequalities that ultimately  hinder productivity 
and  competitiveness.  In  the  poorest  quartile, 
62% 
underachieve 
15-year-olds 
simultaneously in all three subjects, compared 
with  16.5%  among  their  advantaged  peers. 
learning 
Social 
disadvantages.  For  example,  64  %  of  Roma 

segregation 

increases 

(iii)  the 

of 

children aged 6-15 attend schools where all or 
most pupils are Roma.  

is 

low. 

education 

exacerbate 

further  hampered  by 

Despite sustained efforts, low availability 
of  professionals  in  science,  technology, 
engineering and mathematics (STEM), and 
insufficient  labour-market  relevance  of 
higher 
skills 
shortages and mismatches. In 2024, 40.5% 
of  Bulgarians  aged  25-34  have  a  tertiary 
education  degree  (against  an  EU  average  of 
44.2%).  As  Bulgaria’s  population  declines,  the 
number  of  bachelor  students  is  dropping (See 
Annex  12),  exacerbating  skills  shortages.  The 
participation in higher education of Bulgarians 
from  poor  backgrounds  remains 
In 
addition,  the  matching  of  skills  supply  and 
demand 
the 
insufficient  labour-market  relevance  of  higher 
education.  Only  23.8%  of  higher  education 
students  in  Bulgaria  in  2022  were  pursuing  a 
degree in STEM subjects (EU average: 27.1%), 
with fewer women enrolled than men.  As part 
of  reforms  under  the  Recovery  and  Resilience 
Facility  (RRF),  the  national  map  of  higher 
education  has  been  adopted  to  include  an 
analysis  of  the  offering  –  and  needs  –  of  the 
country’s  higher  education  institutions.  This 
map  should  serve  as  a  basis  for  allocating 
student  places  in  public  universities  to  more 
effectively  reflect  more  efficiently  the  needs 
of  the  labour  market.  Under  the  RRF,  STEM 
laboratories  are  being  set  up  in  schools 
nationwide  to  support  the  development  of 
digital  skills  and  learning  in  STEM  subjects. 
However, there still remains scope to increase 
teaching capacity in digital and STEM areas. 

relevance 

labour-market 

The 
of 
vocational  education  and  training  (VET) 
could  be  increased.  Skills  mismatches  are 
exacerbated by the low alignment of VET with 
the  needs  of  the  jobs  market.  Furthermore, 
dual  VET  and  work-based  learning  remains 
unpopular,  with  very  limited  involvement  of 
companies.  Although  Bulgaria’s  VET  Act  has 

17 

 
 
been  amended  and  the  list  of  professions  on 
VET has been updated under the recovery and 
resilience plan (RRP), it will only be possible to 
align  VET  more  with  the  needs  of  the  jobs 
learning 
market  when  programmes  and 
content  for  each  profession  are  updated  and 
effectively  applied  in  the  education  system. 
There is also a need to: (i) continue raising the 
awareness  among  students  and  employers  of 
dual  VET;  and  (ii)  strengthen  the  involvement 
of employers and local actors in VET and dual 
VET. 

Low  and  declining  participation  in  adult 
learning  hinders  skills  development  and 
the  workforce, 
the  adaptability  of 
Bulgaria's 
weakening 
thereby 
competitiveness.  Adult  participation 
in 
learning  is  not  only  very  low  but  also  on  a 
decreasing  trend.  The  rate  in  2022  was  9.5% 
(vs  an  EU  average  of  39.5%)  and  was  even 
lower among the poorly educated. This rate is 
significantly below the 2030 national target of 
35.4%.  This  poses  significant  risks  to  the 
adaptability of the workforce to the digital and 
green 
transitions.  Despite  having  slightly 
improved,  the  share  of  the  adult  population 
with  at-least  basic  digital  skills  (35.5%  in 
2023)  remains  well  below  the  EU  average 
(55.5%)  and the  gap  is  even  larger  for  young 
people.  Only  one  third  of  Bulgarians  report 
having the necessary skills to benefit from the 
green  transition,  an  insufficient  share  of  the 
population  to  meet  the  demands  caused  by 
the  significant  restructuring  being  undergone 
intensive  Bulgarian 
by 
economy (see Annex 12).  

the  highly-energy 

EU 

and 

support 

instrument, 

Significant 
state-funded 
measures are supporting adult up-skilling 
and  re-skilling,  but  further  action  is 
needed  to  identify  barriers  and  raise 
awareness.  With  support  from  the  EU’s 
technical 
Bulgaria 
developed  a  proposal  for  an  action  plan  for 
skills to implement the country’s national skills 
strategy.  The  action  plan for  skills  aims  to: (i) 
identify  the  skills  needed  for  future  jobs;  (ii) 
ensure  that  people  with  these  skills  find 
employment  where  they  can  use  these  skills; 
and (iii) strengthen the governance system for 
adult learning. The EU’s European Social Fund+ 
and  RRF  are  supporting  key  investments  to 

18 

provide  training  in  digital  skills.  In  addition,  a 
pilot project for individual learning accounts is 
under  development,  with  plans  to  run  from 
2025  to  2027,  although  implementation  of 
this pilot project has been delayed (see Annex 
12).  Nevertheless,  the  persistently  low  levels 
of  adult  learning  indicate the  need to identify 
barriers  to  participation  and  adopt  measures 
aimed to increase flexibility, in part through: (i) 
the  promotion  of  more  online  training;  (ii) 
reducing administrative burden; and (iii) raising 
awareness  about  the  benefits  of  lifelong 
learning.  Bulgaria  could  boost  the  resilience 
the  workforce  and 
and  adaptability  of 
strengthen 
(i) 
dedicating  a  higher  share  of  measures  to 
helping  people  find  work  or  training;  and  (ii) 
incentivising  employers  and  employees  to 
increase workplace training. 

competitiveness 

by: 

its 

A more inclusive labour market 
can offset demographic challenges 

the 

towards 

advancing 

The  strong  performance  of  the  labour 
market  is  under  pressure  from  adverse 
demographic  trends.  Employment  has  been 
growing  since  2021,  staying  above  the  EU 
average to reach 76.8% in 2024 (aged 20-64), 
national 
and 
employment 
target  of  79%  by  2030. 
Unemployment has also dropped to historically 
low  levels  and  was  at  4.2%  in  2024.  A  tight 
labour  market  and  government  policies  on 
minimum  and  public  sector  wages  are  the 
cause  of  recent  wage  growth,  which  has 
considerably  outpaced 
recent 
years,  except  in  2022.  Real  wages  grew  by 
6.4% in 2024 and are expected to increase by 
8.4%  in  2025.  Nevertheless,  labour  costs 
remain among the lowest in the EU, reflecting 
low  pre-accession  wage  levels  and  lower 
labour productivity overall. Negative long-term 
demographic 
trends,  combined  with  net 
emigration of workers over a prolonged period 
the  working-age 
reduced 
of 
population 
the  country.  Positive  net 
migration  to  the  country  in  recent  years  has 
been  insufficient  to  alter  the  declining  labour 
force.  With  a  high  proportion  of  Bulgarian 
students studying abroad, greater prospects of 
finding  a  good  job  outside  the  country,  and 

time,  have 

inflation 

in 

in 

 
highly  educated  citizens  leaving,  the  loss  of 
skilled  workers  remains  a  challenge.  Thus, 
attracting skilled workers and activating those 
that are of working age and are able to work is 
support  economic  growth 
important 
potential.  A  positive  step  in  this  direction  was 
taken  with  the  amendment  of  the  VET  Act, 
which  means  that  people  without  a  formal 
education  aged  16  or  above  can  now  be 
encouraged into vocational training. 

to 

Vulnerable  groups  such  as  persons  with 
disabilities,  the  low-skilled,  and  Roma 
face greater barriers to employment. The 
situation is particularly concerning for persons 
with  disabilities,  as  the  disability  employment 
gap (the gap between the employment rate of 
people  with  a  disability  and  people  without  a 
disability) was one of the highest in the EU in 
2024. And the share of young people (15-29) 
neither  in  employment  nor  in  education  or 
training  (NEET),  although  declining,  remained 
above  the  EU  average.  The  gap 
in  the 
employment rate between low-skilled  workers 
and skilled workers was much higher than the 
EU  average.  Employment  outcomes  for  Roma 
were  much  lower  compared  with  the  overall 
took  certain 
rate.  Bulgaria 
employment 
measures in 2024 such as the launch of eight 
new 
‘Activation’  clubs  funded  under  the 
European  Social  Fund+,  which  identify  jobless 
people  and  find  them  work  or  training. 
Nevertheless, further sustained  efforts will  be 
necessary  to  increase  the  participation  in  the 
jobs market of these groups. This will support 
the sustainable and inclusive growth potential 
of the economy.  

in 

disparities 

the  country 

Regional 
activity, 
employment  and  unemployment  persist. 
The  north-west  of 
reports 
particularly poor figures. There are also major 
regional  differences  in  activity  rates.  And 
employment  rates  are  also  characterised  by 
large urban-rural divides (the employment rate 
was  81.1%  in  cities,  77.9%  in  towns  and 
suburbs  and  68.5%  in  rural  areas  in  2024). 
Further  efforts 
the  most 
disadvantaged  regions  are  necessary  to  tap 
the  country’s  potential  for  economic  growth 
and boost its overall competitiveness. 

support 

to 

Poverty is decreasing while energy 
poverty and access to quality 
healthcare remain challenging 

for 

the 

to  keep 

Energy  poverty  remains  a  structural 
challenge.  Although  the  proportion  of  the 
their  homes 
population  unable 
adequately  warm  has  substantially  decreased 
since  2015,  it  has  remained  higher  than  the 
EU average, particularly affecting those at risk 
of  poverty.  Arrears  on  utility  bills  have  also 
been  decreasing,  but  a  significant  proportion 
of  households  still  faces  difficulties  in  paying 
time.  The  housing-cost 
their  bills  on 
overburden  rate, 
indicating  the  share  of 
households that spend more than 40% of their 
income on housing-related costs, remains high. 
introduced  a  targeted 
In  2008,  Bulgaria 
heating 
vulnerable 
allowance 
population  to  cover  energy  costs  during  the 
winter  season,  with  about  a  third  of  a  million 
households  still  benefiting  from  the  scheme. 
Successive governments have also invested in 
renovating  residential  buildings  to  improve 
their  energy  efficiency.  In  addition,  a  legal 
definition  of  energy  poverty  was  adopted  in 
2023.  Nevertheless, 
for 
improvement. For example, Bulgaria could still: 
(i) develop an information system/database to 
identify  the  affected  population;  (ii)  put  in 
place  support  mechanisms  for  the  energy-
vulnerable  population;  and  (iii)  commit  to 
specific targets and timelines to reduce energy 
poverty.  These  actions  will  be  instrumental  in 
addressing 
the  challenge,  especially  as 
Bulgaria  is  moving  towards  liberalising  its 
electricity market.  

room 

there 

is 

challenges 

Bulgaria  has  made  progress  in  reducing 
overall poverty risks and inequalities, but 
persist, 
significant 
particularly  for  vulnerable  groups.  The 
2023 reform of the minimum income scheme 
(included  in  the  RRP)  aimed  to  increase  the 
adequacy  and  coverage  of  income  support. 
Preliminary data suggest the reform has led to 
an 
in  both  coverage  and 
adequacy. Despite improvements and progress 
towards  the  2030  poverty-reduction  target 
(see  Annex  11),  the  country  still  has  a  high 
share  of  the  population  experiencing  poverty 

improvement 

19 

 
or  social  exclusion  risks.  This  in  particular 
affects  children,  older  people,  persons  with 
disabilities,  and  Roma.  The  social  protection 
system’s  limited  capacity  and  uneven  access 
to quality services make it hard for Bulgaria to 
achieve sustainable and inclusive growth. This 
has  also  contributed  to  one  of  the  highest 
rates of income inequality in the EU. Increased 
social spending and a reform of the minimum 
income scheme under the RRP have improved 
the  situation  to  some  extent.  Better  targeting 
social  benefits  towards  those  most  in  need 
could  provide  sufficient  support  without 
jeopardising fiscal sustainability.  

education;  (ii)  participation  in  early  childhood 
education and care; (iii) basic skills levels; and 
(iv)  the  labour-market relevance of vocational 
education, 
training  and  higher  education. 
However, the analysis does not point to overall 
social  convergence  challenges  for  Bulgaria,  in 
part  due  to  the  measures  implemented  or 
planned (19). 

in 

to 

and 

shortcomings 

productivity 

Challenges  persist 
in  the  healthcare 
system  that  risk  undermining  social 
fairness, 
the 
development  of  human  capital.  Life 
expectancy in Bulgaria is among the lowest in 
the  EU,  with  high  rates  of  treatable  mortality 
indicating 
healthcare 
effectiveness.  Additionally,  the  country  has 
one  of  the  highest  rates  of  mortality  at 
working  age.  Bulgaria  faces  significant  and 
growing 
shortages  –  and  an  uneven 
distribution  –  of healthcare  professionals.  The 
number of practising nurses per 1 000 people 
is one of the lowest in the EU (4.3 vs 7.6 in the 
EU  on  average),  limiting  further  Bulgarians’ 
access 
healthcare.  Despite 
healthcare  spending  rising  constantly  since 
2019, it remains one of the lowest per capita 
in  the  EU.  In  addition,  low  investment  levels 
hamper  both  patient  access  and  the  health 
system’s  capacity  to  contribute  to  innovation, 
as  suggested  by  low  levels  of  R&D  in  the 
healthcare  system.  RRF-funded  reforms  set 
out  proposed  measures  to:  (i)  address  the 
shortages  of  healthcare  professionals;  (ii) 
address  the  uneven  distribution  of  healthcare 
professionals;  and 
(iii)  promote  e-Health. 
However,  to  increase  the  effectiveness  of  the 
country’s  heavily  hospital-centred  system,  it 
will  also  be  important  to:  (i)  improve  primary, 
preventive, and outpatient care; and (ii) reduce 
out-of-pocket  payments  as  a  share  of  total 
healthcare costs. 

quality 

These  findings  are  consistent  with  the 
second-stage  analysis  in  line  with  the 
EU’s  social  convergence  framework.  The 
analysis  points  to  challenges  related  to:  (i) 

(19)  European Commission, SWD(2025)95. The analysis 

relies on all the available quantitative and qualitative 
evidence and the policy response undertaken and 
planned. 

20 

 
 
 
 
 
KEY FINDINGS 

To  foster  competitiveness,  sustainability  and 
social fairness, Bulgaria would benefit from: 

the  share  of  renewables  –  and  increase 
their integration – into the energy mix; 

•  Urgently 

accelerating 

the 
implementation  of  the  recovery  and 
resilience  plan,  including  the  REPowerEU 
chapter;  swiftly  implementing  cohesion 
policy, 
the 
opportunities  under  the  mid-term  review 
and making optimal use of EU instruments, 
including  InvestEU  and  STEP,  to  improve 
competitiveness. 

advantage 

taking 

of 

• 

• 

improving 
the  quality  of  public 
investment  management  and  public 
services  to  attract  productive  private 
investment; 

(i) 

ensuring 

the  public  procurement 
improving 
process  by: 
tendering 
procedures  are  carried  out  in  an  open, 
transparent  and  competitive  way;  and  (ii) 
encouraging 
these 
participation 
processes; 

in 

•  moving forward with the liberalisation 
of  the  electricity  market  and 
the 
removal  of  electricity  price  caps  for 
businesses to further facilitate the entry of 
new renewable energy sources and flexible 
non-fossil-fuel energy assets; 

• 

increasing 
clean 
investment 
transport  infrastructure  to  support  the 
uptake of clean mobility and incentivise the 
modernisation of the passenger car fleet; 

in 

•  accelerating 

the  green 

transition 
further by  taking  concrete  steps  to  phase 
out fossil fuel subsidies; 

•  to support upward social convergence, 
in  higher 
increasing  participation 
education  and  strengthening  adult 
learning  to  ensure  skilled  workers  for  the 
labour market; 

improving  the  quality  of  teaching  by 
attracting  more  talent  to  the  profession 
and  providing  them  with  quality  training 
and  continuous  professional  development 
to increase students’ basic skills; 

the 

participation 

of 
increasing 
vulnerable  groups  in  the  jobs  market, 
in  particular  persons  with  disabilities  and 
Roma,  by  strengthening  the  effectiveness 
of  policies  to  help  people  find  work  or 
training and thus reduce the risk of poverty 
and social exclusion;  

•  reducing 

regional 

disparities 

by 
providing  better  education,  administrative 
and  social  services  and  better  access  to 
quality healthcare in lower-income regions. 

•  strengthening  the  effectiveness  of 
regulatory  bodies  by  ensuring  their 
political  independence  and  ensuring 
they  have  sufficient  expertise  and 
resources  to  reduce  uncertainty  among 
businesses and boost investment; 

• 

• 

resources 

•  concentrating  research and  innovation 
efforts  and 
fewer 
institutions  to:  (i)  increase  the  quality  of 
output;  (ii)  strengthen  academic-business 
links; 
the 
commercialisation  of  research  for  greater 
relevance for businesses; 

accelerate 

and 

(iii) 

on 

• 

investing  in  clean-energy  technologies 
as  well  as  expanding,  upgrading  and 
digitalising  the  grid,  and  increasing 
energy storage capacity to help increase 

21 

 
 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Fiscal 

A1.  Fiscal surveillance and debt sustainability 

A2.  Taxation 

Productivity 

A3. 

Innovation to business 

A4.  Making business easier 

A5.  Capital markets, financial stability and access to finance 

A6.  Effective institutional framework 

Sustainability 

A7.  Clean industry and climate mitigation 

A8.  Affordable energy transition 

A9.  Climate adaptation, preparedness and environment 

Fairness 

A10.  Labour market 

A11.  Social policies 

A12.  Education and skills 

A13.  Social Scoreboard 

A14.  Health and health systems 

Horizontal 

A15.  Sustainable development goals 

A16.  CSR progress and EU funds implementation 

A17.  Competitive regions 

LIST OF TABLES 

General government balance and debt 
Net expenditure growth 
Net expenditure (outturn and forecasts), annual and cumulated deviations vis-à-vis the medium-term plan 
Defence expenditure and the national escape clause 

A1.1. 
A1.2. 
A1.3. 
A1.4. 
A1.5.  Macroeconomic developments and forecasts 
A1.6. 
A1.7. 
A1.8. 
A1.9. 

General government budgetary position 
Debt developments 
RRF – Grants 
Projected change in age-related expenditure in 2024-2040 and 2024-2070 

25 

25 

25 

32 

35 

35 

39 

45 

53 

59 

59 

66 

73 

78 

78 

83 

88 

92 

93 

97 

97 

99 

107 

26 
26 
27 
27 
28 
28 
29 
29 
30 

 
 
 
A1.10.  Fiscal Governance Database Indicators 
A2.1. 
Taxation indicators 
A3.1. 
Key innovation indicators 
A4.1.  Making business easier: indicators 
A5.1. 
Financial sector indicators 
A6.1. 
Selected indicators on administrative burden reduction and simplification 
A6.2. 
Key Digital Decade targets monitored through the Digital Economy and Society Index 
A7.1. 
Key clean industry and climate mitigation indicators: Bulgaria 
A8.1. 
Retail energy price components for household and non-household consumers, 2024 
A9.1. 
Key indicators for progress on climate adaptation, preparedness and environment 
A13.1.  Social Scoreboard for Bulgaria 
A14.1.  Key health indicators 
A16.1.  Selected EU funds with adopted allocations - summary data (million EUR) 
A16.2.  Summary table on 2019-2024 CSRs 
A17.1.  Selection of indicators at regional level in Bulgaria 

LIST OF GRAPHS 

Greenhouse gas emissions in the effort sharing sectors, 2005 and 2023 
Retail energy price components for household and non-household consumers, 2024 

A2.1. 
Tax revenue shares in 2023 
A2.2. 
Tax wedge for single and second earners, % of total labour costs, 2024 
A3.1. 
R&D investment as % of GDP, 2013-2023 
A4.1.  Making Business Easier: selected indicators. 
A5.1. 
Net savings-investment balance 
A5.2. 
International investment position 
A5.3. 
Capital markets and financial intermediation 
A5.4. 
Composition of NFC funding as a % of GDP 
A5.5. 
Composition of HH financial assets per capita ('000 EUR) and as a % of GDP 
A6.1. 
Trust in justice, regional / local authorities and in government 
A6.2. 
Indicators of Regulatory Policy and Governance (iREG) 
A7.1. 
GHG emission intensity of manu-facturing and energy-intensive sectors, 2022 
A7.2.  Manufacturing industry production: total and selected sectors, index (2021 = 100), 2017-2023 
A7.3. 
A8.1. 
A8.2.  Monthly average day-ahead wholesale electricity prices and European benchmark natural gas prices (Dutch TTF) 
A8.3. 
A9.1. 
A9.2. 
A10.1.  Employment per region, 2008-2024 
A10.2.  Employment low-skilled and disability employment gap 
A11.1.  Components of AROPE, 2015-2024 
A11.2.  Components of energy poverty 2015-2024 
A11.3.  Housing cost overburden 2015-2024 
A12.1.  Skills development in Bulgaria 
A14.1.  Life expectancy at birth, years 
A14.2.  Treatable mortality 
A15.1.  Progress towards the SDGs in Bulgaria 
A16.1.  Distribution of RRF funding in Bulgaria by policy field 
A16.2.  Distribution of cohesion policy funding across policy objectives in Bulgaria 
A17.1.  Labour productivity per hour 
A17.2.  Access to healthcare and primary education, 2023 
A17.3.  Greenhouse gas emissions per capita 

Bulgaria's installed renewable capacity (left) and electricity generation mix (right) 
Investment needs and gaps in EUR million, in 2022 constant prices 
Direct dependency(1) on ecosystem services(2) of the gross value added generated by economic sector in 2022 

LIST OF MAPS 

A17.1.  Regional Competitiveness Index 2.0, 2022 edition 

26 

31 
33 
38 
44 
52 
54 
56 
65 
72 
77 
92 
94 
102 
103 
108 

32 
33 
35 
40 
45 
45 
46 
49 
50 
53 
53 
61 
61 
62 
66 
66 
69 
75 
75 
79 
80 
83 
84 
86 
91 
93 
93 
97 
100 
100 
107 
110 
110 

109 

 
 
 
 
FISCAL 
ANNEX 1: FISCAL SURVEILLANCE AND DEBT SUSTAINABILITY 

This  Annex  contains  a  series  of  tables  relevant  for  the  assessment  of  the  fiscal  situation  in  Bulgaria, 
including  how  Bulgaria  is  responding  to  Council  recommendations  issued  under  the  reformed  Economic 
Governance Framework. 

The  reformed  framework,  which  entered  into  force  on  30  April  2024 (20),  aims  to  strengthen  debt 
sustainability  and  promote  sustainable  and  inclusive  growth  through  growth-enhancing  reforms  and 
priority investments. The medium-term fiscal-structural plans (hereinafter, MTPs or plans) constitute the 
cornerstone  of  the  framework,  setting  the  budgetary  commitment  of  Member  States  over  the  medium 
term. The latter is defined in terms of net expenditure growth, which is the single operational indicator for 
fiscal surveillance.  

Bulgaria  submitted  its  plan  on  27  February  2025.  The  plan  covers  the  period  until  2028,  presenting  a 
fiscal  adjustment  over  four  years.  The  Commission  has  assessed  the  MTP  of  Bulgaria  and  on  12 May 
2025 recommended to the Council to adopt a recommendation setting the net expenditure growth ceilings 
contained in the plan (21). 

The  assessment  of  the  fiscal  situation  of  Bulgaria  considers  the  Commission  Recommendation  for  a 
Council Recommendation endorsing the Bulgaria’s plan and it is carried out on the basis of outturn data 
from Eurostat, the Commission Spring 2025 Forecast and taking into account the Annual Progress Report 
(APR)  that  Bulgaria  submitted  on  2  May  2025.  Furthermore,  given  Bulgaria’s  request  to  activate  the 
National  Escape  Clause (22)  following  the  Commission  Communication  of  19  March  2025(23),  the 
assessment  also  considers,  as  appropriate,  the  projected  increase  in  defence  expenditure  based  on  the 
Commission Spring 2025 Forecast.  

The Annex is organised as follows. First, developments in government deficit and debt are presented 
based on the figures reported in Table A1.1. Then, the assessment of the fiscal situation of Bulgaria 
follows,  considering  the  Commission’s  proposal  for  a  Council  Recommendation  endorsing  the 
plan,  based  on  the  relevant  figures  presented  in  Tables  A1.2  to  A1.8,  including  data  on  defence 
expenditure.  

The Annex also provides information on the cost of ageing and the national fiscal framework. Fiscal 
sustainability risks are discussed in the Debt Sustainability Monitor 2024 (24). 

Developments in government deficit and debt  

Bulgaria’s government deficit amounted to 3.0% of GDP in 2024. Based on the Commission’s Spring 2025 
Forecast,  it  is  projected  to  decrease  to  2.8%  in  2025.  The  government  debt-to-GDP  ratio  amounted  to 
24.1%  at the end  of  2024  and,  according  to  the Commission,  it is projected to  increase  to  25.1%  end-

(20)  Regulation (EU) 2024/1263 of the European Parliament and of the Council (EU) on the effective coordination of economic policies 
and on multilateral budgetary surveillance, together with the amended Regulation (EC) No 1467/97 on the implementation of the 
excessive deficit procedure, and the amended Council Directive 2011/85/EU on the budgetary frameworks of Member States are the 
core elements of the reformed EU economic governance framework. 

(21)  COM(2025) 238 of 12.05.2025 

(22)  On  2 May  2025,  Bulgaria  requested  to  the  Commission  and  to  the  Council  the  activation  of  the  National  Escape  Clause.  On  this 
basis, the Commission adopted a Recommendation for a Council Recommendation allowing Bulgaria to deviate from, and exceed, 
the net expenditure path set by the Council, COM(2025)601. 

(23)  Communication  from  the  Commission  accommodating  increased  defence  expenditure  within  the  Stability  and  Growth  Pact of  19 

March 2025, C(2025) 2000 final. 

(24)  European Commission (2025) ‘Debt Sustainability Monitor 2024,’ European Economy-Institutional Papers 306. 

27 

 
 
 
 
 
2025. The general government deficit is set to remain just under 3% of GDP going forward, whereas the 
general government debt-to-GDP ratio is expected to increase by 2026, driven by a stable primary deficit 
above 2% and sustained disinflation paired with increasing interest rates.   

Table A1.1:  General government balance and debt 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

Developments in net expenditure  

The  net  expenditure (25)  growth  of  Bulgaria  in  2025  is  forecast  by  the  Commission (26)  to  be  above  the 
recommended  maximum,  corresponding  to  a  deviation  of  1.1%  of  GDP.  The  increase  in  expenditure  is 
mainly  driven  by  a  projected  growth  in  defence  investment  in  2025  and  by  public  wages  expected  to 
continue rising, in line with recent trends, especially in the area of defence. The net expenditure growth in 
the Commission’s forecast is higher than the expected net expenditure growth presented by Bulgaria in its 
Annual Progress Report. The difference is mostly due to the fact that the Commission has recorded some 
expenditure  as  one-off  for  2024,  and  thus  a  lower  net  nationally  financed  primary  expenditure  in  the 
same year, which has then lowered the basis for the net expenditure growth calculation for 2025. Also, 
the Annual Progress Report includes higher EU funded expenditure and a greater impact of discretionary 
revenue  measures  in  2025,  albeit  against  a  higher  expected  total  expenditure,  when  compared  to  the 
Commission forecast.  

Table A1.2:  Net expenditure growth 

* The cumulative growth rates are calculated by reference to the base year of 2024. 
Source: Medium-term fiscal structural plan of Bulgaria (MTP), Annual Progress Report (APR) and Commission's calculation based 
on Commission Spring 2025 Forecast (COM). 

The assessment of the net expenditure growth and in particular the comparison with the recommended 
net expenditure path considers that Bulgaria has requested the activation of the national escape clause to 
facilitate  transitioning  to  a  higher  level  of  defence  expenditure (27).  General  government  defence 
expenditure  in  Bulgaria  amounted  to  1.6%  of  GDP  in  2021,  1.6%  of  GDP  in  2022  and  1.5%  of  GDP  in 

(25)  Net expenditure is defined in Article 2(2) of Regulation (EU) 2024/1263 as government expenditure net of (i) interest expenditure, 
(ii) discretionary revenue measures, (iii) expenditure on programmes of the Union fully matched by revenue from Union funds,  (iv) 
national  expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of  unemployment  benefit 
expenditure, and (vi) one-off and other temporary measures.  

(26)  Commission Spring 2025 Forecast, European Economy-Institutional paper 318, May 2025. 

(27)  On 4 June 2025 the Commission adopted a Recommendation for a Council Recommendation to deviate from, and exceed, the 

recommended net expenditure path [BG - COM(2025)601]. 

28 

2024OutturnAPRCOMAPRCOM1General government balance% GDP-3.0-2.9-2.8n.a.-2.82General government gross debt% GDP24.128.925.1n.a.27.1Variables20252026 
 
            
 
 
      
 
 
2023 (28). According to the Commission Spring 2025 Forecast, expenditure on defence is projected at 1.4% 
of  GDP  in  2024  and  2.6%  of  GDP  in  2025.  Based  on  current  projections  for  defence  spending,  the 
deviation that is projected for Bulgaria is within the flexibility provided by the national escape clause.  

Table A1.3:  Net expenditure (outturn and forecasts), annual and cumulated deviations vis-à-vis the 
medium-term plan 

* The medium-term plan was positively assessed by the Commission and is now pending the endorsement by the Council. 
Source: Commission Spring 2025 Forecast and Commission's calculation 

Table A1.4:  Defence expenditure and the national escape clause 

Source:  Eurostat (COFOG), Commission Spring 2025 Forecast and Commission's calculation 

(28)  Eurostat, government expenditure by classification of functions of government (COFOG). 

29 

2023202420252026OutturnOutturnCOMCOM1Total expenditurebn NAC71.880.790.794.12Interest expenditurebn NAC0.91.11.41.53Cyclical unemployment expenditurebn NAC0.00.00.00.04Expenditure funded by transfers from the EUbn NAC1.61.53.14.65National co-financing of EU programmesbn NAC0.40.40.50.46One-off expenditure (levels, excl. EU funded)bn NAC0.01.10.00.07=1-2-3-4-5-6Net nationally financed primary expenditure (before discretionary revenue measures, DRM)bn NAC68.976.785.787.58Change in net nationally financed primary expenditure (before DRM)bn NAC7.89.01.89DRM (excl. one-off revenue, incremental impact)bn NAC0.61.90.410=8-9Change in net nationally financed primary expenditure (after DRM) bn NAC7.27.11.411Outturn / forecast net expenditure growth% change10.42%9.2%1.7%12Net expenditure growth as reported in the medium-term plan * % changen.a.6.2%4.9%13=(11-12) x 7Annual deviationbn NACn.a.2.3-2.814 (cumulated from 13)Cumulated deviationbn NACn.a.2.3-0.415=13/17Annual balance% GDPn.a.1.1-1.216=14/17Cumulated balance% GDPn.a.1.1-0.217p.m. Nominal GDP  bn NAC185.2202.9218.1228.3Variables2021202220232024202520261Total defence expenditure% GDP1.61.61.51.42.61.72of which: gross fixed capital formation% GDP0.60.50.40.31.10.13Flexibility from increases in defence expenditure% GDP1.20.34Cumulated balance after flexibility% GDP-0.2-0.5 
 
  
 
 
 
      
 
 
 
Table A1.5:  Macroeconomic developments and forecasts 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

Table A1.6:  General government budgetary position 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

30 

2024OutturnAPRCOMAPRCOM1=7+8+9Real GDP% change2.83.02.0n.a.2.12Private consumption% change4.23.93.5n.a.2.53Government consumption expenditure% change4.62.90.3n.a.1.94Gross fixed capital formation% change-1.112.82.0n.a.3.55Exports of goods and services% change-0.82.61.6n.a.2.16Imports of goods and services% change1.36.72.4n.a.2.8Contributions to real GDP growth 7- Final domestic demandpps3.15.12.4n.a.2.58- Change in inventoriespps1.00.00.0n.a.0.09- Net exportspps-1.3-2.1-0.4n.a.-0.310Output gap% pot GDP0.70.2-0.1n.a.-0.511Employment % change1.10.60.4n.a.0.312Unemployment rate%4.24.14.0n.a.3.813Labour productivity% change1.72.41.7n.a.1.814HICP % change2.63.63.6n.a.1.815GDP deflator% change6.54.55.4n.a.2.516Compensation of employees per head% change10.48.79.6n.a.6.117Net lending/borrowing vis-à-vis the rest of the world% GDP-1.7n.a.-1.4n.a.-0.920252026Variables2024OutturnAPRCOMAPRCOM1=2+3+4+5Revenue36.740.538.8n.a.38.4of which:2- Taxes on production and imports14.816.615.9n.a.15.83- Current taxes on income, wealth, etc.6.66.96.6n.a.6.24- Social contributions9.09.69.2n.a.9.35- Other (residual)6.37.47.0n.a.7.18=9+16Expenditure 39.843.341.6n.a.41.2of which:9- Primary expenditure39.242.540.9n.a.40.5of which:10- Compensation of employees 11.412.112.7n.a.12.611- Intermediate consumption4.54.84.2n.a.4.012- Social payments15.717.116.0n.a.16.113- Subsidies2.21.81.8n.a.1.714- Gross fixed capital formation3.04.93.6n.a.3.315- Other2.51.82.6n.a.2.816- Interest expenditure0.50.80.6n.a.0.718=1-8General government balance-3.0-2.9-2.8n.a.-2.819=1-9Primary balance-2.5-2.0-2.2n.a.-2.120Cyclically adjusted balance-3.2n.a.-2.8n.a.-2.721One-offs-0.50.00.4n.a.0.022=20-21Structural balance-2.7-2.9-3.2n.a.-2.723=22+16Structural primary balance-2.2-2.1-2.5n.a.-2.0Variables (% GDP)20252026 
 
            
 
 
 
      
 
 
 
Table A1.7:  Debt developments 

* End of period.  
** The 'snow-ball' effect captures the impact of interest expenditure on accumulated general government debt, as well as the 
impact of real GDP growth and inflation on the general government debt-to-GDP ratio (through the denominator). The stock-flow 
adjustment includes differences in cash and accrual accounting (including leads and lags in Recovery and Resilience Facility grant 
disbursements), accumulation of financial assets, and valuation and other residual effects. 
Source: Commission Spring 2025 Forecast and Commission's calculation (COM), Annual Progress Report (APR) 

Table A1.8:  RRF – Grants 

Source: Annual Progress Report 

Cost of ageing  

Total  age-related  spending  in  Bulgaria  is  projected  to  decline  from  about  19.5%  of  GDP  in 
2024  to  about  18.5%  in  2040,  rising  again  thereafter  to  around  19%  but  remaining 
considerably  below  the  EU  average  (see  Table  A1.9).  The  overall  dynamic  is  mainly  driven  by  the 
projected decline in pension spending over the next decades, which more than offsets the limited increase 
expected for healthcare and long-term care expenditure.   Pension spending would fall by 1.2 pps of GDP 
between 2024 and 2040, the largest projected decline among all EU Member States, and broadly stabilise 
thereafter.  

Public healthcare expenditure is projected at 4.5% of GDP in 2024 (well below the EU average 
of 6.6%) and is expected to increase by 0.3 pps by 2040 but then reverse and decrease by 0.1 

31 

2024OutturnAPRCOMAPRCOM1Gross debt ratio* (% of GDP)24.128.925.1n.a.27.12=3+4+8Change in the ratio (pps. of GDP)1.24.81.0n.a.2.0Contributions**3Primary balance2.52.02.2n.a.2.14≈5+6+7'Snow-ball' effect-1.5-0.9-1.0n.a.-0.4of which:5- Interest expenditure0.50.80.6n.a.0.76- Real growth effect-0.6-0.7-0.5n.a.-0.57- Inflation effect-1.4-1.0-1.2n.a.-0.68'Stock-flow' adjustment0.13.7-0.1n.a.0.420252026VariablesRevenue from RRF grants (% of GDP)20202021202220232024202520261RRF grants as included in the revenue projectionsn.a.n.a.0.00.00.30.9n.a.2Cash disbursements of RRF grants from EUn.a.n.a.1.60.00.01.8n.a.20202021202220232024202520263Total current expendituren.a.n.a.0.00.00.10.1n.a.4Gross fixed capital formationn.a.n.a.0.00.00.20.8n.a.5Capital transfersn.a.n.a.0.00.00.00.0n.a.6=4+5Total capital expendituren.a.n.a.0.00.00.20.8n.a.20202021202220232024202520267Reduction in tax revenuen.a.n.a.0.00.00.00.0n.a.8Other costs with impact on revenuen.a.n.a.0.00.00.00.0n.a.9Financial transactionsn.a.n.a.0.00.00.00.0n.a.Expenditure financed by RRF grants (% of GDP)Other costs financed by RRF grants (% of GDP) 
 
               
 
 
 
            
 
pp by 2070. While the overall increase is driven by an ageing population, it is constrained in the long-
term by a significant decline in the overall population (29).  

Public expenditure on long-term care is projected at 0.5% of GDP in 2024 (well below the EU 
average of 1.7%) and is expected to increase by 0.1 pp of GDP by 2040 and by a further 0.1 pp 
of  GDP  by  2070.  The  projected  increase  is  due  to  an  ageing  population  but  is  relatively  low  due  to 
underdeveloped long-term care services (30). 

Table A1.9:  Projected change in age-related expenditure in 2024-2040 and 2024-2070 

Source: 2024 Ageing Report (EC/EPC). 

National fiscal framework 

There  is  potential  to  enhance  the  capacity  and  independence  of  the  Bulgarian  independent 
fiscal  institution  (IFI),  the  Fiscal  Council  of  Bulgaria  (FCB).  Currently,  it  has  a  narrow  mandate, 
monitoring compliance with fiscal rules and assessing the macroeconomic and budgetary forecasts and is 
supported  by  a  thinly  staffed  Secretariat  of  only  two  full-time  employees.  The  six-year  mandates  of 
Members  are  not  staggered,  increasing  the  need  for  transparency  in  the  appointment  process.  The 
mandate of the previous Board expired in November 2021, and a new board was only appointed in March 
2025.  Despite  a  legal  requirement  to  provide  the  FCB  with  all  necessary  information,  improvements  in 
practice  are  needed  regarding  both  the  content  and  timing  of  delivery.  The  policy  dialogue  with  the 
government and the parliament could be further developed.  

The  planning  and  budgeting  of  public  investments  is  subject  to  ongoing  reform  in  Bulgaria, 
while room for improvement remains. The 2024 State Budget Law approved an investment program 
for  nationally  financed  projects,  centralising  capital  expenditures  into  a  dedicated  fund  to  improve 
planning, transparency, and efficiency. The medium-term budgeting framework includes capital spending 
ceilings  for  the  budget  year  and  the  next  two  years.  Yet,  these  are  indicative  and  subject  to  yearly 
amendments. Project assessment and selection based on objective value-for money indicators are not in 
place yet and neither are external quality assurances that could help reduce underrepresentation of risks 
and  costs  ((31).  However,  reforms  are  underway  to  introduce  standardised  appraisal  methods  ((32).  After 
sufficient  time  since  a  project  started  delivering,  a  comprehensive  ex-post  review  can  be  carried  out  to 
assess strategic performance and they require careful planning and are resource intensive. In Bulgaria, ex 
post reviews are neither systematically required nor frequently conducted. 

(29)  Key performance characteristics, recent reforms and investments of the Bulgarian healthcare system are discussed in Annex 14 

‘Health and health systems’.   

(30)  The quality and adequacy of the Bulgarian long-term care system are covered in Annex 11 ‘Social policies’. 

(31)  OECD (2023), Public Investment in Bulgaria: Planning and Delivering Infrastructure, OECD Public Governance Reviews, OECD 

Publishing, Paris, https://doi.org/10.1787/b73ef3b4-en. 

(32)  For example, reforms supported by the Technical Support Instrument of the European Commission. 

32 

BG19.4-1.20.30.1-0.2-1.018.4BGEU24.30.50.30.4-0.30.925.2EUBG19.4-1.00.20.20.0-0.618.8BGEU24.30.20.60.8-0.41.325.6EUage-related expenditure 2024 (% GDP)change in 2024-2040 (pps GDP) due to:age-related expenditure 2040 (%GDP)pensionshealthcarelong-term careeducationtotalage-related expenditure 2024 (% GDP)change in 2024-2070 (pps GDP) due to:age-related expenditure 2070 (%GDP)pensionshealthcarelong-term careeducationtotal 
 
   
 
 
Table A1.10:Fiscal Governance Database Indicators 

The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level based 
on i) the legal base, ii) how binding the rule is, iii) monitoring bodies, iv) correction mechanisms, and v) resilience to shocks. The 
Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on i) coverage of the 
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the 
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal 
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength. 
Source: Fiscal Governance Database 

33 

2023BulgariaEU AverageCountry Fiscal Rule Strength Index (C-FRSI)22.2614.52Medium-Term Budgetary Framework Index (MTBFI)0.730.73 
 
 
   
 
 
 
ANNEX 2: TAXATION 

This  annex  provides  an 
indicator-based 
overview of Bulgaria’s tax system.  It includes 
information on: (i) the tax mix; (ii) competitiveness 
and  fairness  aspects  of  the  tax  system;  and  (iii) 
tax collection and compliance.  

Graph A2.1: Tax revenue shares in 2023 

Source: Taxation Trends Data, DG TAXUD 

and 

investment 

its  GDP,  with  the 

Bulgaria’s  tax  revenue  is  relatively  low  in 
relation  to 
largest 
contribution coming from consumption taxes. 
The  low-tax  environment  with  respect  to  direct 
taxes  benefits  economic  activity  because 
it 
encourages 
employment. 
Table A2.1 shows that Bulgaria’s tax revenue as a 
percentage of GDP was considerably below the EU 
average  in  2023  (29.9%  vs  an  EU  average  of 
39%),  having  fallen  by  1.2  pps  compared  with 
2022.  The  share  of  consumption  taxes  as  a 
proportion  of  total  tax  revenue  was  significantly 
above  the  EU  average  (42.5%  compared  with  an 
EU  average  of  26.9%).  However,  revenue  from 
labour  taxes  was  significantly  below  the  EU 
average, both as a share of GDP and as a share of 
total  taxation  (see  Graph  A2.1).  Revenue  from 
property  taxes  was  also  relatively  low  as  a 
percentage of both GDP and total tax revenue, as 
were  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 
in 
sustainability 
Bulgaria. 

challenges 

fiscal 

Bulgaria’s  environmental  taxes  are  higher 
than  the  EU  average  but  could  still  be 
expanded.  These  taxes  accounted  for  15.3%  of 
total  tax  revenues  in  2023,  which  was  one  the 
highest shares in the EU-27. This was mostly due 
to  energy  taxes  (for  more  on  policies  related  to 
environmental 
Annex 7). 
sustainability, 
Nevertheless,  taxes  on  pollution  and  resources 

see 

34 

taxes account for only 0.1% of Bulgaria’s 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).  However,  it  has  not  yet 
introduced  the  other  five  types  (i.e.  taxes  on: 
incineration  and  landfilling;  waste  discharge  into 
water; fertilisers; pesticides; and plastic products).  

Bulgaria’s  levels  of  property  and  corporate 
taxation  are  below  the  EU  average.  In  2023, 
the  average  forward-looking  effective  tax  rate  on 
corporate  income  in  Bulgaria  was  9.4%,  which  is 
considerably  below  the  EU  average  (18.9%),  but 
not  very  far  from  the  statutory  tax  rate  (10%). 
Moreover, companies can carry forward losses for 
up to five consecutive years. These two features of 
the tax system (low effective rates and the ability 
to  carry  forward  losses  for  five  years),  combined 
with  the  significant  tax  incentives  provided  for 
investments 
in  poorly  developed  areas  may 
benefit economic growth. At the same time, other 
factors  are  working  in  the  opposite  direction  and 
potentially  holding  back  growth.  These  other 
factors include the lack of tax incentives for R&D, 
the  debt-equity  bias  and  the  treatment  of  stock 
options  on  a  case-by-case  basis 
(creating 
considerable uncertainty over the use of employee 
stock  options).  Moreover,  Bulgarian  entities  in  the 
scope of the OECD-proposed ‘global minimum tax’ 
have  been  subjected  to  a  minimum  effective  tax 
rate  of  15%  as  of  1 January 2024,  while  public 
country-by-country  reporting  had  to  be  adopted 
from 1 January 2025. 

Bulgaria has a flat-rate tax system, which is 
not  progressive  (unlike  most  tax  systems  in 
the EU). 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.  The  tax  wedge  is  therefore 
relatively  high  for 
low-income  earners  and 
relatively  low  for  high-income  earners  (Graph 
A2.2) (33). This may reduce employers’ demand for 
low-skilled  workers,  which  may  partly  explain  the 
low  employment  rate  of  low-educated  people 

(33)  The  tax  wedge  is  defined  as  the  sum  of  personal  income 
social-security 
taxes  and  employee  and  employer 
contributions  net  of  family  allowances,  expressed  as  a 
percentage of total labour costs (the sum of the gross wage 
and social-security contributions paid by the employer). 

51,226,921,936,242,521,3Tax revenue shares in 2023, Bulgaria (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital 
 
       
 
 
Table A2.1:  Taxation indicators 

(1) Forward-looking effective tax rate (KPMG).       
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) For more details on the VAT gap, see European Commission, Directorate-General for Taxation and Customs Union, VAT gap in 
the EU - 2024 report, https://data.europa.eu/doi/10.2778/2476549 
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, OECD 

(48.5%  of  whom  are  employed  in  Bulgaria  vs  an 
EU average of 58.7%). The lack of progressivity in 
the  tax  system  also  means  that  the  tax-and-
benefit system is less able to redistribute income. 
The  tax-and-benefit  system  reduced  the  Gini 
coefficient  (a  measure  of  income  inequality)  in 
2023 by only 4.2 points, which was well below the 
EU  average  of  7.7  points 
(see Table  A2.1). 
Simulations  using  the  EUROMOD  microsimulation 
model  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 could reduce relative poverty by 
inequality  by  0.8  Gini 
around  0.6 pps  and 
points (34). 

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

Graph A2.2: Tax wedge for single and second 
earners, % of total labour costs, 2024 

The tax wedge for second earners assumes a first earner at 
100% of the average wage and no children. For the full 
methodology, see OECD, 2016, Taxing Wages 2014-2015. 
Source: European Commission 

Bulgaria  continues  to  face  some  challenges 
in  the  efficiency  of  tax  administration.  The 
2022  VAT  compliance  gap  (the  gap  between 
revenues collected and the theoretical tax liability) 
was  close  to  the  EU-27  average,  at  7.7% 
compared  with  7.0%  for  the  EU.  Overall,  there  is 
still considerable room to improve the efficiency of 
the  tax  administration.  Outstanding  tax  arrears 
decreased  by  16.4  pps  to  67%  of  total  revenue 
collected  between  2021  and  2022,  but  this  was 

35 

34,934,934,934,234,92025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - BGSingle earner - EU averageSecond earner -  BGSecond earner -  EU averageBGMedian (EU-27)2010202120222023202420102021202220232024Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)25,430,731,129,937,840,239,739,0Taxes on labour (% of GDP)8,411,110,410,819,820,520,120,0of which, social security contributions (SSC, % of GDP)6,68,88,28,512,913,012,712,7Taxes on consumption (% of GDP)13,414,012,912,710,911,210,910,5of which, value added taxes (VAT, % of GDP)8,39,39,08,86,87,37,47,1Taxes on capital (% of GDP)3,65,67,86,47,18,58,78,5Personal income taxes (PIT, % of GDP)2,83,43,13,38,69,69,49,3Corporate income taxes (CIT, % of GDP)1,82,82,92,92,22,93,23,2Total property taxes (% of GDP)0,50,80,70,61,92,22,11,9Recurrent taxes on immovable property (% of GDP)0,30,30,20,21,11,11,00,9Environmental taxes (% of GDP)2,72,84,83,42,52,42,12,0Effective carbon rate in EUR per tonne of CO2 equivalentsNANANA65,0NA86,0NA84,8Tax wedge at 50% of average wage (single person) (*)32,534,934,934,934,933,931,831,531,531,8Tax wedge at 100% of average wage (single person) (*)32,534,934,934,934,940,939,939,940,240,3Corporate income tax - effective average tax rates (1) (*)9,29,49,49,421,319,319,118,9Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)3,64,74,44,28,68,27,97,7Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)81,067,735,532,6VAT gap (% of VAT total tax liability, VTTL) (**)3,77,76,67,0Progressivity & fairnessTax administration & complianceBy tax baseSome tax typesBulgariaEU-27 
 
 
       
 
  
 
still among the highest in the EU (the EU average 
is  32.6%).  Bulgaria  is  also  lagging  behind  other 
Member States in the degree to which tax returns 
are  pre-filled,  and  this  can  be  considered  as  an 
indicator  of  the  compliance  costs  that  Bulgarian 
taxpayers  face.  The  electronic  filing  rates  for 
personal-income-tax  returns  have  improved  in 
recent  years  but  are  still  lower  than  in  other 
Member  States.  Bulgaria’s  recovery  and  resilience 
plan  does  not  include  tax  reforms,  despite  2019 
and  2020  country-specific 
recommendations 
related  to  taxation.  However,  Bulgaria  has  put  in 
to  prevent  money 
place 
laundering  by  people  providing  professional 
company  services  (including  accountants  and  tax 
advisers)  and  others  providing 
incentives  for 
electric mobility.  

some  measures 

36 

 
 
PRODUCTIVITY 
ANNEX 3: INNOVATION TO BUSINESS  

the 

country’s 

science-business 

Despite  some  progress 
in  recent  years, 
Bulgaria remains an ‘emerging innovator’ (35), 
mainly due to significant underinvestment in 
ties. 
R&D  and  weak 
Innovation 
According  to  the  2024  European 
Scoreboard (36), 
innovation 
performance  has  increased  over  time,  but  at  a 
slower  pace  than  that  of  the  EU.  Sustaining  this 
positive trend will be crucial to closing the growing 
gap  with  the  EU  average.  While  total  R&D 
intensity (37)  increased  from  0.43%  in  2007  to 
0.79%  in  2023,  both  public  and  private  R&D 
investment  remains  critically  low  (among  the 
lowest  in  the  EU)  and  is  still  far  from  Bulgaria’s 
goal  of  spending  2%  of  its  GDP  on  R&D  by 
2025 (38).  In  addition  to  a  fragmented  research 
system  and  weak  science-business  ties,  this 
underinvestment  weighs  heavily  on  Bulgaria’s 
innovation  potential.  Strengthening  the  Bulgarian 
public  science  base  and  its  linkages  with  the 
business  ecosystem,  while  boosting  private  R&D 
efforts  through  well-calibrated  public  support 
tools,  will  be  essential  to  improving  Bulgaria’s 
innovative capacity and competitiveness. 

(35)  The European Innovation Scoreboard categorises EU Member 
States into four performance groups based on their scores: 
Innovation Leaders, Strong Innovators, Moderate Innovators, 
and Emerging Innovators. 

(36)  2024  European 

Innovation  Scoreboard,  country  profile: 
Bulgaria,  https://ec.europa.eu/assets/rtd/eis/2024/ec_rtd_eis-
country-profile-bg.pdf. 
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). 

scoreboard 

provides 

The 

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

percentage of GDP. 

(38)  As set out in the national strategy for the development of 

scientific research 2017-2030. 

37 

Graph A3.1: R&D investment as % of GDP, 2013-
2023 

Source: Eurostat 

Science and innovative ecosystems  

to 

and 

remain 

scientific 
continues 

technological 
Bulgaria’s 
potential 
largely 
untapped  due  to  underfunding  and  a  highly 
fragmented  public  research  landscape.  Over 
the  last  decade,  Bulgaria  has  been  unable  to 
increase  its  public  R&D  intensity,  which  remains 
well below the EU average (0.28% of GDP in 2023 
vs  0.72%  in  the  EU).  Low  public  R&D  spending  is 
affecting  the  quality  of  the  public  science  base, 
which is among the lowest in the EU (39). Although 
performance-based funding progressed in the past 
years  it  still  accounts  for only  a  very  small  share 
of  the  overall  institutional  funding  of  public 
research  organisations,  providing  limited  financial 
scientific 
incentives 
The 
excellence. 
consequences  of 
levels  of  public  R&D 
low 
expenditure in Bulgaria are further exacerbated by 
the  fact  that  the  limited  public  R&D  budget  is 
distributed  over  a 
large  number  of  higher 
education  institutions  and  research  organisations. 
Through  the  Horizon  Policy  Support  Facility  (PSF), 
the  Bulgarian  government  receives  support  to 

for 

(39)  As  measured  in  scientific  publications  of  the  country  within 
the top 10% most cited scientific publications worldwide as 
% of total scientific publications of the country: 3.3 (2021) in 
Bulgaria vs 9.6 (2023) in the EU. 

00.20.40.60.811.21.41.62013201520192020202120222023BG public R&D %GDPBG business R&D %GDPEU average public R&D % GDPEU average business R&D %GDP 
 
 
 
     
 
 
 
address  its  fragmented  research  landscape.  The 
ongoing  PSF  review  is  assessing  the  Bulgarian 
scientific ecosystem to identify the policy levers to 
be  used  and  provide  concrete  recommendations 
for  consolidating  research-performing  institutions. 
A  proper  and  timely  implementation  of  these 
recommendations, which is expected in June 2025, 
will  be  key  to  increasing  the  efficiency  and 
excellence  of  Bulgaria’s  public  research  system, 
for  strong 
which  provides 
innovation performance. 

foundation 

the 

the 

and 

development 

Ineffective  coordination  between  ministries 
and implementing agencies hinders effective 
policy 
proper 
implementation of reforms and research and 
innovation  (R&I)  strategies.  The  new  Research 
and  Innovation  Act,  adopted  in  May  2024 (40)  as 
part of the recovery and resilience plan, regulates 
the  role  and  responsibilities  of  the  institutions 
involved  in  the  policy  cycle.  One  of  its  key 
elements  is  the  establishment  of  an  Innovation 
and  Science  Research  Council  to  advise  the 
Ministry of Education and Science and the Ministry 
of  Innovation  and  Growth  on  matters  related  to 
research and innovation. One third of the Council’s 
members 
represent  businesses.  The  Council, 
together  with  the  Research  and  Innovation  Act, 
supports the creation of a research and innovation 
ecosystem  by  ensuring  close 
links  between 
academia  and  business  sectors,  including  the 
promotion of technology transfers (41). 

Business innovation  

in  modest 

Low  and  stagnant  private  R&D  investment, 
innovation  output, 
resulting 
hinders  Bulgaria’s  economic  development. 
Between  2021  and  2023,  business  R&D  intensity 
remained  stagnant  at  0.51%  of  GDP,  well  below 
the  EU  average  of  1.49%.  In  addition,  public 
support  to  business  R&D  remains  marginal  and 
insufficient to stimulate private R&D efforts. Public 
support  to  business  R&D  stands  at  0.011%  of 
GDP, well below the EU average of 0.204%. Many 

(40)  https://www.mon.bg/regulation/zakon-za-nasarchavane-na-

nauchnite-izsledvaniya-i-inovacziite/. 

(41)  https://op.europa.eu/en/publication-detail/-
/publication/80ec9c96-be86-11ef-91ed-
01aa75ed71a1/language-en. 

38 

to 

businesses  in  Bulgaria  are  low-tech,  which  limits 
innovate  and  adopt  new 
their  ability 
technologies (42). This limited innovation activity of 
businesses also results in weak innovation output, 
as measured for example by patents (43).  

a 

to 

obstacle 

research 

Limited  academia-business  links  continue  to 
the 
be 
serious 
results. 
of 
commercialisation 
Science-business  cooperation,  as  reflected  in  the 
share  of  public-private  scientific  co-publications, 
remains  at  the  low  end  of  the  scale,  5.6% 
compared to the EU average of 7.7%. Public R&D 
expenditure  financed  by  businesses  is  also  well 
below 
that 
the  EU  average.  This  suggests 
Bulgarian  businesses  have  little  incentive  to  work 
with public research institutions, which then limits 
the  innovation  output  and  commercialisation  of 
research.  The  technology  transfer  ecosystem (44) 
remains  underdeveloped:  not  all 
research-
performing institutions have a technology transfer 
office, and if they do, these offices generally lack 
sufficient 
administrative 
capacity (45).  Furthermore,  while  entrepreneurship 
education is embedded in the school curriculum, it 
is limited by its scale and low instruction time.  

resources 

and 

by 

technologies 

The  uptake  of  digital 
is 
significantly  below  the  EU  average,  despite 
recent  progress  on  the  uptake  of  cloud 
services 
small  and  medium-sized 
enterprises  (SMEs).  In  2024,  49.9%  of  the 
country’s SMEs had at least a basic level of digital 
intensity, far below the EU average of 72.91% and 
last  among  EU  Member  States.  Against  an  EU 
average  of  13.48%,  only  6.47%  of  the  country’s 
firms  had  adopted  AI  in  2024.  Cloud  adoption 
(14.22%) was extremely low in 2023 compared to 
the  EU  average  (38.86%),  and  only  21.86%  of 

(42)  Innovation.bg 2024, ARC Fund: 

https://arcfund.net/en/category-publications/inovatsii-bg-
2024/. 

(43)  Measured as patent applications filed under the Patent 

Cooperation Treaty per billion of GDP (in purchasing power 
standards): 0.3 in Bulgaria (2022) vs 2.8 (2024) in the EU. 

(44)  Strategic evaluation of the technology transfer and IPR 

protection systems of Bulgaria, Croatia and Romania and 
recommendations for their enhancement: 
https://publications.jrc.ec.europa.eu/repository/handle/JRC136
807. 

(45)  Bulgaria: Country Needs and STI Policy Mix Assessment, 

September 2020, World Bank. 

 
 
 
 
firms used data analytics compared to 33.17% in 
the  EU.  To  address  this  issue,  the  Bulgarian 
recovery  and 
includes  an 
resilience  plan 
investment  to  support  the  deployment  of  digital 
technologies  in  SMEs  and improve  their  readiness 
for  the  subsequent  adoption  of  Industry  4.0 
technologies.  The  cohesion  policy 
investment 
would  primarily  focus  on  supporting  SMEs  in 
achieving  higher 
levels  of  digitalisation  and 
deploying  Industry  4.0  technologies.  Bulgaria  has 
made  progress 
the 
development  of  strategic  technologies  such  as 
semiconductors. The country’s quantum computing 
capabilities  make  it  a  forerunner  in  the  EU  for 
and 
quantum 
cybersecurity.  The  country 
the 
European  High  Performance  Joint  Undertaking 
´Discoverer´,  which 
the  eight 
supercomputers located across Europe and is fully 
operational. 

technologies 
is  home 

its  contribution 

communication 

is  one  of 

to 

to 

in 

Financing innovation  

The  availability  of  risk  capital  has  improved 
over  the  years  and  supports  the  growth  of 
Bulgaria’s  start-up  ecosystem;  however,  it 
remains small compared with other countries 
worldwide. Venture capital investment has grown 
significantly  (0.024%  of  GDP  in  2023  vs  0.007% 
in  2019),  but  is  still  below  the  EU  average  of 
0.078%  and  is  concentrated  in  seed  and  start-up 
funding.  The  shares  (%  of  total  venture  capital) 
are  well  above  the  EU  average  (24.6%  vs  7.3% 
and  64.5%  vs  44%  respectively),  showing  that 
Bulgaria’s start-up ecosystem is growing. Bulgaria 
has emerged as the entrepreneurial hub in south-
east Europe with over EUR 1 billion of investments 
in the last five years (2019-2023) and the highest 
number  of  funded  start-ups  per  capita  in  the 
region (46).  Another 
for 
innovative  companies  comes  from  private  equity, 
but  the  average  annual  investment,  at  0.1%  of 
GDP, is still below the EU average of 0.6%. Early-
stage innovative firms in Bulgaria continue to face 
their 
a  persistent  financing  gap 
lifecycle,  highlighting  the  need  to  further  develop 
the  private  equity  and  venture  capital  markets  in 

source  of 

throughout 

finance 

(46)  https://bvca.bg/wp-content/uploads/2024/02/Project-
Venture-Startup-Ecosystem-Overview_date.pdf 

39 

order to support the growth of the country’s start-
up ecosystem (47).  

Innovative talent 

towards  a 

the  EU  average (48).  This 

Systemic  loss  of  scientific  capacities 
is 
hampering  Bulgaria’s  competitiveness  and 
transition 
knowledge-based 
economy. Bulgaria’s pool of available workers for 
R&I,  as  measured  by  the share  of  new  graduates 
in  science  and  engineering  in  the  population,  has 
been on a downward trend since 2010 and is well 
below 
further 
exacerbated  by  one  of  the  lowest,  but  recently 
growing (49),  shares  of  people  aged  25-34  who 
have  successfully  completed  tertiary  education 
(40.5%  against  the  EU  average  of  44.2%),  along 
with an ageing workforce (50) and lack of research 
staff due to low 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  among  the  lowest  of  all  EU  countries 
(2.8 in 2023 compared to an EU average of 4.2). 

is 

Entrepreneurship  education  is  embedded  in  the 
school  curriculum  (grade  1–12);  however,  it  is 
limited  by its  scale,  low  instruction  times  and  the 
lack  of  specific  national  strategy. 
In  higher 
the  promotion  of  entrepreneurial 
education, 
education is not recognised (51) as a strategic goal, 
and 
in  providing 
role  of  universities 
entrepreneurship education is not clearly defined. 

the 

(47)  See also Annex 5: Access to finance. 

(48)  Measured as new graduates in science and engineering per 
thousand of the population aged 25-34: 10.2 in Bulgaria 
(2022) vs 17.6 (2024) in the EU. 

(49)  Measured by share of population aged 25-34 who have 

successfully completed tertiary education (%): 35.8 (2023) 
to 40.5 (2024) in Bulgaria 

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

(51)  Yordanova, D., (2021a). Nascent Technology 

Entrepreneurship among Bulgarian STEM Students, 
Administrative Sciences, vol:11, issue:4. 

 
 
 
 
 
 
Table A3.1:  Key innovation indicators 

(1) EU average for the last available year or the year with the largest number of country data. 
Source: Eurostat, DG JRC, OECD, Science-Metrix (Scopus database), Invest Europe, European Innovation Scoreboard 

40 

R&D intensity (gross domestic expenditure on R&D as % of GDP)0.600.740.850.770.750.79:2.243.45Public expenditure on R&D as % of GDP0.230.210.270.260.240.28:0.720.64Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 1.92.92.53.3:::9.612.3Researchers (FTE) employed by public sector (Gov+HEI) per thousand active population2.82.62.82.72.82.8:4.2:International co-publications as % of total number of publications45.248.337.937.437.936.3:55.939.3Business enterprise expenditure on R&D (BERD) as % of GDP0.360.520.570.510.510.51:1.492.70Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0.320.270.250.220.24::0.40.3Researchers employed by business per thousand active population0.622.82.73.12.7:5.7:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)0.60.50.50.30.3::2.8:Employment share of high-growth enterprises measured in employment (%):19.4614.16::::12.51:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::47.18:49.9372.91:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%):::::21.86:33.17:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%):::9.93:14.22:38.86:Artificial intelligence adoption% enterprises (EU Digital Decade target by 2030: 75%):::3.29:3.626.4713.48:Public-private scientific co-publications as % of total number of publications55.74.555.35.6:7.78.9Public expenditure on R&D financed by business enterprises (national) as % of GDP0.0140.0140.0290.0260.021::0.050.02Total public sector support for BERD as % of GDP0.0080.0190.0160.011:::0.2040.251R&D tax incentives: foregone revenues as % of GDP:::::::0.1020.141BERD financed by the public sector (national and abroad) as % of GDP 0.0080.0190.0160.011:::0.10.11Venture capital (market statistics) as % of GDP, total (calculated as a 3-year moving average)0.0030.0120.0080.0150.0170.024:0.078:Seed stage funding share (% of total venture capital)124.657.749.347.224.6:7.3:Start-up stage funding share (% of total venture capital)10.95935.847.350.264.5:44.0:Later stage funding share (% of total venture capital)88.116.46.53.42.610.9:48.7:New graduates in science and engineering per thousand population aged 25-3412.711.19.110.010.2::17.6:Graduates in the field of computing per thousand population aged 25-341.72.52.83.23.4::3.6:2023EU average (1)USA2024Headline indicatorScience and innovative ecosystemsR&D investment & researchers employed in businessesPublic support for business innovationInnovation outputsDigitalisation of businessesAcademia-business collaborationFinancing innovationInnovative talent20222021Bulgaria201220172020 
 
 
 
 
 
 
 
 
   
 
ANNEX 4: MAKING BUSINESS EASIER 

of 

challenges 

Despite some efforts to improve the business 
environment,  Bulgarian  businesses  face  the 
continuing 
political 
uncertainty,  administrative  and  regulatory 
burden, and (skilled) staff shortages. Capacity 
constraints  in  the  public  sector  negatively  impact 
various areas of the business environment  – such 
as  the  performance  of  the  public  procurement 
system,  absorption  of  EU  funds  and  the  related 
Regulatory 
poor 
restrictions 
and 
professional 
administrative  burden  remain  high.  Progress  has 
been  made  on  digital  connectivity,  but  persistent 
inadequate  digital 
in 
sparsely  populated,  remote and rural  areas needs 
to be addressed. 

infrastructure  coverage 

infrastructure. 

services 

quality 

of 

in 

In 

than 

(albeit 

current  and  short-term  situation  to  be  good  or 
less 
satisfactory,  and  are  optimistic 
in  2023) (54). 
optimistic 
terms  of 
investment planning, Bulgarian investors are more 
optimistic  (43%)  than  those  in  Romania,  who 
(24.1%) (55). 
to  a  similar  survey 
responded 
However,  only  7%  of  the  Bulgarian  investors  are 
satisfied  with  the  level  of  political  and  social 
stability, and only 22%/27% are satisfied with the 
quality 
education/vocational 
education  and  training  (VET).  In  addition,  the  lack 
of skilled staff is forcing more than 50% of firms 
to reduce their planned level of investment. Nearly 
80%  of  firms  expect  higher  labour  costs  and  are 
wary  of  accepting  additional  orders.  In  order  to 
ease  the  negative  impact,  firms  are  increasingly 
in  automation  and  digitalisation, 
investing 
educating their own staff and raising wages (56). 

academic 

of 

Economic framework conditions 

(89%) 

Investment  Survey (52), 

Insufficient  availability  of  skilled  staff  and 
uncertainty about the future are weighing on 
business activity and investment. According to 
the  EIB 
the  primary 
obstacles  to  long-term  investments  for  Bulgarian 
businesses  are  insufficient  availability  of  skilled 
(see  also  the  Annex  10)  and 
staff 
uncertainty  about  the  future  (82%).  Short-term 
business  indicators  specifically  point  to  labour 
shortages  in  manufacturing,  where  25%  of  gross 
the 
value  added 
pharmaceutical,  metal  and  rubber  production 
sectors especially, up to 72% of the firms reported 
labour  shortages,  a  factor  that  limits  production 
activity.  In  the  service  sector,  which  has  a  68% 
GVA  share, 
in 
tourism-related  services,  such  as  accommodation 
(63%)  and  food/beverages  (54%).  Finding  skilled 
staff and experienced managers are, together with 
finding  customers, 
for 
Bulgarian  SMEs  –  respectively  30%  and  17%  of 
SMEs (broadly in line with the EU averages of 26% 
and 18%) (53). 

labour  shortages  are  highest 

the  main  problems 

is  generated. 

(GVA) 

In 

Economic and political uncertainty as well as 
skill shortages also impact foreign investors’ 
investment  activities.  Following  a  survey  of 
managers,  most  foreign  investors  consider  their 

(52)  European  Investment  Bank,  EIB  investment  survey  2024, 
based on interviews carried out between April and July 2024.  
(53)  European  Commission,  Survey  on  access  to  finance  for 

Access  to  finance  is  mainly  an  obstacle  for 
construction  activity,  but  late  business-to-
business  payments  risk  disrupting  firms’ 
cash  flows  in  all  sectors.  According  to  the  EIB 
Investment Survey (57), availability of finance is an 
obstacle to investment for only 35% of Bulgarian 
firms  (below  the  EU  average  of  45%)  (see  the 
Annex  5).  Late  business-to-business  payments 
continue  to  be  problematic  for  27.7%  of  SMEs  in 
2024  (the  EU  average  is  48%) (58).  The  business-
to-business  payment  gap  in  2024  has  slightly 
decreased  compared  with  2023  and  is  now  16 
days  (the  EU  average  is  15.5  days) (59).  Corporate 
customers  are  among  the  slowest  in  the  EU  to 
make  payments  and  above  the  EU  average  (65 
days  vs.  60  days).  Customers  in  sectors  such  as 
industry  and 
banking  and  financial  services, 
chemicals,  and  construction  even  take  up  to  78 
days.  The  payment  gap  from  the  public  sector  is 
increasing and is still above the EU average (19.7 
days vs 16.2 days).  

(54)  AHK  Bulgarian,  Konjunkturumfrage  2024,  EU-Mitgliedschaft 
und  steuerliche  Rahmenbedingungen:  Bulgariens  wichtigste 
Vorteile laut DBIHK- Konjunkturumfrage 2024. 
(55)  AHK Romania, Business outlook, autumn 2024. 
(56)  AHK  Bulgarian,  Konjunkturumfrage  2024,  EU-Mitgliedschaft 
und  steuerliche  Rahmenbedingungen:  Bulgariens  wichtigste 
Vorteile laut DBIHK- Konjunkturumfrage 2024. 

(57)  European  Investment  Bank,  EIB  investment  survey  2024, 
based on interviews carried out between April and July 2024.  
(58)  European  Commission  and  European  Central  Bank,  2023 
SAFE  survey.  Survey  conducted  between  September  and 
October 2023. 

enterprises (SAFE), Analytical Report 2022.  

(59)  Intrum, European payment report 2024. 

41 

 
 
 
 
 
(39% 

firms 

consider 

infrastructure  as  an  obstacle 

Bulgarian 
transport 
infrastructure  as  an  obstacle  to  investment 
to  a  greater  extent  than  their  counterparts 
in  the  rest  of  the  EU.  According  to  the  EIBIS 
2024  survey (60),  58%  of 
respondents  see 
transport 
to 
investment  (compared  with  45%  in  the  EU).  In 
addition,  62% 
the  EU)  consider 
inadequate  infrastructure  as  a  problem  when 
doing business (61). Together with Cyprus, Hungary 
and Romania, Bulgaria is ranked the lowest in the 
World Bank’s Logistics Performance Index (LPI) (62). 
The  score  of  the  infrastructure  component  – 
evaluating  the  quality  of soft  and  hard  trade  and 
transport-related 
(information 
technology, ports, railroads, roads) – is better (3.1) 
than in 2018 (2.8), but it reduces Bulgaria’s overall 
performance on logistics (63). 

infrastructure 

in 

Bulgaria  has  a  well-developed  and  growing 
infrastructure  with  a  high 
connectivity 
internet  penetration 
rate  and  widely 
available  broadband  services  (especially  in 
urban areas – but rural areas lack coverage). 
Bulgaria’s  households  have  a  high  fibre-coverage 
for premises, with 88.6% connected (much higher 
than the EU average of 64%). However, Bulgaria’s 
high-speed 
5G-coverage 
broadband  remain  below  the  EU  averages  of 
respectively  89.3%  and  65.9%  (5G  covers  only 
70.9%  of  populated  areas,  and  the  take-up  of 
fixed  broadband  subscriptions  for  speeds  over 
100 Mbps  is  only  53.4%).  The  high  prices  of 
gigabit  services  are  an  issue,  given  the  low 
purchasing power of the average user. 

take-up 

and 

of 

Bulgaria is taking steps to improve its digital 
infrastructure. Bulgaria’s recovery and resilience 
plan (RRP) includes a significant investment in the 
‘large-scale deployment of digital infrastructure on 
the  territory  of  Bulgaria’,  with  a  measure  to 
accelerate its efforts in connectivity and coverage. 
In  particular,  it  will  support  the  deployment  of 
VHCNs  (with  a  focus  on  sparsely  populated, 
remote and rural areas) with a planned budget of 
EUR  270  million  (BGN  528  million)  from  the 
Recovery and Resilience Facility. 

(60)  European  Investment  Bank,  EIB  investment  survey  2024, 
based on interviews carried out between April and July 2024.  
(61)  Eurobarometer,  Businesses’  attitudes  towards  corruption  in 

the EU in 2024, July 2024. 

(62)  https://lpi.worldbank.org/international/scorecard. 
(63)  The  best  performing  country  was  Singapore,  which  had  an 

index value of 4.6. 

Graph A4.1: Making Business Easier: selected 
indicators. 

Share of (1) enterprises, (2) average intra-EU exports and 
imports in GDP, (3) firms, (4) SMEs. 
Source: (1) EIB IS, (2) Eurostat, (3) ECFIN BCS, (4) SAFE 
survey. 

Bulgaria  has  a  well-developed  and  growing 
infrastructure  with  a  high 
connectivity 
rate  and  widely 
internet  penetration 
available  broadband  services  (especially  in 
urban areas – but rural areas lack coverage). 
Bulgaria’s  households  have  a  high  fibre-coverage 
for premises, with 88.6% connected (much higher 
than the EU average of 64%). However, Bulgaria’s 
5G-coverage 
high-speed 
broadband  remain  below  the  EU  averages  (5G 
covers only 70.9% of populated areas vs. 89% for 
the  EU,  and  the  take-up  of  fixed  broadband 
subscriptions  for  speeds  over  100 Mbps  is  only 
53.4%  vs.  65.9%  for  the  EU).  The  high  prices  of 
gigabit  services  are  an  issue,  given  the  low 
purchasing power of the average user. 

take-up 

and 

of 

Bulgaria  has  made  regulatory  progress  on 
cybersecurity  but  continues  to  face  high 
cybersecurity  risks.  83.2%  of  enterprises  had 
deployed  some  ICT  security  measures  in  2022 
(below the EU  average of 92.8%)  and 48.6%  had 
made their employees aware of their obligations in 
ICT-security-related issues (significantly below the 
EU average of 60%). In 2024, 1.8% of enterprises 

42 

27.715.37.233.117.447.916.61041.624.50102030405060from private entitiesfrom public entitiesMaterial shortages as afactor limiting productionEU Trade IntegrationRegulation as a majorobstacle to investment(4) Late payments(3) Shortages(2) SingleMarket(1) RegulatoryburdenShare (%)EU27BG 
 
      
reported  ICT  security incidents  caused by external 
cyberattacks (below the EU average of 3.4%). 

Regulatory and administrative 
barriers 

face 

considerable 
Bulgarian  businesses 
administrative  pressure  and 
regulatory 
burden.  Fewer  firms  than  in  the  rest  of  the  EU 
considered  regulations  as  a  major  obstacle  to 
investment (54% vs 66%) (64), but businesses that 
(65)  cited 
responded 
to  a  national  survey 
bureaucracy  and  regulatory  burden  (60%),  often-
changing  regulation  (47%)  and  corruption  (47%) 
as  the  biggest  barriers  to  business  development. 
The  OECD’s  economy-wide  Product  Market 
Regulation  (PMR)  indicator  improved  for  Bulgaria 
between 2018 and 2024 and is now, with a value 
of 1.3, close to the EU average of 1.2 (66). However, 
Bulgaria  ranks  second  lowest  for  the  PMR  sub-
component 
for 
limited liability companies’. In particular, according 
to  the  OECD  analysis,  setting  up  a  new  firm  is 
regulation-intensive. 
could  be 
achieved  by  combining/digitising  administrative 
processes for starting a business. 

‘administrative 

Improvements 

requirements 

on 

entrepreneurship 

Bulgaria’s  2021-2027  national  strategy  for 
small  and  medium-sized  enterprises  focuses 
specifically 
and 
entrepreneurial  skills.  The  proposed  measures 
include  entrepreneurial  education  (also  targeting 
schools  and  universities),  and  support  for  family 
businesses, crafts and other niche entrepreneurial 
activities.  Despite  political  uncertainty,  annual 
programmes  that  follow  up  and  specify  concrete 
measures  are  regularly  set  up  by  the  Ministry  of 
Economy  and 
in  cooperation  with 
concerned ministries (e.g. the Ministry of Education 
and  Science).  The  latest  implementation  report 
training  courses  and 
cites  various  events, 
conferences  to  support  businesses,  as  well  as 
target and performance indicators. 

Industry 

framework, 

Bulgaria  has  transposed  the  Restructuring 
and  Insolvency  Directive,  but  the  impact  on 
Bulgaria’s  business  dynamism  needs  to  be 
further  monitored.  According  to  the  OECD (67) 
and  World  Bank (68),  Bulgaria  scores  low  for  its 
insolvency framework in several areas: the de jure 
regulatory 
institutional  and 
operational  infrastructure,  and  time/cost  required 
for  the  procedures.  Changes  to  the  Bulgarian 
Commercial Act in 2023 and secondary legislation 
long-standing 
are 
shortcomings 
insolvency  and 
restructuring regime. This reform and measures to 
implement the legislation are part of the Bulgarian 
RRP. 

in  Bulgaria’s 

intended 

improve 

the 

to 

Business  registrations  declined  across  all 
sectors  by  an  aggregate  total  of  24.6% 
during  the  COVID-19  year  of  2020,  but  the 
2024 data show a rather mixed performance. 
Business  registrations  were  mainly  driven  by  a 
dynamic  information  and  communication  sector, 
where  business  registrations  increased  by  46% 
(year  on  year),  followed  by  accommodation  and 
food service activities (33%). By contrast, business 
registrations  in  the  industry  and  construction 
activities  fell  substantially  by  14.5%  and  53.3% 
respectively.  Overall,  bankruptcies  increased  only 
slightly, mainly  driven  by the  wholesale/retail  and 
transport sectors. 

Tax  compliance  costs  are  close  to  the  EU 
average  and  tax  administration  is  operating 
in  general  efficiently,  with  possibilities  to 
improve (see the Annex 2). For Bulgarian SMEs, 
the total cost of tax compliance for both direct and 
indirect taxes was on average 1.6% of turnover in 
2019 (below the EU aggregate mean of 1.9%) (69). 
In  terms  of  operational  efficiency  (including  the 
time  and  functionality  of  the  process  of  paying 
taxes,  as  well  as  the  financial  burden  on  firms), 
Bulgaria performed relatively well  with a score of 
71.6%  (slightly  below  Estonia  (72.0)  but  much 
better than Romania (61.5)). There is nevertheless 
room  for  improvement  in  public  tax  services 
(specifically  developing  integrated  digital  services 

(64)  EIB  Investment  Survey  2024:  European  Union  overview, 

p. 26. 

(65)  Bulgarian Industrial Association: https://www.bia-

bg.com/uploads/gallery/-
%20ANKETI/Anketa_2024/ANKETA_2024.pdf  

(66)  Lower  index  values  of  the  PMR  indicate  a  more  favourable 

(67)  OECD,  Enhancing 

insolvency 

frameworks 

to  support 

economic renewal, 8/12/2022. 
(68)  World Bank, Business Ready, 2024. 
(69)  Tax  compliance  costs  for  SME,  European  Commission, 

regulatory environment. 

1/2022, p. 38.  

43 

 
 
 
for  taxpayers, 
transparency of the administration) (70). 

improving  tax  audits  and  the 

Single market  

Bulgaria is relatively well integrated into the 
single  market,  but  its  participation  in  global 
production  processes  is  slowing  down (71). 
Bulgarian trade integration in goods was 26.7% of 
GDP  in  2024  (slightly  lower  than  the  EU  average 
of 27.4%) but trade in goods has slowed down in 
recent years. Trade in services is gradually picking 
up but remains only at 6.5% of GDP (far below the 
EU  average  of  14.7%).  Economic  ties  in  terms  of 
trade  and  investments  with  Germany,  Romania 
and 
Bulgarian 
significant 
businesses (72). 

Italy 

are 

for 

for 

there 

Some  administrative  barriers  to  trade  have 
been  removed  by  Bulgaria  in  recent  years, 
but 
further 
is  still  scope 
improvement.  According  to  the  OECD  trade 
facilitation  indicator,  Bulgaria’s  score  improved 
from 1.53 in 2019 to 0.92 in 2023, so still worse 
than  EU  average  of  0.69 (73).  Bulgaria’s  lower 
performance  in  international  trade  than  peer 
countries  (e.g. Romania,  Hungary  and  Greece)  in 
the  World  Bank’s  ‘Business  ready’  survey  reflects 
several  shortcomings  in  the  quality  of  public 
services’ facilitation of international trade. The lack 
of integrated digital services and insufficient trade 
infrastructure  means  that  there  is  a  need  for 
further  development (74).  Bulgaria  has  recently 
joined the Schengen area and this could encourage 
further  progress  by 
the  administration  and 
stimulate business and investment activities. 

Bulgaria has made some progress in enacting 
single  market  legislation  but  it  continues  to 
struggle with fully and accurately enacting it 
in  several  single  market 
as  reflected 
enforcement  indicators (75).  The  transposition 

(70)  World Bank, Business Ready, 2024. 
(71)  Magistretti,  G.  and  Vassileva,  I.  (2024).  Bulgaria  in  Global 
Value  Chains:  Leveraging  Integration  with  the  EU,  IMF 
selected issues, SIP/2024/023. 

(72)  Eurostat. 
(73)  See OECD Product Market Regulation indicators: low-levels of 
the  indicator  signify  a  more  favourable  state  of  the 
regulatory environment for competition. 

(74)  World Bank, Business Ready, 2024. 
(75)  Single Market Scoreboard, 2024. 

44 

deficit  (which  measures  the  percentage  of  all 
directives  not  transposed  into  national  law)  has 
decreased to 1.6%, but this is still well above the 
EU  average  of  0.8%.  In  addition,  there  is  a  large 
number of directives whose transposition is (long) 
overdue.  Bulgaria  is  also  reducing  the  number  of 
incorrectly  transposed  directives  (as  can  be  seen 
from  the  conformity  deficit,  which  decreased 
to1.3%  in  2024  from  1.6%  in  2023  (in  2024  the 
EU average was 0.9%). Bulgaria still ranks 25th out 
of the 27 EU Member States on the transposition 
deficit  and  22nd  for  the  conformity  deficit.  The 
infringement  cases 
high  number  of  pending 
continues  to  hamper  businesses,  especially  in  the 
digital  economy,  transport,  and  goods  and  public 
procurement (76).  Bulgaria  resolved  92.3%  of  the 
SOLVIT (77) cases it handled as lead centre in 2024 
(the EU average was 84.9%). 

to 

the 

According 

in  Bulgaria 

remain  higher 

Several  professional  services  are  more 
strictly  regulated  than  in  the  other  EU 
countries. 
European 
Commission (78)  and  the  OECD (79),  regulatory 
barriers 
in 
lawyers,  notaries, 
comparable  countries 
architects  and  civil  engineers.  Those  barriers 
mostly 
shareholding 
requirements,  obligatory  fees  and  company  form 
restrictions (80). 
these 
professions 
the 
development  of  innovative  services.  According  to 
the  OECD,  the  barriers  to  entry  in  service  sectors 
were as high in early 2023 as in 2019. 

for 
harming 

Exclusive 

remain 

broad, 

rights 

form 

than 

take 

the 

for 

of 

Public procurement  

Bulgaria  has  made  some  progress 
in 
reforming its regulatory framework in public 
lack  of  competition 
procurement  but  a 

(76)  European  Commission,  2023  Annual  Report  on  monitoring 

the application of EU law, 2024. 

(77)  SOLVIT  is  a  service  to  help  businesses  and  citizens  in  the 
event of an EU Member State other than their own breaching 
EU law. 

(78)  European Commission, Communication from the Commission 
to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the 
Regions of 9 July 2021 on taking stock of and updating the 
reform  recommendations  for  regulation 
in  professional 
services of 2017, COM (2021)385 final. 

(79)  OECD, Product Market Regulation (PMR) indicators: How does 

Bulgaria compare? OECD, 2024.  

(80)  European Commission, COM (2021)385 final. 

 
 
 
remains  a  concern.  In  2024,  competition  in 
Bulgaria’s  public  procurement  remains  restricted, 
as  evidenced  by  several  indicators.  In  particular, 
the  single  bids  indicator  (which  represents  the 
number  of  procedures  where  the  contract  was 
awarded to the sole bidder) reached 36% (37% in 
2023).  Furthermore,  a  significant  proportion  of 
contracts (31%) were unsuccessful (81), while 21% 
of  contracts  were  awarded  without  competition 
through  a  negotiated  procedure  without  prior 
publication.  

of 

only  21% 

Businesses  express  concerns  about  public 
procurement  procedures  and  these  concerns 
are  confirmed  by  this  year’s  OECD  PMR 
indicator.  In  a  national  survey  by  the  Bulgarian 
the 
Industrial  Association, 
respondents  confirmed  that  they  participated  in 
tender procedures in 2024 (compared with 29% in 
2023).  The  most  common  problems  encountered 
by participants are the biased setting of conditions 
by  a  contractor  (26%),  the  biased  evaluation  of 
tenders  (21%)  and  an  incorrect  requirement  to 
provide  data  already  known  to  the  contracting 
authorities (19%). According to the OECD indicator 
on  public  procurement (82),  tender  procedures  in 
Bulgaria are de jure less favourable to competition 
than in the rest of the EU (83). The challenges in the 
public procurement system also impact the quality 
of infrastructure mentioned above. 

encourages 

sustainable 
Bulgaria 
procurement,  but  an  integrated  approach 
based on stable legislation would be a major 
improvement.  Bulgaria  has  set  up  different 
action  plans  (e.g.  the  transition  to  a  circular 
economy  or  the  national  environmental  strategy, 
which  contain  elements  on  green  procurement, 
such  as  guidelines,  optional  trainings  and  online 
information  tools) (84).  Implementation  challenges 
remain, due to the lack of professionalisation and 
capacity  of  public  procurement  staff  and 
insufficient strategic planning by public buyers. 

(81)  No tenders or requests to participate were received or all 

were rejected; or other reasons of not successful contracting. 
(82)  See  OECD  Product  Market  Regulation  indicators:  low-level 
indicators, barriers to trade – facilitation and tariff barriers. 

(83)  Bulgaria’s index value is 0.8, the EU average is 0.5. 
(84)  European  Commission,  Article  83  –  public  procurement 

monitoring reporting, 2021-2023. 

45 

 
 
Table A4.1:  Making business easier: indicators 

*Change in methodology in 2024: reporting late payments from public and private entities separately. 
**The 2024 data on single bids is provisional and subject to revision. Please note that approximately 19% of the total data is 
currently missing, which may impact the accuracy and completeness of the information. Due to missing data, the EU average of 
direct awards data is calculated without Romania. 
Source: (1) ECFIN BCS, (2) Eurostat, (3) EIB IS, (4) Digital Decade country reports; target = 100%, (5) Intrum Payment Report, (6) 
SAFE survey, (7) OECD, (8) up to 2023: Single Market and Competitiveness Scoreboard, 2024: Public procurement data space 
(PPDS). 

46 

POLICY AREA20202021202220232024EU-27 average4.47.312.311.67.210.029.629.534.936.739.120.20.60.70.80.70.72.318.519.230.825.928.313.4-81.485.688.6-78.8-81.485.688.6-64.0-40.167.270.9-89.3Regulatory environment20.624.919.621.417.424.517.014.114.017.016.015.625.39.915.419.019.715.1from public or private entities in the last 6 months30.332.425.130.7--from private entities in the previous or current quarter----27.747.9from public entities in the previous or current quarter----15.316.634.237.340.936.233.141.6-----0.0501.62.21.81.71.60.81.92.12.01.61.30.910095.010010092.384.942.038.038.036.031.024.42632343736-29252321217.0BulgariaINDICATOR NAMEInvestment climateShortagesMaterial shortage, firms facing constraints, %1Labour shortage, firms facing constraints, %1Vacancy rate, vacant posts as a % of all available ones (vacant + occupied)2InfrastructureTransport infrastructure as an obstacle to investment, % of firms reporting it as a major obstacle3VHCN coverage, %4FTTP coverage, %45G coverage, %4Reduction of regulatory and administrative barriersImpact of regulation on long-term investment, % firms reporting business regulation as a major obstacle3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment5Payment gap - public sector, difference in days between offered and actual payment5Share of SMEs experiencing late payments, %*6Single MarketIntegrationEU trade integration, % (Average intra-EU imports + average intra EU exports)/GDP2EEA Services Trade Restrictiveness Index7ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, % resolution rate per country8Number of pending infringement proceedings8Competition and transparency in public procurementSingle bids, % of total contractors**8Direct awards, %**8Public procurement 
 
 
       
 
ANNEX 5: CAPITAL MARKETS, FINANCIAL STABILITY AND ACCESS TO FINANCE 

domestic economic conditions, investment climate 
and government borrowing needs. 

Graph A5.1: Net savings-investment balance 

Source: AMECO. 

international 

Bulgaria's  net 
investment 
position  (NIIP)  has  steadily  improved  over 
the  past  few  years  but  remains  negative.  In 
the past,  Bulgaria  accumulated  significant  foreign 
debt  and  thus  exhibited  a  material  negative  NIIP 
that  stood  at  -43.5%  of  GDP  in  2017.  The 
decrease in net foreign liabilities, driven mostly by 
a decrease in net foreign direct investments (FDIs) 
and  net  other investments,  were  the main  drivers 
to this improved NIIP position, which by September 
2024,  improved  by  90%  compared  to  2017  and 
stood  at  -4.7%  of  GDP  (see  Graph  A5.2).  Overall, 
the  Bulgarian  economy  is  well  integrated  in 
international  capital  flows,  and  its  improving  NIIP 
position  indicates  progress  towards  reducing  its 
reliance  on  foreign  capital.  Nevertheless,  despite 
being a net lender in recent years, Bulgaria's NIIP 
remains  negative,  reflecting  past  reliance  on 
foreign  capital,  mostly  via  non-market  channels 
like FDIs.  

Graph A5.2: International investment position 

raising 

finance 

underscores 

The  low  reliance  on  listed  shares  and  bonds 
the 
for 
underdeveloped  state  of  Bulgaria's  capital 
markets and highlights the need for reforms. 
Retail  participation  (85)  in  capital markets  remains 
weak,  while  institutional  investors  place  most  of 
their assets in foreign securities. At the same time, 
the  Bulgarian  banking  sector,  which  is  profitable, 
very liquid, and adequately capitalized, is the main 
source  for  finance  for  Bulgarian  non-financial 
corporations (NFCs). However, innovative start-ups 
with  limited  or  no  credit  history  often  struggle  to 
secure  bank  funding.  The  amount  of  capital 
invested by Private Equity (PE) and Venture Capital 
(VC)  investors  is  increasing,  but  from  a  very  low 
base, leaving a significant funding gap for startups 
and innovative firms.  

Availability and use of domestic 
savings 

to 

lender  of  capital 

Domestic  net  private  savings  in  Bulgaria 
have  been  exceeding  the  sum  of  net  private 
investment  and  the  amount  lent  to  the 
government over the past few years, making 
Bulgaria  a 
the 
international community. Over the last decade, 
the  gross  savings  rate  of  the  private  sector  in 
Bulgaria  has  hovered  around  20%  of  its  gross 
domestic  product  (GDP),  which  stands  below  the 
euro area average of 23.8%. Approximately half of 
it  finances  fixed  capital  consumption,  hence  the 
country’s  net  private  savings  ratio,  on  average,  is 
around  10%.  The  net  private  investment  position 
has averaged around 6% over the past five years. 
(see  Graph  A5.1).  This  level  allows  part  of  the 
savings  either  be  lent  to  the  government  in 
Bulgaria  or  the  rest  of  the  world.  Lending  to  the 
government  has  shown  variability,  fluctuating 
between  negative  and  positive  values.  Domestic 
capital  markets  are  underdeveloped  and  not  very 
appealing to locals. As a result, Bulgaria has been 
a  net  lender  to  the  international  community  over 
the past few years. On average, Bulgaria is lending 
around  2.8%  of  its  GDP  to  the  rest  of  the  world, 
subject  to  some  fluctuations  influenced  by  its 

(85)  Throughout  this  annex,  “retail  participation”  refers  to  the 
involvement  of  individual  (non-institutional)  investors  in 
capital markets. 

Source: ECB. 

47 

-10-505101520252017201820192020202120222023% of GDPPrivate investment, netLending to the governmentPrivate saving, netPrivate saving, grossBorrowing from the rest of the world-150-100-5005010015020172018201920202021202220232024-Q3% of GDPForeign Direct Investment, AssetsPortfolio Investment, AssetsOther investment, AssetsOfficial reserve assetsForeign Direct Investment, LiabilitiesPortfolio Investment, LiabilitiesOther investment, LiabilitiesNIIP 
 
 
  
  
 
 
Structure of the capital markets and 
size of the financial sector 

The  market-funding 

The  Bulgarian  capital  markets  remain  small 
and play a limited role in financing domestic 
firms. 
ratio,  which 
encompasses funds raised through equity markets 
(stocks),  debt  markets  (bonds)  and  other  market 
instruments  (including  venture  capital  and  private 
equity funds) has been declining in recent years. In 
December 2023, this ratio stood at 11.3% of GDP, 
down from 11.7% in 2022 and 12.3% in 2021. It 
is  one  of  the  three  lowest  in  the  EU,  significantly 
lagging  behind  the  EU  average  of  49.6%  (as 
shown in Table A5.1).  

debt capital market. Government debt issuance 
in Bulgaria is primarily  conducted  on international 
markets,  with  only  a  quarter  of  the  outstanding 
amount  issued  domestically  (89).  This  has  a  ripple 
effect  on  corporate  bond  issuance,  as  investors 
struggle  to  establish  reliable  benchmarks  to  price 
corporate  bonds.  Other  reasons  the  Bulgarian 
companies  underutilise  corporate  bonds  include 
the  ease  of  bank  financing,  limited  knowledge  of 
the  bond-issuance  process,  and  relatively  high 
associated  costs  of  bond  issuance.  Nonetheless, 
bond  issuances  have  nearly  doubled  in  recent 
for 
years, 
corporate  bond  financing,  albeit  from  a  very  low 
base. 

suggesting  growing  momentum 

Graph A5.3: Capital markets and financial 
intermediation 

Bulgaria's  equity  market  is  inefficient  and 
underutilised,  despite  having  the  necessary 
infrastructure  in  place.  The  Bulgarian  Stock 
Exchange  (BSE)  plays  a  critical  role  in  facilitating 
market  transactions  through  its  structured  main 
and  alternative  markets  (86).  In  September  2024, 
the  BSE’s  market  capitalisation  was  equivalent  to 
just  8.4%  of  GDP,  significantly  below  the  EU 
average  of  69%.  The  size  and  the  liquidity  of  the 
capital  market  deter  corporates  from  seeking 
public equity financing on the stock exchange. The 
inclusion of new issuers and capital raised through 
different  segments  of  the  BSE  and  the  SME 
Growth market  BEAM  (87), reflects ongoing efforts 
to 
The 
development of BEAM underscores the benefits of 
simplifying  SME 
listing  requirements,  thereby 
enhancing  access  to  capital  markets  for  growing 
businesses.  However,  the  lack  of  market  depth, 
high listing costs, and the overall higher perceived 
risks  associated  with  traded  stocks  in  Bulgaria  - 
partly  rooted  in  legacy  issues (88)  -  continue  to 
drive  investors  away  from  the  BSE.  These  issues 
contribute  to  the  persistent 
inefficiency  and 
underutilisation of the BSE. 

increase  market-based 

funding. 

Bulgarian  corporates  face  challenges 
in 
accessing  financing  through  the  domestic 

(86)  See BSE Sofia market segmentation 
(87)  The SME growth market, the Bulgarian Enterprise Accelerator 
Market (widely known as the BEAM), was set up in 2018 and 
is  a  specific  category  of  multilateral  trading  facility, 
introduced  under  the  EU’s  MiFID  II  framework,  designed  to 
lighter 
in  accessing  capital, 
support  SMEs 
regulatory requirements than the main market. 

imposing 

(88)  Sofix,  the  BSE's  major  index, lost almost 87%  of  its  market 
capitalisation between October 2008 and February 2009. 

48 

Source: ECB, EIOPA, AMECO. 

The  Bulgarian  authorities  recognise  the 
importance  of  capital-market  development 
and  have  made  it  a  priority.  A  recent  EU-
funded  project  assessed  the  Bulgarian  capital 
markets  and  identified  key  barriers  to  growth, 
resulting in 60 recommended  actions  (90). Barriers 
to the growth of Bulgaria’s capital markets include: 
(i)  low  trust  due  to  legacy  issues;  (ii)  a  limited 
asset  base;  (iii)  minimal  free  floats;  and  (iv)  the 
higher  cost  and  complexity  of  market  financing 
compared  with  bank  loans.  Studies  have  also 
highlighted areas for improvement in the country’s 
in  financial 
institutional  framework 

(91)  and 

(89)  See  Central  Government  Debt  and  Guarantees  Monthly 

Bulletin for November 2024. 

(90)  See Diagnostic of the State of Development of the Bulgarian 

Capital Market. 

(91)  According  to  the  World  Bank's  Worldwide  Governance 
Indicators,  Bulgaria  is  one  of  the  three  worst  performers  in 
the EU-27 in the areas of government effectiveness, political 

Non-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIsInsurance corporations020406080100120     Listed equity            Bonds                           Assets by sector% of GDP 
 
  
 
 
the 

successful 

implementation  of 

literacy,  both  of  which  may  pose  challenges  to 
further  progress.  The  government’s  commitment 
to 
the 
recommended  actions  is  key  to  fostering  market 
development.  The  country  must  be  ready  to  fully 
capitalise  on  its  upcoming  adoption  of  the  euro, 
which  represents  a  significant  opportunity  to 
attract 
investment  and  accelerate 
growth in Bulgaria’s capital markets. 

increased 

Resilience of the banking sector 

the  economy,  despite 

Bulgaria’s banking sector plays a crucial role 
in  financing 
its 
relatively  small  size.  In  December  2024,  there 
were 23 banks operating in Bulgaria (92). The total 
amount of assets of the banking system increased 
by  11.4%  to  EUR  98  billion  (93),  compared  to  a 
year  earlier.  The  size  of  the  banking  sector  in 
Bulgaria,  at  94%  of  GDP,  is  relatively  small 
compared  with  the  EU  average,  which  stands  at 
248%  of  GDP  (as  shown  in  Table A5.1).  The  four 
largest  banks  held  approximately  69%  of  all 
banking  assets, 
indicating  a  high  degree  of 
concentration,  given  that  the  EU  average  is  54%. 
The  market  share  of  the  12  less  significant 
institutions  stood  at  approximately  29%.  The  six 
foreign  credit  institutions  from  EU  and  non-EU 
member states operating via branches in Bulgaria 
had a market share of less than 3% (94). The four 
significant  institutions  are  directly  supervised  by 
the  European  Central  Bank  (ECB)  and  the  rest  by 
the  Bulgarian  National  Bank,  under  the  oversight 
of  the  ECB.  Commercial  banks  in  Bulgaria  are 
mostly  foreign  owned.  Domestic  ownership  in 
banks  comprises  approximately  one-fifth  of  the 
total  banking  sector  assets.  The  Bulgarian 
Development  Bank  is  the  only  State-controlled 
bank in the country. 

In 2024, Bulgarian banks maintained the high 
profitability  level  achieved  in  the  previous 

stability, rule of law, regulatory quality, control of corruption, 
and voice and accountability. 

(92)  See  Bulgarian  National  Bank,  December  2024,  Data  of  the 

banking system 

(93)  The Bulgarian lev (BGN) has been pegged to the euro at an 
exchange  rate  of  1  euro  =  1.95583  leva  since  the 
introduction  of  the  euro  on  1st  January  1999.  This  Annex 
uses the euro equivalent throughout.  

(94)  See Bulgarian National Bank’s Banks in Bulgaria - quarterly 

bulletin 

to 

largely  due 

year,  driven  predominantly  by  high  level  of 
net interest income and net fee, and also by 
commission income.  The former rose by almost 
15%  year-on-year, 
strong 
contribution  of  interest  income  from  both  the 
household and NFCs’ sectors. Additionally, net fee 
and  commission  income  also  contributed  to  the 
total  operating  profit,  marking  a  8.9%  year-on-
year  increase.  However,  impairments  increased 
substantially,  rising  by  60%  from  the  previous 
year.  However,  as  the  asset  quality  does  not 
appear to have deteriorated during the year (refer 
to  paragraph  on  asset  quality),  the  additional 
provisions  are  attributed  to  the  banks'  efforts  to 
clean  up  their  balance  sheets  and  proactively 
curtail  the  creation  of  new  non-performing  loans 
(NPLs)  stemming  from  macroprudential  risks.  The 
increase in administrative expenses by 12.2%, and 
in  staff  expenses  by  13.8%,  are  consistent  with 
the growth of the assets on the balance sheet, and 
the rising salary levels in the country, respectively 
(95).  As  a  result,  the  Bulgarian  banking  sector 
exhibited  strong  profitability  in  2024,  achieving  a 
net profit after tax of EUR 1.9 bn, which represents 
the  previous  year. 
an  8.1% 
Consequently,  the  cost-to-income  ratio  remained 
low  at  38.2%,  with  the  return-on-equity  (RoE)  at 
15.7%  (96).  Both metrics  compare  favourably  with 
the corresponding EU averages of 53% and 10%, 
respectively. 

increase  over 

is  well-
The  Bulgarian  banking  sector 
capitalized and liquid. The capital position of the 
banking system remained solid, despite the growth 
in  risk-weighted  assets  resulting  from  the  credit 
expansion.  Own  funds  rose  to  EUR  10.7 billion  in 
December  2024  (from  EUR  9.3 billion  a  year 
earlier),  driven  by  organic capital  generation  from 
higher  profits.  The  Common  Equity  Tier  1  (CET1) 
capital  ratio  stood  at  22.1%  (97),  well  above  the 
regulatory  minimum,  indicating  strong  financial 
health. This is also thanks to a consistent policy by 
the  Bulgarian  National  Bank  to  maintain  high 
a 
capital 
countercyclical  buffer  rate  incrementally  raised  to 
2% and a systemic risk buffer of 3%, applicable to 
all institutions authorised in Bulgaria. Furthermore, 
the  sector  is  cash-rich,  with  a  liquidity  coverage 
ratio (LCR) of 244%, and a net stable funding ratio 

requirements, 

including 

buffer 

(95)  See  Bulgarian  National  Bank,  December  2024,  Data  of  the 

banking system 

(96)  Annualised ECB data, Q3 2024, refer to Table A5.1 
(97)  Annualised ECB data, Q3 2024, refer to Table A5.1 

49 

 
 
 
of  162%,  which  remain  among  the  highest in the 
EU (98). In 2024, Bulgarian banks issued securities 
eligible  for  the  Minimum  Requirement  for  own 
funds  and  Eligible  Liabilities  (MREL),  increasing 
their  average  MREL  level  to  30.4%  of  Total  Risk-
Exposed  Amount  (TREA)  by  June  2024,  further 
closing  the  shortfall  to  the  binding  target  to 
approximately EUR 0.4 billion (3.5% of TREA) (99). 

The  asset  quality  did  not  show  signs  of 
deterioration,  despite  the  growth  in  lending, 
but  the  non-performing  loans  (NPLs)  ratio 
remains  higher  than  the  EU  average.  In  Q3-
2024,  the  NPL  ratio  fell  to  3%  from  more  than 
10% in 2017. Despite the significant progress, this 
level is above the EU  average of 1.9% (as shown 
in  Table  A5.1).  Notwithstanding  the  significant 
credit  growth,  the  nominal  amount  of  NPLs 
decreased  by  1%  to  EUR  1.9 billion,  which 
indicates that the credit quality did not deteriorate 
in the year. Moreover, the coverage ratio of gross 
non-performing 
indicating 
sufficient provisions to cover potential losses. 

loans  was  47.8%, 

impact  asset  quality 

The  banking  sector's  challenges  and  risks  to 
financial  stability  remain  largely  unchanged 
from  last  year.  The  main  concerns  stem  from 
external  economic  uncertainties,  which  could 
negatively 
if  economic 
conditions  worsen.  Also,  lending  activity  in  the 
private sector remained elevated during 2024. This 
prolonged period of high credit growth, fuelled by 
increased  household  demand  due 
rising 
disposable  income  and  low  interest  rates,  raises 
concerns about credit risk and potential real estate 
market  overheating.  Other  emerging  risks,  include 
climate and cybersecurity threats for which banks 
remain  vigilant.  To  preserve  the  resilience  of  the 
banking  system  in  the  context  of  increasing 
medium-term cyclical risks, the Bulgarian National 
Bank 
borrower-based-measures, 
effective from 1 October 2024 (100) (101). 

introduced 

to 

(98)  See EBA’s Risk Dashboard - Q4 2024 
(99)  See EBA’s MREL dashboard - Q2 2024 
(100) See  Bulgarian  National  Bank’s  press  release  about  the 

introduction of borrower-based measures. 

(101) In  March  2025,  based  on  statistics  from  Q4  2024,  the 
issued  a  press  release  that 

Bulgarian  National  Bank 
measures have had an effect on an effect on  lending. 

50 

Resilience of the non-bank financial 
intermediaries 

issued  by  corporations  specialising 

The non-bank credit sector has been growing 
rapidly  in  Bulgaria  over  the  last  few  years. 
Credit 
in 
lending  has  increased  by  around  22%  on  an 
annual  basis  since  2022 and  reached  EUR  3.2  bn 
(102).  As  a  result  of  the  strong  credit  activity  by 
these  credit  corporations,  the  level  of  consumer 
loans  in  the  sector’s  balance  sheet  in  September 
2024 was roughly one fifth of the consumer credit 
held 
in  the  banking  sector’s  balance  sheet. 
Corporations  specialising  in  lending  also  lend  to 
NFCs, but this segment is not their main focus. The 
non-bank sector has self-organised to uphold best 
practices  (103), 
including  preventing  fraudulent 
practices from taking place. 

The  Bulgarian  insurance  market  remains 
significantly  smaller than  the  EU average.  In 
September  2024,  the  Bulgarian  insurance  market 
comprised  46  active  insurance  companies  (104). 
General  insurance  companies  manage  assets  of 
EUR  4.1 billion,  while  life  insurance  companies 
manage  EUR  1.7 billion.  The  market  is  relatively 
small,  with  total  assets  equivalent  to  less  than 
6.2%  of  GDP,  significantly  below  the  EU  average 
of  54.8%  (as  shown  in  Table A5.1).  The  Bulgarian 
insurance and pensions industry is overseen by the 
Financial  Supervision  Commission.  Post-ERM  II 
commitments  in  the  area  of  non-bank  financial 
sector  have  been  fully  addressed,  with  new 
regulations  introduced  to  enhance  supervisory 
effectiveness. As of December 2023, the industry's 
equity  capital  was  EUR  1.94  billion  and  technical 
reserves  were  EUR  2.81  billion,  with  a  relatively 
robust solvency ratio of 187.4%, which is however 
below the EU average of 258.6%. 

Bulgaria's  second  and  third  pillar  pension 
funds are growing strongly and are projected 
to  expand  further  as  wages  increase.  In 
addition 
the  first  pillar  pension  system 
administered  by  the  National  Social  Security 
Institute,  Bulgaria  offers  four  supplementary 
pension  funds  under  the  second  pillar  and  third 

to 

(102) See Bulgarian National Bank’s  Statistical Press Releases on 

non-bank corporations specialising in lending. 

(103) See АОНК | Association for Responsible Non-Banking 

Lending. 

(104) See the ECB's list of insurance corporations. 

 
 
 
EUR 12.2 billion 

pillar  (105).  In  March  2024,  the  net  assets  under 
management by the four pension funds amounted 
compared  with 
to 
EUR 11.7 billion 
(and 
EUR 9.8 billion  in  end-2022),  clear  evidence  that 
the sector is growing.  

(106) 
in  December 

2023 

Bulgaria's investment-fund sector is modest, 
but  gradually  expanding.  In  2024,  the  sector 
played a rather minor role in the broader financial 
system,  compared  to  banking  and  non-bank 
financial  institutions.  In  December  2024,  1 628 
funds  were  operating  in  Bulgaria,  of  which  the 
resident  (local)  investment  funds  were  150  (112 
UCITS  and  38  alternative  investment  funds).  The 
total  assets  under  management  by  Bulgarian 
investment  funds  amounted  to  EUR 1.9 billion, 
equivalent  to  around  2%  of  2024  GDP  (107).  This 
size  is  comparable  to  that  of  several  euro-area 
countries  with  smaller 
In 
addition,  foreign  funds  distributed  in  Bulgaria, 
managed  an  additional  EUR 4.1 billion  of  assets. 
The total amount of assets under management of 
both  resident  and  non-resident  investment  funds 
Investment 
increased  by  EUR 1 billion 
funds  are  continuously  expanding  the  range  of 
alternative  investment  opportunities  they  offer, 
and  as  a  result,  the  sector  is  expected  to  grow 
further in the coming years. 

financial  sectors. 

(21%). 

Sources of business funding and the 
role of banks 

Bulgarian  corporates  rely  on  bank  finance 
through  loans  or  internal  resources  to  cover 
their  funding  needs,  and  they  tend  to  avoid 
tapping  the  capital  markets.  Bank  finance 
through 
loans  accounts  for  approximately  a 
quarter  of  Bulgarian  NFCs’  total  financing  needs, 
similar to the EU average. In contrast, other forms 

(105) The  second  pillar  is  a  defined  contribution  system  and  is 
mandatory for individuals born after 1959 and comprises (i) 
the  Universal  Pension  Funds,  which  has  the  largest  share 
(c.80%) of insured persons; and (ii) the Occupational Pension 
Funds (PPFs) for individuals working in hazardous professions 
that are typically allowed to retire earlier. The third pillar is a 
voluntary defined contribution system and comprises: (i)  the 
Voluntary  Pension  Funds;  and  (ii)  the  Voluntary  Pension 
Funds under Professional Schemes.   

(106) See Bulgaria’s Financial Supervision Commission’s Results of 
the supplementary pension insurance activity for 2023. 
(107) See Bulgarian National Bank’s Investment Funds Statistics. 

of 
financing,  such  as  unlisted  equity  or 
partnerships, account for 67% of total financing in 
Bulgaria,  far  exceeding  the  EU  average  of  45%. 
Consequently,  the  level  of  financing  through  the 
capital  markets  in  Bulgaria  is  significantly  lower 
than  the  EU  average.  In  particular,  bond  issuance 
and  listed  shares  play  a  minor  role  in  NFC 
financing  in  Bulgaria.  Bond  issuance  accounts  for 
only  1%  of  total  financing,  and  listed  shares 
account  for  less  than  2%,  significantly  below  the 
EU averages of 5% and 19%, respectively. 

Graph A5.4: Composition of NFC funding as a % of 
GDP 

(1) Reference period is end-2023 
Source: Eurostat 

sector 

banking 

Bulgarian 

The 
has 
experienced rapid growth in lending over the 
past  several  years.  After  a  period  of  subdued 
lending  activity  that  lasted  until  2017,  banks  in 
Bulgaria  began  to  actively  expand  their  lending 
portfolios.  Their  focus  has  been  on  mortgage 
lending,  but  they  have  also  channelled  funds  to 
NFCs.  Several  factors  have  contributed  to  this 
growth, including low interest rates (108), abundant 
liquidity  in  the  banking  system,  rapid  increases  in 
incomes,  and  positive  consumer  sentiment.  In 
September  2024,  this  trend  of 
loan  growth 
continued,  with  the  total  amount  of  loans  for 
households growing by 21.3% year on year, while 
loans  to  NFCs  increased  by  9.1%  (as  shown  in 
Table A5.1).  

to 
Bulgarian 
continue  to  have  relatively  easy  access  to 

corporates  are  expected 

(108) The Bulgarian lev is fixed to the euro, but the transmission of 
the ECB's monetary tightening in recent years was very weak 
in  Bulgaria,  especially  for  the  households’  sector,  due  to 
abundant  liquidity  and  the  resulting  very  low  rates  on 
deposits. 

51 

050100150200250BGEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equity 
 
  
 
funding in the future. The strong liquidity in the 
banking  system,  and  the  relatively  low  loan-to-
deposit  (LTD)  ratio  (109)  suggests  that  there  is 
sufficient  headroom  for  additional  lending  should 
banks maintain their appetite for extending credit. 
According  to  the  European  Investment  Bank’s 
CESEE Bank Lending Survey (110), credit demand in 
Bulgaria  is  expected  to  stagnate  in  the  coming 
months,  and  credit  supply  might  even  tighten. 
Nevertheless,  the  conditions  faced  by  corporates 
seeking to access funding are projected to remain 
good.  Accordingly,  businesses  are  unlikely  to  face 
in  securing  stable  and 
significant  challenges 
affordable  bank  loans  in  the  near  term.  However, 
firms  with  no  credit  history,  such  as  innovative 
start-ups, may still encounter difficulties. 

The participation of retail investors in 
capital markets 

in  Bulgaria 

Bulgarians  take  a  conservative  approach  to 
managing  their  financial  assets,  with  a 
strong preference for deposits. The amount of 
financial  assets  per  capita 
is 
EUR 21 000,  which  is  25%  of  the  average  in  the 
EU-27.  Bulgarian  households  hold  around  a  third 
of  their  financial  assets  in  currency  and  deposits, 
similar  to  the  EU  average.  In  contrast,  Bulgarians 
allocate  a  significantly  lower  proportion  of  their 
financial  assets  to  insurance  and  pension  funds 
than  the  EU  average  (Bulgarians  allocate  10% 
against an EU average of 28%). Furthermore, they 
investment  funds, 
have  minimal  exposure  to 
bonds,  and 
listed  shares,  with  a  cumulative 
exposure of just over 3%, compared to 18% in the 
EU (as shown in Graph A5.5).  

Graph A5.5: Composition of HH financial assets per 
capita ('000 EUR) and as a % of GDP 

(1) Reference period is end-2023. 
Source: Eurostat. 

Promoting  alternative  investment  products 
is 
incentivising  retail  participation 
and 
essential  to  further  develop  Bulgaria’s 
capital  markets.  Households  tend  to  prioritise 
liquidity over more complex financial investments. 
Lower  income  levels  in  the  country  hamper  the 
ability  of  poorer  households  to  save  and  invest. 
Other  factors,  such  as  fewer  market  offerings,  
and  the need to further increase  financial literacy 
may  also  contribute  to  this  investing  behaviour. 
Nevertheless,  given  the  rising  levels  of  average 
income,  a  comprehensive  review  of  existing 
incentives 
is 
warranted.  Building  trust  in  the  market  is  crucial, 
and maintaining compliance with sound corporate 
governance  practices  is  essential  to  this  end.  To 
incentivise  retail  participation  in  capital  markets, 
policymakers  could  introduce  tax  breaks  for  long-
term  investments  and  develop  tax-advantaged 
investment savings accounts for households. 

retail  participation 

to  promote 

The role of domestic institutional 
investors  

Insurance  companies  in  Bulgaria  exhibit  a 
conservative  investment  strategy,  with  a 
limited  allocation  to  local  corporate  bonds 
and  shares.  Insurance  companies  in  Bulgaria 
allocate  only  14%  of  their  assets  to  corporate 
bonds  (of  which  only  1%  is  allocated  to  locally 
issued  corporate  bonds)  and  26%  to  shares  (of 
which only 7% is allocated to local shares). About 
47%  of  their  assets  are  allocated  to  government 

(109) The  banking  system’s  LTD  ratio  rose  to  73%  in  June  2024 
but remained below the EU average of 95%, giving Bulgaria 
the 11th lowest LTD ratio in the EU-27. 

(110) European  Investment  Bank’s    Central,  Eastern  and  South-
Eastern Europe (CESEE) Bank Lending Survey of second half 
of 2024 

52 

0501001502002500102030405060708090BGEUBGEUper capita (000 EUR) (lhs)% of GDP (rhs)Currency and depositsInsurance and pension fundsInvestment fundsBondsListed sharesUnlisted sharesOther equityHH Debt (liability) 
 
  
bonds.  Notably,  35%  of  all  insurance  assets  are 
invested  in  Bulgaria,  55%  in  other  EU  countries, 
and the rest outside Europe. 

Bulgaria's  pension  funds  have  a  substantial 
presence  in  the  country's  financial  market, 
with  a  large  proportion  of  their  assets 
invested  abroad.  Most  of 
sector’s 
EUR 11.71 billion net assets under management in 
December 2023, were allocated to foreign assets. 
Of those, 70% are invested in foreign government 
bonds  and  foreign  shares.  The  remaining  amount 
is invested domestically, and approximately half is 
placed  in  deposits  or  invested  in  government 
securities (111).  

the 

in  financing  the 
Investment  funds'  role 
economy  remains  modest.  The  assets  of 
resident  investment  funds  are  allocated  62%  to 
equity  funds,  24%  to bond  funds,  and the  rest  to 
mixed and other funds. The currency breakdown of 
resident 
investment  funds'  assets  showed  a 
prevailing  share  of  assets  denominated  in  BGN 
(63%) and in EUR (32%) (112).  

The depth of venture and growth 
capital  

Despite  growth  in  the  past  five  years,  local 
private-equity  (PE)  and  venture-capital  (VC) 
markets  remain  too  small  to  meet  the 
financing  needs  of  innovative  firms.  PE  and 
VC are valuable sources of finance for companies 
as  they  grow,  providing  finance  and  offering 
useful  guidance  to  management.  In  Bulgaria,  the 
amount  of  capital invested  by  VC  and  PE  firms is 
on  a  growing  trajectory  since  2019,  and  by  2023 
the  country  has  increased  its  investment  value 
fourfold (113). However, despite their potential, both 
sources  of  finance  remain  limited  in  Bulgaria 
compared  with  elsewhere  in  the  EU.  In  December 
2023,  the  average  annual  PE  investment  in 
Bulgaria  as  a  percentage  of  GDP  was  0.06%, 
significantly lower than the 0.41% average in the 
EU. The average VC investment was even smaller, 
equivalent  to  less  than  0.03%  of  GDP,  which  is 

approximately 60% of the EU average for VC fund 
investment  (as  shown  in  Table A5.1).  Moreover, 
VCs 
in  Bulgaria  focus  more  on  early-stage 
businesses,  which  is  positive  for  innovation  but 
may  pose  challenges  when  scaling  start-ups  to 
more  mature  businesses  (114).  Furthermore,  VC 
funds active in Bulgaria face several challenges in 
attracting  funds  from  local  institutional  investors. 
These  challenges 
legal  or  regulatory 
constraints  on  the  investments  of  pension  funds, 
which limit exposure to PE and VC (115).  

include 

The growth of Bulgaria’s start-up ecosystem 
in the past few years has been mainly driven 
by  public 
injecting 
institutional  support, 
capital  inflows.  The  European  Investment  Bank 
and  the  European  Investment  Fund  are  both 
actively  involved  in  the  development  of  Bulgarian 
capital  markets.  They  provide  advisory  services 
and  financial  instruments  to  improve  market 
infrastructure  and  increase  the  capacity  of  local 
financial  institutions.  Two  distinct  entities,  the 
Fund  of  Funds  (FoF)  (116)  and  the  Recovery  Equity 
Fund  of  Funds  (REF)  (117),  each  with  specific 
objectives  and  funding  sources,  operate  with  the 
aim  of  increasing  access  to  finance  for  Bulgarian 
businesses,  including  innovative  firms  and  start-
ups.  

Financing the green transition  

yet 

not 

has 

issued 

Bulgaria 
any 
Environmental,  Social,  and  Governance 
related (ESG) bond.  Despite efforts to integrate 
sustainable  finance  practices  by  adhering  to 
broader  EU  directives  and  strategies,  Bulgaria  is 
one  of  the  two  EU  countries  with  no  ESG  bond 
issuance  (118).  However,  driven  by  regulatory 
requirements  and  market  pressures,  Bulgarian 
financial institutions are increasingly incorporating 
environmental, social, and governance factors into 
their  operations.  Efforts 
to  promote  green 
financing  in  Bulgaria  stem  primarily  from  public 
initiatives,  particularly  those  outlined  in  Bulgaria's 

(114) See also Annex 1: Innovation to Business. 
(115) See  2024  Survey  of  Investment  Regulation  of  Pension 

Providers. 

(111) See Bulgaria’s Financial Supervision Commission’s Results of 
the supplementary pension insurance activity for 2023. 
(112) See Bulgarian National Bank’s Investment Funds Statistics. 
(113) See Bulgarian Private Equity and Venture Capital Association, 
2024, Private Investment in Bulgaria & South Eastern Europe 

(116) See Fund of Funds | FMFIB.  
(117) See Recovery Equity Fund of Funds of Bulgaria. 
(118) Refer to Association for Financial Markets in Europe (AMFE’s) 
Capital Markets Union Key Performance Indicators – Seventh 
Edition November 2024 

53 

 
 
 
Table A5.1:  Financial sector indicators 

Source: ECB, Eurostat, EIOPA, DG FISMA CMU Dashboard, AMECO. 

Recovery  and  Resilience  Plan.  Nevertheless,  the 
scale  of  climate  investment  required  cannot  be 
met  by  public  funding  alone.  Developing  the 
including  the  creation  of  a 
capital  market, 
functioning  green  bond  market,  is  important  for 
boosting  climate-related  investment  in  Bulgaria 
and attracting private investors. 

Financial literacy 

low 

although 

relatively 

level  of 

participants. 

capital  markets, 

The 
financial 
literacy (119)  in  Bulgaria  hinders  the  growth 
recent 
of 
initiatives  show  promise  in  educating  and 
engaging  market 
Many 
households 
remain  unaware  of  alternative 
investment options, while businesses often lack an 
understanding of the potential benefits of capital-
market  finance.  However,  there  has  been  an 
enthusiastic  response  from  SMEs  to  the  BEAM 
market  and  from  retail  investors  to  international 
investment  opportunities  via 
the  MTF  BSE 
International  (120).  This  indicates  that  there  is 
sufficient knowledge to support the organic growth 

of the market at its current stage. In recent years, 
institutions and market participants have launched 
numerous  initiatives  to  increase  financial  literacy, 
including in capital markets. The national strategy 
for  financial 
literacy,  adopted  by  Bulgaria’s 
government  in  2021,  accompanied  by  an  action 
plan that outlines priority activities until 2025 (121), 
is  a  step  in  the  right  direction.  However,  this 
strategy  and  its  action  plan  are  not  yet  fully 
implemented,  and  therefore  their  effectiveness  is 
yet  to  be  proven.  After  an  assessment  of  the 
implementation of the strategy and the first action 
plan,  a  new  Action  Plan  2026-2030  is  planned  to 
be elaborated and implemented. 

(119) See  Eurobarometer-Monitoring  the  level  of  financial  literacy 

in the EU.  

(120) For more, see MTF BSE International. 

(121) See  National  Strategy  for  Financial  Literacy  and  its  Action 

Plan (2021-2025). 

54 

20172018201920202021202220232024-Q3EUTotal assets of MFIs (% of GDP)101.6101.8100.4107.2100.995.395.394.0248.4Common Equity Tier 1 ratio20.219.318.422.022.020.420.522.116.6Total capital adequacy ratio21.820.619.523.122.921.322.123.820.1Overall NPL ratio (% of all loans)10.27.76.55.94.83.72.93.01.9NPL (% loans to NFC-Non financial corporations)17.312.710.79.67.66.55.15.23.5NPL (% loans to HH-Households)11.49.07.27.35.84.03.02.92.2NPL-Non performing loans coverage ratio50.652.748.348.249.749.849.247.842.1Return on equity110.211.811.24.98.811.216.315.710.0Loans to NFCs (% of GDP)30.430.029.129.727.024.724.123.830.0Loans to HHs (% of GDP)19.119.919.921.120.719.720.722.344.5NFC credit annual % growth4.88.67.64.05.711.18.89.10.8HH credit annual % growth8.99.110.67.614.516.016.821.30.7Stock market capitalisation (% of GDP)---10.111.19.29.28.469.3Initial public offerings (% of GDP)0.000.200.000.010.210.170.03-0.05Market funding ratio17.015.415.313.612.311.711.3-49.6Private equity (% of GDP)0.030.020.020.020.040.050.06-0.41Venture capital (% of GDP)0.010.010.010.010.030.010.03-0.05Financial literacy (composite)------43.5-45.5Bonds (as % of HH financial assets)0.40.20.30.30.20.20.5-2.7Listed shares (as % of HH financial assets)1.91.81.91.81.81.71.8-4.8Investment funds (as % of HH financial assets)0.70.70.80.81.00.90.9-10.0Insurance/pension funds (as % of HH financial assets)11.111.412.112.610.99.610.3-27.8Total assets of all insurers (% of GDP)6.66.86.87.57.35.96.16.254.81-34-1011-1718-2425-27Colours indicate performance ranking among 27 EU Member States.1 Annualised data.Credit growth and pension funds EU data refers to the EA average.Banking sectorNon-banks sector 
 
 
 
 
 
  
 
ANNEX 6: EFFECTIVE INSTITUTIONAL FRAMEWORK 

Bulgaria’s institutional framework influences 
its competitiveness. Trust in public institutions is 
very  low.  Inconsistent  regulatory  practices,  slow 
implementation  of  administrative  simplification 
measures  and  quality  of 
remain  a 
challenge. Corruption is perceived as a problem for 
doing  business  in  the  country.  Low  skills  and  pay 
disparities  in  the  public  administration  affect  its 
productivity.  Bulgaria  has  made  notable  progress 
in  delivering  digital  public  services  to  businesses. 
However, uptake by citizens remains low.  

justice 

Public perceptions 

Graph A6.1: Trust in justice, regional / local 
authorities and in government 

Quality of legislation and regulatory 
simplification 

in  drafting  and 
Bulgaria’s  performance 
evaluating  legislation  aligns  with  the  EU 
average.  The  country  has  established  a  detailed 
methodology  and  set  of  rules  for  assessing 
impacts of both primary and secondary legislation. 
However,  these  practices  are  not  consistently 
applied (124). There is also well-established practice 
for  public  consultations  of  government  initiatives. 
Evaluations of existing laws however are relatively 
In  2024,  a  series  of  measures  were 
rare. 
to  enhance  strategic  planning, 
implemented 
implementation,  and  utilize 
monitor  policy 
evidence,  data,  and 
in 
innovative  methods 
policymaking.  These  measures  complement  IT 
investments for improved strategic planning under 
the  national  recovery  and  resilience  plan.  A  newly 
adopted  concept  aims  to  strengthen  regulatory 
governance  by  applying  the  regulatory  standards 
at local level (125).  

Graph A6.2: Indicators of Regulatory Policy and 
Governance (iREG) 

(1) EU27 from 2019; EU28 before 
Source: Standard Eurobarometer surveys 

Trust  in  Bulgaria’s  public  institutions  is  far 
below  the  EU  average  (Graph  A6.1).  Although 
trust  in  local  and  regional  governments  is  higher, 
their  perceived  quality  continues  to  be  rated  the 
lowest in the EU (122). 46% of citizens believe that 
reducing  bureaucracy  would  enhance  trust  in 
public administration (compared to the EU's 52%), 
38%  expect  more  transparency  (compared  to  the 
EU's  44%),  and  34%  desire  better-skilled  civil 
servants (compared to the EU's 30%) (123).  

Source: OECD (2025), Regulatory Policy Outlook 2025 and 
Better Regulation across the European Union 2025 
(forthcoming). 

(122) Inforegio - European Quality of Government Index 

през 2023 г. p. 6.  

(124) See 2024, Годишен доклад за оценка на въздействието 

(123) Understanding Europeans’ views on reform needs - April 

(125) Концепция за развитие на регулаторната политика на 

2023 - - Eurobarometer survey 

Република България 2025-2027. 

55 

00.10.20.30.40.50.60.7AutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSummerWinterSummerWinterSpringAutumnSpringAutumn2014201520162017201820192020202220232024Justice,  legal system EU27Justice,  legal system BGRegional or local public authorities EU27Regional or local public authorities BGGovernment  EU27Government  BG0.00.51.01.52.02.53.03.54.0Primary lawsSubordinateregulationsPrimary lawsSubordinateregulationsPrimary lawsSubordinateregulationsBG_StakeholderengagementBG_Regulatory ImpactAssessmentBG_Ex-post evaluation oflegislationMethodologySystematic adoptionTransparencyOversight and quality control2021EU-27 
 
     
 
     
 
 
 
Table A6.1:  Selected indicators on administrative burden reduction and simplification 

(1) This table presents a subset of iREG indicators focusing on regulatory costs. The indicators refer to primary legislation. 
Source: OECD (2025), Regulatory Policy Outlook 2025 [https://doi.org/10.1787/56b60e39-en] and Better Regulation across the 
European Union 2025 (forthcoming). 

Bulgaria  has  not  consistently  used  tools  for 
regulatory  simplification  such  as 
in-depth 
reviews  of 
regulatory  areas  and 
specific 
assessments  of  administrative  burdens  and 
substantive compliance costs when developing and 
evaluating  legislation  (Table  A6.1).  A  government 
plan aims to reduce administrative burdens in the 
areas  of  health,  education,  energy,  agriculture, 
trade,  infrastructure,  the  environment  and  public 
safety (126).  In  early  2025,  the  government  also 
committed  to  simplify  administrative  services 
related  to  10  life  events,  connected  to  the  EU 
Single Digital Gateway (127).  

Efforts to improve  the law-making  practices 
in the parliament have not shown results yet. 
While  parliament 
in 
retains  a 
legislative  initiative  (in  2024  80%  of  proposals 
were  submitted  by  members  of  parliament)  the 
share  of 
impact  assessments  and  public 
consultations of these remains extremely low (128). 
Only  a  small  share  of  legislative  proposals  made 
use  of  evidence  or  assess  alignment  with  EU 

leading 

role 

legislation.  Stakeholders  have  also 
reported 
problems  with  transparency  of  the  Bulgarian 
parliament (129).  

Social dialogue 

legislation  and  policymaking 

The  involvement  of  the  social  partners  in 
national 
is 
institutionalised  in  the  National  Council  for 
Tripartite  Cooperation  and  in  the  sectoral, 
branch,  regional  and  municipal  councils  for 
tripartite  cooperation.  All  councils  include  the 
and 
nationally 
employers’  organisations  who  are  recognised  in 
this  capacity  by  the  government  in  accordance 
with a special procedure laid down in the national 
labour legislation. The consultation of the National 
Council  is  required  by  law  and  covers  legislative 
initiatives and secondary legislation on labour and 
issues directly related to labour, social security, as 

represented 

unions 

trade 

(126) План за намаляване на административната тежест 

(127) План за действие за внедряване на услуги на принципа 

„епизод от живота“ 

(128) 2024. Изследване на законодателната дейност на 50-

(129) See  2024  Rule  of  Law  Report,  country  chapter  on  Bulgaria, 

ото народно събрание 

pp. 33-34. 

56 

Ex ante impact assessment of legislationEx post evaluation of legislationIdentify and assess the impacts of the baseline or ‘do nothing’ option.Is required to consider the consistency of regulations and address areas of duplication.Identify and assess the impacts of alternative non-regulatory options.Is required to contain an assessment of administrative burdens.Quantify administrative burdens of new regulations.Is required to contain an assessment of substantive compliance costs.Quantify substantial costs of compliance of new regulations.Compares the impact of the existing regulation to alternative options.Assess macroeconomic costs of new regulations. Periodic ex post evaluation of existing regulations is mandatory.Assess the level of compliance.Government uses stock-flow linkage rules when introducing new regulations (e.g., one-in one-out).Identify and assess potential enforcement mechanisms.A standing body has published an in-depth review of specific regulatory areas in the last 3 years.In the last 5 years, public stocktakes have invited businesses and citizens to assess the effectiveness, efficiency, and burdens of legislation.When developing new legislation, regulators are required to …Yes /  For all primary laws For major primary laws For some primary lawsNo / Never 
 
 
 
   
 
well  as  issues  related  to  the  standard  of  living. 
(130) 

in  the 

Overall,  trade  union  membership  has  seen  a 
last  decades  with  some 
decline 
estimates  putting  it  at  15%  of  the  labour 
force.(131) The influence of trade unions is further 
undermined  by  the  low  coverage  of  collective 
labour  agreements.  Employers  generally  prefer 
direct company level negotiations over sector-wide 
agreements,  limiting  the  potential  for  broader 
‘Social 
wage 
partnership’,  with  a  budget  of  approximately  EUR 
26.6  million,  under  the  programme  for  Human 
Resources Development 2021-2027 co-funded by 
the  ESF+  is  supporting  social  partners,  aiming  to 
strengthen  the  social  dialogue  and 
increase 
collective bargaining. 

improvements. 

Operation 

Efficiency of selected administrative 
procedures 

The  OECD  product  market 
regulation 
indicators  show  that  Bulgaria’s  licensing 
system  is  less  burdensome  than  in  the 
average EU-27 economy. However, there is still 
scope to continue adopting best practice. Although 
the  government  keeps  an  up-to-date  inventory  of 
all  permits  and 
to 
licences 
businesses  by  public  bodies,  the  inventory  is  not 
available  online  for  consultation.  Also,  there  is  no 
requirement  for  the  government  to  regularly 
assess whether such licences and permits are still 
required  or  should  be  withdrawn  (see  also  Annex 
4). According to a Commission report on speeding 
up  permit-granting  procedures  for  renewable 
energy  and  related  infrastructure  projects (132) 

required/issued 

(130) For  an  analysis  of  the  involvement  of  Bulgaria’s  social 
partners at national level in the European Semester and the 
Recovery  and  Resilience  Facility,  see  Eurofound  (2025), 
National-level  social  governance  of  the  European  Semester 
and the Recovery and Resilience Facility. 

(131) See 

на 

Развитие 

синдикализма 

историческа 
перспектива.  Преглед  на  правния,  политическия  и 
социалния  контекст  на  функциониране  на  съвременните 
синдикални 
на 
организации 
независимите синдикати в България (КНСБ). 

Конфедерация 

– 

в 

(132) European 

Commission: 

for 
Energy, Monitoring  the  implementation  of  the  Commission 
recommendation  and  guidance  on  speeding  up  permit-
granting  procedures  for  renewable  energy  and  related 

Directorate-General 

is  scope  for  further  aligning  national 
there 
practices in Bulgaria with the guidance to support 
faster  and  shorter procedures  for  the licensing  of 
renewable  energy  projects.  Unlike  19  other  EU 
Member  States,  Bulgaria  does  not  have  a 
dedicated 
pro-
productivity  policies.  Furthermore,  a  significant 
number of independent and regulatory authorities 
are operating with an expired mandate (133).  

promoting 

institution 

for 

Digital public services 

Bulgaria  has  a  strong  legal  framework  for 
supporting online digital services and a well-
developed  e-government  architecture.  It  has 
been  working  to  digitalise 
its  administrative 
registers,  increase  interoperability  and  enable  the 
administrative 
(once-only 
principle).  

transfer  of  data 

Only  a  small  percentage  of  Bulgarian 
internet  users  engage  with  e-government 
services.  At  just  35.4%  engagement,  this  is  the 
second  lowest  in  the  EU  and  significantly  below 
the  EU  average  of  75%  (Table  A6.2)  Reasons  for 
this  according  to  a  national  study  from  2023, 
include distrust in electronic services and concerns 
about weak information security, lack of adequate 
computer skills, insufficient promotion of services. 
Moreover, 
of 
minorities  and  people  living  in  remote  areas  is  a 
further obstacle to online services. Bulgaria had an 
overall e-health maturity score of 77.2 out of 100 
in 2023, close to the EU average of 79.1. 

insufficient 

inclusion 

digital 

regulatory 

The  national  scheme  for  eID  is  still  in 
development.  However, 
changes 
introduced in 2023 are significantly improving the 
situation.  As  of  2023,  6.09%  of  Bulgarians  had 
used  one  of  the  existing  eID  systems  to  access 
online services for private purposes within the past 
12  months,  compared  to  an  EU  average  of 
41.11%.  Use  of  eID  for  accessing  services 
provided  by  national  public  authorities  or  public 

infrastructure  projects  –  Final  report,  Publications  Office  of 
the European Union, 2025, link.  

(133) See 2024 Rule of Law Report, country chapter on Bulgaria, 

pp. 31-32. 

57 

 
 
 
 
 
Table A6.2:  Key Digital Decade targets monitored through the Digital Economy and Society Index 

Source: State of the Digital Decade report 2024(135) 

services was slightly lower at 5.36%, which is well 
below the EU average of 36.14%. 

is  developing 

Bulgaria 
the  necessary 
infrastructure  towards  seamless,  automated 
exchange  of  authentic  documents  and  data 
across the EU. There are still additional  steps to 
be  taken  by  Bulgaria  to  become technically  ready 
to connect to the Once-Only Technical System(134), 
part of the EU Single Digital Gateway. 

Civil service  

learning 

(BG  2.3%; 

EU  17.9%)(136). 

Bulgaria’s  civil  service  continues  to  face 
difficulties  in  ensuring  civil  servants  have 
sufficient  skills.  Enrolment  of  civil  servants  in 
adult 
is  significantly  below  the  EU 
The 
average 
participation  rate  in  compulsory  induction  training 
courses has continued to decline both among civil 
servants (from 49.1% in 2022 to 46.7% in 2023) 
and managers (46.3% in 2023 to 37% in 2022). In 
2023, 36% of administrations had not earmarked 
any funding for training. On a more positive note, 
the  total  number  of  participants  in  professional 
training courses, including courses on digital  skills 
for  Public 
had 

increased (137).  The 

Institute 

Administration has expanded its training catalogue 
to  include  digital  skills,  strategic  planning  and 
monitoring,  public  procurement,  service  delivery, 
etc. (138).  

of 

the 

attractiveness 

The 
public 
administration  as  an  employer  is  declining. 
This  was  demonstrated  by  a  visible  shift  towards 
an older age profile in the civil service as of 2019 
and a lower number of applications for vacancies 
published  in  2023.  About  half  of  vacant  posts  in 
the administration were filled via internal mobility. 
The  existing  civil  service  traineeship  scheme  had 
not improved recruitment of young talent and was 
therefore replaced by a new programme for young 
jobseekers  with  a  university  education (139).  The 
starting salary in the public administration is equal 
to the national minimal wage. There continue to be 
huge  disparities  in  pay  across  administrations 
between  persons  with  the  same  function  and 
grade,  despite  several  proposals  to  address  the 
issue (140).  Moreover,  a  national  review  showed 
that  the  current  bonus  system  tended  to  inflate 
the  number  of  vacant  posts,  this  leaving  more 
funds  for  top-ups  from  budget  savings.  Finally, 
although  staff  engagement  is  monitored (141),  the 
results do not feed into consistent staff policies. 

(134) European Commission, The Once Only Principle System: A 

breakthrough for the EU’s Digital Single Market 

(138) Annual report of the Institute for public administration, 2024, 
https://www.ipa.government.bg/sites/default/files/annualrepo
rt_ipa_24_fpi_final.pdf  

(135) Digital Decade DESI indicators 2024 

(139) Програма "Старт в кариерата"  

(136) Eurostat. Data to be updated and refernce to be included in 

(140) Портал за обществени консултации  

April 

(137) Reports on the status of the state administration for 2022 

and 2023, https://strategy.bg/FileHandler.ashx?fileId=36619  

(141) Institute for Public Administration, Engagement barometer, 

https://www.ipa.government.bg/bg/publications#cbp=/bg/baro
metr-na-angazhiranostta-2024 

58 

Digital Decadetarget by 20302022202320242024EU-27Digitalisation of public services159606779100Score (0 to 100)20212022202320232030276819285100Score (0 to 100)202120222023202320303na777779100Score (0 to 100)20212022202320232030BulgariaEU-27Digital public services for citizensDigital public services for businessesAccess to e-health records 
 
 
 
  
 
Integrity 

that 

consider 

corruption 

companies 

for  bribing  a 

A  far  higher  percentage  of  companies  than 
the  EU  average  consider  corruption  to  be 
widespread  and  a  problem  when  doing 
business,  and  there  are  concerns  related  to 
high-level  corruption  cases.  In  particular,  88% 
of 
is 
widespread (EU average 65%), while 57% consider 
that  corruption is  a problem  when doing business 
(EU  average  36%) (142).  Moreover,  only  14%  of 
companies  believe  that  people  and  businesses 
caught 
senior  official  are 
appropriately  punished  (EU  average  31%) (143). 
There  has  been  no  progress  yet  in  establishing  a 
robust  track-record  of  high-level  corruption  cases 
or in work to strengthen the legislative framework 
in  the  area  of  foreign  bribery  in  line  with  OECD 
reform  of 
recommendations.  Following 
Bulgaria’s 
Counteracting 
Illegal  Assets  Forfeiture,  the 
Corruption  and 
collegial 
the  Anti-Corruption 
Commission  has  not  yet  been  appointed  and  its 
(144). 
performance 
Moreover, there are continued gaps in the integrity 
framework  for  persons in top  executive  functions, 
the 
with  no  clear 
government  and  no  appropriate  sanctioning 
mechanism.  The  government  has  started  work  on 
a comprehensive code of conduct (145).  

integrity  standards 

to  be  assessed 

leadership  of 

Commission 

remains 

the 

for 

for 

Public  procurement  remains  an  area  at  high 
risk  of  corruption 
in  Bulgaria.  36%  of 
companies (EU average 27%) think that corruption 
has prevented them from winning a public tender 
or a public procurement contract in practice in the 
last three years (146). Bulgarian public procurement 
legislation  was  amended  in  October  2023  to 
improve  transparency  and  integrity.  Investigations 
and 
legal  proceedings  concerning  Bulgarian 
citizenship  previously  granted  under  the  country’s 
investor  citizenship  scheme,  abolished  in  2022, 

(142) Flash Eurobarometer 543 on businesses’ attitudes towards 

corruption in the EU (2024). 

(143) Ibid. 

(144) See 2024 Rule of Law Report, country chapter on Bulgaria, 

pp. 16-18. 

(145) Ibid., pp. 21-22. 

continued  in  2023.  Even  after  their  abolition, 
investor  citizenship  schemes  also  continue  to 
expose  a  high-risk  of  corruption,  as  new 
allegations  emerged, 
including  corruption  and 
fraud to avoid proper due diligence in the granting 
of citizenship. (147) 

implemented  a  public 
Bulgaria  has  not 
lobbyists.  However,  work  on 
register  for 
legislation to make lobbying more transparent has 
started  and  rules  on  ‘revolving  doors’  have  been 
reformed. The government has prepared a concept 
paper  and  set  up  a  working  group  to  prepare 
legislation aiming to define lobbying and set up a 
transparency  register  (148).  This  could  help  to 
improve transparency in corporate lobbying. 

Justice 

The  justice  system  is  performing  efficiently 
overall.  For  the  first  time,  Bulgaria  was  able  to 
collect  and  present  disaggregated  data  on  the 
efficiency  of  first  instance  civil  and  commercial 
proceedings.  The  estimated  time  to  resolve  such 
cases was 186 days in 2023. The estimated time 
to  resolve  administrative  cases  at  first  instance 
has  decreased  from  129  days  in  2022  to  121 
days  in  2023.  The  justice  system  is  faced  with 
some challenges regarding digitalisation. Despite a 
slight improvement, digital tools are scarcely used 
in courts. Concerns regarding judicial independence 
persist. 
In  December  2023,  a  comprehensive 
constitutional  reform  was  adopted  to  improve 
judicial  independence  and  address  long-standing 
concerns.  However,  on  26  July  2024,  Bulgaria’s 
Constitutional  Court  declared  a  significant  part  of 
the  constitutional  amendments  unconstitutional. 
Therefore, the concerns regarding the composition 
and  functioning  of  the  Supreme  Judicial  Council 
persist.  In  addition,  long-term  secondments  of 
judges  are  widely  used  to  fill  vacant  positions. 
Moreover,  the  risk  of  political  influence  of  the 
Inspectorate to the Supreme Judicial Council could 

(147) See 2024 Rule of Law Report, country chapter on Bulgaria, 

(146) Flash Eurobarometer 543 on businesses’ attitudes towards 

corruption in the EU (2024). 

pp. 25-26.  

(148) Ibid., pp. 23-24. 

59 

 
 
 
be  avoided,  in  particular  by  involving  judicial 
bodies in the selection of its members (149). 

(149) For more detailed analysis of the performance of the justice 
system  in  Bulgaria,  see  the  upcoming  2025  EU  Justice 
Scoreboard and the 2024 Rule of Law Report. 

60 

 
 
SUSTAINABILITY 
ANNEX 7: CLEAN INDUSTRY AND CLIMATE MITIGATION 

faces 

it  has 

significant 

Bulgaria 
challenges 
regarding  its  clean  industry  transition  and 
climate  mitigation:  to  date, 
limited 
manufacturing  capacity  for  net-zero  technologies, 
while  obstacles  remain  in  streamlining  industrial 
permitting. Its reliance on imports for many critical 
raw materials and a low circular material use rate 
threaten  its  industrial  autonomy.  Despite  some 
progress 
industry  has 
remained  greenhouse  gas  emissions  intensive  so 
far,  and  air  quality  is  a  significant  concern. 
Furthermore,  Bulgaria  is  lagging  behind  in  waste 
management. 
reliance 
landfilling, a positive development is that Bulgaria 
closed its substandard landfills. This annex reviews 
the areas in need of urgent attention in Belgium’s 
clean  industry  transition  and  climate  mitigation, 
looking at different dimensions. 

in  decarbonizing, 

Bulgaria’s 

Despite 

its 

Strategic autonomy and technology 
for the green transition  

Net zero industry 

Bulgaria’s manufacturing capacity across all 
net zero technologies is very limited, despite 
plans  to  develop  the  batteries  sector (150). 
Some  recent  investments  in  battery  and  storage 
technologies  include  EUR 1.1  billion  of  planned 
investment by Belgium-based ABEE for a research 
and  development  centre,  a  gigafactory  and  a 
recycling centre. The South African company solar 
MD  plans  to  invest  EUR 1.53  million  for  a  battery 
factory in Bulgaria.  

of 

scale 

clean 

Bulgaria’s 
tech 
up 
manufacturing capacity  is  supported  by  only 
a  few  and  high-level  policy  frameworks. 
Bulgaria’s  draft  national  energy  and  climate  plan 
provides 
the 
for 
technologies.  The 
manufacturing  of  net-zero 
proposed  measures 
the 
conditions for investment in net zero technologies; 
improving  the  permitting  procedures  for  strategic 

stimulating 

improving 

strategy 

include: 

a 

(150) European  Commission:  Directorate-General  for  Energy,  ‘The 
landscape  across  the 
2025’, 

net-zero  manufacturing 
Member 
https://data.europa.eu/doi/10.2833/2181110. 

industry 
States 

net  zero  technologies;  promoting  the  purchase  of 
net zero technologies with financial compensation: 
building  a  skilled  workforce;  and  establishing 
industrial  parks.  In  addition,  Bulgaria’s  Ministry  of 
the  Economy  and  Industry  is  currently  working  on 
an  industrial  strategy  for  the  processing  and 
mining 
skills 
programmes provide vocational training that could 
potentially 
net-zero 
a 
technologies. 

industries. 

relevant 

benefit 

Lastly, 

range 

of 

The  procedure  for  industrial  permitting  can 
vary in length depending on the location and 
the  authorities  involved.  In  fact,  the  time 
needed  to  obtain  a  construction  permit  for  net-
zero  manufacturing  can  vary  between  six  months 
and  three  years.  So  far,  Bulgaria  has  not 
established  a  one-stop  shop  to  streamline  the 
process.  The  Investment  Promotion  Act  offers 
support 
specific 
requirements for investment size and job creation 
thresholds.  Further  incentives  for  such  projects 
faster 
could  be  beneficial: 
administrative  procedures,  financial  assistance 
and 
is  not 
specifically  targeted  at  net  zero  technologies,  net 
these 
zero  projects  can  also  benefit  from 
favourable conditions (151). 

this  measure 

relief.  While 

that  meet 

example, 

projects 

tax 

for 

to 

Transforming the car industry 

The automotive sector is one of the fastest-
growing  sectors  in  Bulgaria  with  an  average 
annual growth in production of 8.6%. 80% of 
all  sensors  of  European  cars  were  made  in 
Bulgaria.  The  sector  includes  not  only  plants  for 
vehicle  parts  but  also  38 
research  and 
development  centres  with  innovation  capacity  for 
software  and  design  development.  At  the  same 
time, the automotive industry is heavily dependent 
on other countries, such as Germany. 

EV 

charging 

infrastructure 

Bulgaria’s  transition  to  e-vehicle  (EV)  use 
and 
is 
progressing.  In  2023,  the  stock  of  cars  with 
alternative fuel engines was the highest among EU 
Member  States,  at  14.3%  compared  to  an  EU 
average  of  4.6%. 
recharging 
infrastructure  is  expected  to  continue  growing, 
reaching  an  estimated  1 543  charging  stations  in 

The  public 

(151) European Commission: Directorate-General for Energy, 2025. 

61 

 
 
 
 
 
 
 
2024,  according  to  Statista  Market  Insights.  This 
represents a significant expansion of the country's 
charging  network,  which  has  already  seen  rapid 
growth in previous years. However, legislative and 
infrastructure  challenges  remain,  for  example, 
insufficient grid capacity and uneven geographical 
distribution  of  charging  infrastructure,  including 
fast chargers (152). 

Critical raw materials  

Mining  and  metallurgy  play  a  crucial  role  in 
Bulgaria’s industrial sector. The extraction and 
recycling  of  critical  raw  materials  is  governed  by 
the 2021-2028 national waste management plan, 
the  2022-2027  circular  economy 
transition 
strategy  and  the  related  strategy  action  plan 
(Decision  No  832  of  the  Council  of  Ministers  of 
26 October 2022).  One  of  the  objectives  of  the 
strategy  is  to  strengthen  Bulgaria’s  position  as  a 
supplier of critical raw materials in the EU. This is 
to be supported by a planned national critical raw 
materials  strategy  and  an  act  on  critical  raw 
materials. 

Bulgaria depends on imports for many of the 
critical  raw  materials  needed  for  the 
development  of  net-zero  industry.  Bulgaria 
produces  critical  raw  materials  such  as  baryte, 
bismuth and copper. It ranks among the top three 
EU producers of vermiculite, gold, kaolin, cadmium, 
lead,  and  ornamental  and  building  stones  (153).  A 
significant number of other raw materials need to 
be  imported.  For  example,  high-value  imports 
include  copper  (from  Indonesia,  Brazil,  Georgia, 
Turkey,  Peru,  Chile  and  Panama),  iron  and  non-
alloy  steel  (mainly  from  Ukraine);  aluminium 
(mainly  from  Turkey);  and  fertilisers  (from  Egypt, 
and  Georgia).  Bulgaria’s 
import 
dependency for raw materials (154) is below the EU 
average  (0.19 vs  0.23)  and  on  a  par  with  that  of 

level  of 

Romania and Lithuania (155). To become more raw 
independent,  Bulgaria  could  further 
materials 
diversity  its  supply  sources.  The  circular  use  of 
materials  is  also  key  to  reducing  the  dependence 
on  imports.  In  this  regard,  over  the  last  decade, 
Bulgaria’s  circular  material  use  rate  (4.9%)  has 
been  constantly  way  below  the  EU  average 
(11.8%),  indicating  a  significant  potential  for 
improvement. 

Bulgaria's  mining 
and  metallurgical 
industries have the potential to contribute to 
the  EU's  raw  material  independence  and 
meet some of its critical raw material needs. 
According  to  the  Bulgarian  Association  of  the 
Metallurgical 
Industry,  Bulgaria's  polymetallic 
deposits  contain  primary  metals  and  other 
elements which are processed into concentrates or 
remain in mining waste. The metallurgical industry 
processes  over  1.6  million  tonnes  of  non-ferrous 
metal  ore  concentrates  and  waste  products, 
making  effective  use  of  primary  elements  and 
accompanying metals.  

Bulgaria could take advantage of the Critical 
Raw  Materials  Act  in  the  production  of 
primary  and  secondary  non-ferrous  metals. 
However,  Bulgaria  has  fallen  behind  on  some 
obligations under the Act, such as the obligation to 
prepare  a  database  on  critical  raw  materials  and 
establish  an  information  and  project  support  unit. 
The  Bulgarian  Academy  of  Sciences  has  been 
tasked  with  the  establishment  of  a  national 
scientific  programme  to  support  the  development 
of critical and strategic raw materials, but the long 
implementation  period  may  diminish  potential 
benefits (156). 

Climate mitigation 

Industry decarbonisation 

(152) SeeNext, ‘Automotive Industry in Southeast Europe, Powering 

up for an electric future”, 2024. 

(153) European  Commission,  Raw  Materials  Information  System 

(RMIS) – Country Profile - Bulgaria 

(154) The  concentration  index  score  shows  how  much  a  country 
relies  on  a  number  of  partner  countries  for  a  basket  of 
critical  raw  materials.  Higher  values  indicate  higher  import 
dependency:  a  score  of  0.25  indicates  a  high  dependency, 
0.15-0.25  indicates  a  moderate  degree,  and  a  score  below 
0.15 indicates low  import dependency. 

Bulgaria’s  manufacturing  sector  emits  much 
more  greenhouse  gases  per  unit  produce 
than other EU Member States. Around 18% of 
Bulgaria’s  total  greenhouse  emissions  come  from 

(155) European 

Commission, 

2025 

Single  Market 

and 

Competitiveness Scoreboard. 

(156) Bulgarian  Association  of 

the  Metallurgical 

Industry, 

https://bami.bg/en/  

62 

 
 
 
manufacturing (157).  In  2022,  this  sector  emitted 
790 g  CO2eq  of  greenhouse  gases  per  euro  of 
gross value added (GVA), nearly three times the EU 
average (270 g), ranking it second highest among 
EU Members. The emissions intensity of Bulgaria’s 
manufacturing  sector  has  declined  by  21%  since 
2017,  similar  to  the  EU  average  decrease.  The 
shares  of  Bulgaria’s  manufacturing  emissions 
coming  from  energy  and  non-energy-related 
sources in 2023 (the latter primarily coming from 
industrial  processes)  are  relatively  equal,  while  in 
the EU overall, energy-related emissions dominate, 
with 57%. 

Graph A7.1: GHG emission intensity of manu-
facturing and energy-intensive sectors, 2022 

The  energy  intensity  of  manufacturing  in 
Bulgaria  decreased  by  about  31%  between 
2017 and 2022, to 2.45 GWh/EUR of GVA, though 
it remains much higher than the EU average, 1.05 
GWh.  The  share  of  electricity  and  renewables  in 
final  energy  consumption  of  the  manufacturing 
industry has remained at around 39%. A sustained 
shift from fossil fuels to electricity and renewables 
is yet to build momentum.  

Graph A7.2: Manufacturing industry production: 
total and selected sectors, index (2021 = 100), 
2017-2023 

Source: Eurostat. 

The energy-related greenhouse gas emissions 
intensity  of  manufacturing  has  increased 
recently.  Between,  2017 and  2022,  the  intensity 
of greenhouse emissions from industrial processes 
and  product  use  declined  by  24%,  more  than  in 
the EU as a whole, where it decreased by 19%. At 
the same time, the energy-related greenhouse gas 
emissions  intensity  of  Bulgaria’s  manufacturing 
industry increased by 6%, while the EU overall saw 
a decrease of 11% (158). 

(157) In  2023.  Manufacturing  includes  all  divisions  of  the  “C” 
section  of  the  NACE  Rev.  2  statistical  classification  of 
economic  activities.  In  the  remainder  of  this  section,  unless 
indicated  otherwise,  data  on  manufacturing  refer  to  the 
divisions  of  the  NACE  section  C  excluding  division  C19 
(manufacture  of  coke  and  refined  petroleum  products),  and 
the  year  2022.  The  source  of  all  data  in  this  section  is 
Eurostat;  data  following  the  UNFCCC  Common  Reporting 
Framework (CRF) are from the European Environment Agency 
(EEA), republished by Eurostat. 

(158) For the GHG emissions intensity of GVA related to energy use 
and  industrial  processes  and  product  use  respectively,  GHG 
emissions  are  from  inventory  data  in  line  with  the  UNFCCC 
Common  Reporting  Format  (CRF),  notably  referring  to  the 
source sectors CRF1.A.2 –  fuel combustion in manufacturing 
industries  and  construction  and  CRF2  –  industrial  processes 
and  product  use.  The  CRF1.A.2  data  broadly  correspond  to 

Source: Eurostat. 

Bulgaria’s  energy-intensive  industries  are 
greenhouse  gas  emissions  intensive.  Energy-
intensive  industries (159)  accounted  for  17%  of 
Bulgaria’s  total  manufacturing  GVA  in  2022,  the 
third  highest  share  in  the  EU.  Among  these,  the 
chemicals  and 
chemical 
manufacturing  of 
products 
of 
accounts 
manufacturing  production)  recorded  the  highest 
emission  intensity  of  production  in  the  EU,  with 
5.8 kg CO2eq/EUR of GVA. 

(which 

4.6% 

for 

the NACE C and E sectors, excluding C-19. GVA data (in the 
denominator  for  both  intensities)  are  aligned  with  this 
sectoral  coverage.  Therefore,  they  are  not  fully  consistent 
with the data referred to in other part of this section.  

(159) Notably,  the  manufacture  of  paper  and  paper  products 
(NACE  division  C17),  of  chemicals  and  chemical  products 
(C20),  “other”  non-metallic  mineral  products  (C23;  this 
division includes manufacturing activities related to a single 
substance of mineral origin, such as glass, ceramic products, 
tiles,  and  cement  and  plaster),  and  basic  metals  (C24).  To 
date,  these  industries  are  energy-intensive  –  i.e.  consuming 
much  energy  both  on  site  and/or  in  the  form  of  purchased 
electricity  –  and  greenhouse  gas  emissions  intensive,  in 
various combinations. 

63 

012345678C-C19C17C20C23C24KG CO2eq / €BulgariaEU-277075808590951001051101151202017201820192020202120222023ManufacturingManufacture of paper and paper productsManufacture of chemicals and chemical productsManufacture of other non-metallic mineral productsManufacture of basic metals 
   
 
 
           
 
Bulgaria’s 
industries 
energy-intensive 
experienced  a  contraction  of  production 
recently.  Bulgaria’s  industrial  energy  prices  are 
lower  than  average  EU  prices,  between  2021  and 
2024  (160),  production  in  the  paper,  non-metallic 
mineral products, and basic metals sectors still fell 
by about 5%-10% (see Graph A7.2). 

Graph A7.3: Greenhouse gas emissions in the 
effort sharing sectors, 2005 and 2023 

forward 

legislation 

facilitating 

Bulgaria  has  started  putting  in  place  a 
framework to support the decarbonisation of 
industry, but more needs to be done. Bulgaria 
has  put 
the 
deployment of renewables and storage; measures 
to  improve  energy  efficiency  of  both  residential 
and manufacturing buildings and pilot projects on 
renewable hydrogen. This is also underlined in the 
objectives  of  the  integrated  national  energy  and 
climate  plans  as  well  as  key  outcomes  of  the 
territorial  just  transition  plans.  However,  further 
efforts are needed to support the decarbonisation 
in 
of  manufacturing  production,  particularly 
energy-intensive 
Preparations  have 
sectors. 
started on the development of a national industrial 
strategy  which  will  include  elements  related  to 
industrial decarbonisation, such as the reduction of 
the  carbon 
resource  and  energy 
efficiency,  as  well  as  net  zero  emissions  industry 
analysis. 

footprint, 

Source: European Environment Agency 

Swift  action  on  decarbonising  transport 
appears  particularly  exigent 
in  Bulgaria. 
Between  2005  and  2023,  greenhouse  gas 
emissions  from  road  transport  increased  by  32% 
in Bulgaria, while they decreased by 5% in the EU 
overall.  Speeding  up  climate  mitigation  in  this 
sector  would  help  protect  households,  businesses 
and transport users in Bulgaria from the impact of 
the forthcoming carbon price.  

Reduction  of  emissions  in  the  effort  sharing 
sectors 

Sustainable industry 

Bulgaria is projected to reach its 2030 target 
for the effort sharing sectors if it adopts and 
implements  the  planned  climate  mitigation 
measures (161).  GHG  emissions  from  Bulgaria’s 
effort-sharing  sectors  in  2023  are  expected  to 
have  been  4.7 %  above  those  of  2005.  By  2030, 
additional policies currently considered by Bulgaria 
are  projected  to  achieve  a  reduction  of  11.06 %. 
Hence,  Bulgaria  is  projected  to  overachieve  its 
effort  sharing  target  of  a  10 %  reduction,  by 
1.06 pps (162),  if  it  adopts  and  implements  those 
measures.  

(160) For a detailed analysis of energy prices, see Annex 8 on the 

affordable energy transition. 

in  Regulation 

(161) The national greenhouse gas emission reduction target is set 
out 
(the  Effort  Sharing 
(EU)  2023/857 
Regulation).  It  applies  jointly  to  buildings  (heating  and 
cooling); road transport, agriculture; waste; and small industry 
(known as the effort sharing sectors). 

(162) The emissions from effort sharing sectors for 2023 are 

based on approximated inventory data. The final data will be 

Circular economy transition 

Despite  some  positive  trends,  Bulgaria  lags 
behind  in  its  circular  transition.  The  circular 
use  of  materials  in  Bulgaria  reached  a  peak  of 
5.8%  in  2020  followed  by  a  decline  until  2022, 
and  then  an  increase  to  4.9%  in  2023.  However, 
this  is  still  well  below  the  EU  average  of  11.8%. 
With  EUR 0.38  generated  per  kg  of  material 
consumed 
in 
Bulgaria is well below the EU average of EUR 2.22 
per kg. 

in  2023,  resource  productivity 

There  is  scope  for  Bulgaria  to  implement 
additional  policies  to  increase  circularity.  In 
October  2022,  Bulgaria  adopted  its  strategy  and 

established in 2027 after a comprehensive review. 
Projections on the impact of current policies (‘with existing 
measures’, WEM) and additional policies (‘with additional 
measures’, WAM) as per Bulgaria’s final updated national 
energy and climate plan. 

64 

05101520253020052023MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
 
 
          
 
The 

and 

strategy 

landfilling 

2022–2027. 

to  prevention, 

envisages 
included 

action plan for the transition to a circular economy 
the 
for 
accompanying action plan were adopted under the 
wider umbrella of Bulgaria’s national development 
programme  for  2030, 
‘Bulgaria  2030’.  The 
national  development  programme  shifted  the 
focus  from 
reuse, 
recycling  and  recovery  of  waste.  The  2021-2028 
waste  management 
the 
plan 
in  the 
implementation  of  measures 
circular  economy  strategy  for  products  containing 
critical raw materials. The Public Procurement Law 
has been amended with the inclusion of minimum 
environmental 
tender 
documentation 
contracting 
all 
authorities.  Finally,  Council  of  Ministers’  Decision 
No 508  of  18 July  2024  adopted  the  national 
scientific  programme  ‘Critical  and  strategic  raw 
materials  for  green  transition  and  sustainable 
development’,  supporting  research  to  explore, 
extract  in  an  environmentally  sound  manner  and 
process  CRMs  and  strategic  raw  materials  from 
various  sources,  including  waste  originating  from 
processing  primary  raw  materials  and  from 
secondary resources (from recycling). 

requirements 
for 

in 
public 

the 

lags  behind 

in  waste 
Bulgaria  also 
management.  The 
total  amount  of  waste 
generated in Bulgaria has decreased over the last 
12  years,  with  488  kg  of  waste  produced  per 
capita  in  2022.  This  trend  is  primarily  driven  by 
decreases in the largest waste categories, namely 
mineral waste from mining and quarrying. If these 
categories are excluded, there is an upward trend 
in waste  generation. While total  waste  generation 
has decoupled from economic growth, total waste 
excluding  major  mineral  wastes  has  increased 
more  than  the  economy  as  measured  by  GDP 
growth.  Bulgaria  still  relies  strongly  on  landfilling 
rate  decreased 
even 
significantly  between  2010  and  2022  reaching 
54% in 2022. Municipal waste incineration plays a 
minor  role  in  Bulgaria,  as  only  3%  of  the 
generated  municipal  waste  was  incinerated  in 
2022. 

landfilling 

though 

the 

insufficient.  To  meet 

Current  investment  in  the  circular  transition 
its  environmental 
is 
objectives  on  the  circular  economy  and  waste, 
Bulgaria  needs  to 
increase  circular  economy 
investment  by  an  estimated  EUR 126  million  per 
year,  with  an  additional  EUR 21  million  for  waste 
management action. To close the circular economy 
investment  gap,  EUR 33  million  is  needed  for 
for 
recent 

such  as  eco-design 

initiatives, 

sustainable  products;  packaging  and  packaging 
waste;  labelling  and  digital  tools;  critical  raw 
materials recycling; and measures proposed under 
the  amended  Waste  Framework  Directive.  A 
further EUR 93 million is needed to unlock Bulgaria 
circular economy potential (163). 

Zero-pollution / clean air 

Bulgaria has made some progress in reducing 
air pollution, but further progress is needed.  

Air  quality  in  some parts of  Bulgaria  continues to 
give  cause  for  concern.  In  2023,  exceedances 
above  the  limit  values  set  by  the  Ambient  Air 
Quality  Directive  were  registered  for  nitrogen 
dioxide  in  one  air  quality zone  and  for  particulate 
matter  (PM10)  in  one  air  quality  zone  in  Bulgaria. 
Furthermore,  in  one  air  quality  zone,  the  target 
values for ozone concentration were not met. 

latest 

Bulgaria 
is  above  the  EU  average  for 
releases  of  pollutant  emissions  to  air. 
Bulgaria has not reduced emissions significantly in 
the  context  of  the  national  air  pollution  control 
programme.  The 
reported  data  show 
continued  non-compliance  with  the  2020-2029 
emission  reduction  commitment  for  NH3.  Bulgaria 
is  also  not  on  track  to  meet  emission  reduction 
commitments for 2030 onwards for non-methane 
volatile  organic  compounds.  Based  on  the  latest 
data,  Bulgaria  has  made  some  progress 
in 
achieving compliance with EU air quality standards 
and  maintaining  downward  emission 
trends. 
However,  exceedances  above  limit  values  and 
target  values  remain  for  NO2,  PM10  and  ozone. 
Since 2019, downward emission trends have been 
reported  only  for  NH3  and  PM2.5,  for  NH3  though 
levels are still above those in 2005.  

The  costs of pollution remain  high.  The  latest 
available  annual  estimates  (for  2022)  by  the 
European  Environment  Agency 
for  Bulgaria 
attribute 9 000 deaths each year (or 86 000 years 
of life lost (YLL)) to fine particulate matter; 1 500 
deaths  each  year  (or  14 100  YLL)  to  nitrogen 
dioxide; and 930 deaths each year (or 9 000 YLL) 
to  ozone.  For  2022,  about  3 800  deaths  per  year 
were attributed to fine particulate matter pollution; 
450 deaths to nitrogen dioxide, and 980 to ozone. 

(163) European Commission, DG Environment, Environmental 

investment needs & gaps assessment programme, 2025 
update. Expressed in 2022 prices. 

65 

 
 
To  meet  its  environmental  objectives  on  pollution 
prevention  and  control  (towards  zero  pollution), 
Bulgaria  needs  to  provide  an  additional  EUR 406 
million  per  year  (0.48%  of  GDP),  mostly  for 
measures on clean air (164). 

(164) European Commission, DG Environment, Environmental 

investment needs & gaps assessment programme, 2025 
update. Expressed in 2022 prices. 

66 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A7.1:  Key clean industry and climate mitigation indicators: Bulgaria 

Source:  Net zero industry: European Commission: The net-zero manufacturing industry landscape across Member States: final 
report, 2025. Automotive industry transformation: Eurostat. Critical raw materials: Eurostat. Climate mitigation: See 
footnotes in the "climate mitigation" section; reduction of effort sharing emissions: EEA greenhouse gases data viewer; European 
Commission, Climate Action Progress Report, 2024. Sustainable industry: Years of life lost due to PM2.5: Eurostat and EEA, 
Harm to human health from air pollution in Europe: burden of disease status, 2024. Air pollution damage: EEA, EU large industry 
air pollution damage costs intensity, 2024. Emissions covered: As, benzene, Cd, Cr, Hg, NH3, Ni, NMVOC, NOX, Pb, dioxins, PM10, 
PAH, SOX. Water pollution intensity: EEA, EU large industry water pollution intensity, 2024. Releases into water covered from 
cadmium, lead, mercury, nickel. Other indicators: Eurostat. 

67 

Strategic autonomy and technology for the green transitionNet zero industryOperational manufacturing capacity 2023- Solar PV (c: cell, w: wafer, m: module), MW75-125 (m)- Electrolyzer, MW45931- Wind (b: blade, t: turbine, n: nacelle), MW-- battery, MWh-Automotive industry transformation201720182019202020212022202320182021Motorisation rate (passenger cars per 1000 inhabitants), %410416431439437449466539561New zero-emission vehicles, electricity motor, %0.050.510.571.362.253.574.681.038.96Critical raw materials201720182019202020212022202320182021Material import dependency, %15.716.416.015.317.416.124.222.6Climate mitigationTrendIndustry decarbonisation201720182019202020212022202320172022GHG emissions intensity of manufacturing production, kg/€11.010.910.931.050.790.70.340.27Share of energy-related emissions in industrial GHG emissions64.959.353.552.851.849.851.244.842.5Energy-related GHG emissions intensity of manufacturing327.7378.9354.7381.0446.3346.1-158.4132.9and construction, kg/€Share of electricity and renewables in final energy consumption37.238.239.439.536.939.339.843.344.2in manufacturing, %Energy intensity of manufacturing, GWh/€3.743.553.353.493.822.882.451.291.09Share of energy-intensive industries in manufacturing production17.07.3GHG emissions intensity of production in sector [...], kg/€- paper and paper products (NACE C-17)1.201.161.001.071.091.331.49-0.730.68- chemicals and chemical products (NACE C20)6.027.505.395.3917.765.765.28-1.251.26- other non-metallic mineral products (NACE C23)4.734.243.815.605.596.695.11-2.532.24- basic metals (NACE C24)1.031.001.231.161.060.871.00-2.793.49Reduction of effort sharing emissions20182019202020212022202320182023GHG emission reductions relative to base year, % 12.69.94.9- domestic road transport23.525.518.127.127.232.51.45.2- buildings-25.6-28.6-28.7-17.6-35.4-35.421.432.92005202120222023TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %22.325.124.523.4-10.0-19.71.06Sustainable industryTrendCircular economy transition20182019202020212022202320182021Material footprint, tonnes per person18.420.720.721.624.221.314.715.0Circular material use rate, %2.4        4.0        5.8        4.3        3.0        4.9        11.611.1Resource productivity, €/kg0.4        0.4        0.4        0.5        0.5        0.6        2.12.3Zero pollution industryYears of life lost due to PM2.5, per 100,000 inhabitants1,946    1,641    1,683    1,571    1,729    -702571Air pollution damage cost intensity, per thousand € of GVA    278.4        27.5      Water pollution intensity, kg weighted by human factors per bn € GVA    2.6   0.9BulgariaEU-27BulgariaEU-27BulgariaEU-27 
 
   
 
ANNEX 8: AFFORDABLE ENERGY TRANSITION 

electricity 

prices 
increased 

for 
Bulgaria’s 
households  have  slightly 
in 
2024 but remain the second lowest in the 
EU. Gas prices have slightly increased but 
are still among the lowest in the EU. Price 
regulation  by  the  National  Energy  Authority 
was  in  force  throughout  2024.  The  share  of 
taxes  stands  at  17%  for  both  electricity  and 
gas prices which is significantly lower than the 
EU average of 25% for electricity and 27% for 
gas.   

Retail  electricity  and  gas  prices  for 
industrial  consumers  have  declined  in 
2024  by  14%  and  27%  respectively  and 
are  among  the  lowest  in  the  EU.  Fiscal 
intervention  supports  electricity 
for  non-
household  consumers,  reducing  total  prices  by 
more than 11%.  

Graph A8.2: Monthly average day-ahead wholesale 
electricity prices and European benchmark 
natural gas prices (Dutch TTF) 

This  annex  outlines  the  progress  made 
and  the  ongoing  challenges  faced 
in 
enhancing  energy  competitiveness  and 
affordability,  while 
the 
It 
transition  to  net  zero  in  Bulgaria. 
examines  the  measures  and  targets  proposed 
in the final updates to the national energy and 
climate plans (NECPs) for 2030. 

advancing 

Bulgaria’s electricity mix continues to rely 
on  a  high  share  of  fossil  fuels,  primarily 
coal.  The  country  experienced  high 
electricity prices in 2024 that were partly 
due to the low flexibility of the electricity 
system  and  delayed  electricity  market 
limited 
as  well 
liberalisation 
interconnectivity  between  South-Eastern 
and  Central  Europe.  Bulgaria  has  made 
significant  steps  in  diversifying  away  from 
Russian  fuels  but became  the  only  entry  point 
for  Russian  pipeline  gas  into  the  EU  following 
the expiry of the Ukraine-Russia agreement for 
transit of gas. 

as 

Energy prices and costs 

Graph A8.1: Retail energy price components for 
household and non-household consumers, 2024 

(i) the Title Transfer Facility (TTF) is a virtual trading point for 
natural gas in the Netherlands. It serves as the primary 
benchmark for European natural gas prices. 
(ii) CWE and SEE respectively provide average prices in the 
central-western European (Belgium, France, Germany, 
Luxembourg, the Netherlands and Austria) and south-eastern 
European (Bulgaria, Greece and Croatia) markets. 
Source: S&P Platts and ENTSO-E 

(i) For household consumers, consumption band is DC for 
electricity and D2 for gas. Taxes and levies are shown 
including VAT. 
(ii) For non-household consumers, consumption band is ID for 
electricity and I4 for gas. Taxes and levies are shown 
excluding VAT and recoverable charges, as these are typically 
recovered by businesses. 
Source: Eurostat 

With  an  average  of  EUR 102/MWh  in 
2024 (165), Bulgaria had the fourth-highest 
wholesale electricity prices in the EU; and, 
while  prices  in  Bulgaria  declined  early  in 
the  year  amid  falling  natural  gas  costs, 

(165) Fraunhofer (ENTSO-E data). 

68 

 
 
 
 
 
 
 
markets. 

European 

they surged during the spring/summer and 
in  the  winter,  diverging  from 
again 
Central 
This 
decorrelation  was  driven  by  factors  affecting 
both  consumption  and  generation.  Prolonged 
and  hotter  summer  heatwaves  and  a  colder 
winter in the region led to higher consumption 
(+2%  in  2024).  The  supply-demand  gap  was 
exacerbated  by  lower  hydropower  and  wind 
output (-6% (166) and -9% in 2024) due to the 
meteorological  conditions;  diminished  nuclear 
generation  due  to  malfunctions  (-4%);  lower 
coal output (-32%); limited non-fossil flexibility. 
This gap was mainly covered by higher imports,  
particularly from Greece, Romania and Türkiye, 
where  costly  natural  gas-fired  generation  was 
ramped  up,  especially  during  peak  demand 
hours.  Consequently  (and  more  than  in  2023), 
these conditions resulted in concentrated price 
spikes  in  evening  hours  (18h-21h)  when  solar 
output  declined,  and  demand 
increased 
(especially  during 
the  summer).  However, 
average daytime hourly prices were lower than 
in  2023,  probably  due  to  the  uptake  of  solar 
output in Bulgaria.  

Flexibility and electricity grids 

regions 

calculation 

the 
limited 

The  widening  price  gaps  between  the 
South-  East  Europe (167)  and  CORE 
capacity 
(CCRs) 
observed  during 
summer  also 
cross-border 
the 
highlighted 
capacity  available  for  trade.  Bulgaria  is  in 
the  South-East  Europe CCR 
for  market-
coupling. Electricity flows in this part of Europe 
are influenced by exchanges in nearby bidding 
the  Western  Balkan 
zones, 
countries (168). 
and 
Bulgaria-Greece 
Bulgaria-Romania  borders  are  market-coupled, 
and  trade  levels  were  consistently  high  in 

in 
The 

including 

(166) ENTSO-E. 

(167) South-East Europe is a capacity calculation region (CCR) 
made up of Bulgaria, Greece and Romania. A CCR is a 
group of countries that calculate cross-border electricity 
trade flows together. 

2023.  Member  States  should  ensure  that  a 
minimum  of  70%  of  technical  cross-border 
capacity  is  available  for  trading.  Overall,  this 
capacity reached satisfactory levels in Bulgaria, 
the  Bulgarian  Transmission  System 
but 
Operator (TSO) requested limitations due to the 
absence  of  sufficient  congestion  management 
measures.  

has 

legislation 

complete 

Bulgaria 
the 
to 
liberalisation  of  its  wholesale  and  retail 
to 
electricity  markets.  The 
liberalise  the  wholesale  market  has  been 
adopted,  but  its  entry  into  force  has  been 
postponed  from  July  2024  to  July  2025.  A 
public  supply  obligation  was  awarded  to  the 
state-owned  coal  power  plant  Maritza  East II 
without a competitive tender in June 2024 and 
was subsequently amended in December 2024 
to  increase  further  the  amount  of  electricity 
supplied.  Bulgaria  has  taken  measures  to 
liberalise  its  balancing  market  for  electricity 
and  joined  the  PICASSO  balancing  platform  in 
February  2025.  Until  31  March  2025  a  state-
aid  scheme  offsets  industry’s  electricity  prices 
above  90 EUR/MWh.  The  scheme  is  funded  by 
collecting 
inframarginal 
revenues  of 
technology-
electricity  producers  above  a 
specific threshold. The scheme may deter long-
in  energy 
term  contracts  and 
production  and  undermines 
incentives  for 
energy  efficiency  and  flexibility  in  the  private 
sector. 

investment 

the 

integrate 

The  expansion  of  Bulgaria’s  cross-border 
interconnection  capacity  will,  along  with 
the  reinforcement  of  its  national  grid, 
enable  Bulgaria  to  meet  rising  energy 
renewable  energy 
demand, 
production  more  effectively  and  enhance 
grid flexibility. The Nea Santa interconnector 
between  Greece  and  Bulgaria  became 
in  June  2023.  Bulgaria  has 
operational 
achieved  the  15%  interconnection  target  for 
2030 and reports that it already exceeded 20% 
in  2024 (169).  Under  its  recovery  and  resilience 
plan  (RRP),  Bulgaria  will  enable  its  electricity 
transmission system to integrate a cumulative 
new  4 500 MW  of  production  capacity  from 

(168) The process of integrating them into the EU’s single 

market via market coupling is ongoing. 

(169) NECP, p. 328. 

69 

 
 
 
by 

30 June 2025. 

renewable  sources  by  31 March 2026  and  a 
cumulative  1 200 MW  of  additional  net 
interconnection  capacity  with  Romania  and 
Greece 
Prioritised 
implementation  of  the  Project  of  Common 
Interest  Carmen  Smart  Grid  will  reinforce 
cross-border  TSO-TSO  cooperation  and  data-
sharing;  enhance  TSO-DSO  cooperation;  invest 
for 
in  grid  expansion; 
integration  of  new  renewables;  and  improve 
grid stability, security and flexibility. 

increase  capacity 

legal  framework 

Bulgaria  has  made  efforts  to  facilitate 
permitting  for  infrastructure  projects  but 
can  take  further  steps  to  streamline 
procedures  and  improve  the  capacity  of 
local  administrations.  Bulgaria  applies  the 
existing 
to  all  projects, 
including projects of common interest. Specific 
legislation  is  not  in  place  on  new  types  of 
energy  projects  such  as  smart  electricity  and 
gas  grids,  electrolysers,  hydrogen  and  carbon 
dioxide.  Bulgaria 
fully  digitalise 
should 
permitting  procedures;  accelerate  decision-
making  and  consent-obtaining  processes;  and 
improve 
public 
participation. 
continue 
maturing  its  hydrogen  infrastructure  planning 
and  realisation  of  the  interconnection  with 
Greece  (a  project  of  common  interest  and  a 
priority investment under the CESEC High-Level 
Group). 

effectiveness 

Bulgaria 

should 

the 

of 

of 

light 

remaining 

In 
challenges 
(especially high electricity prices) Bulgaria 
needs to  take steps to support  non-fossil 
flexibility.  One  turbine  of  the  Chaira  Hydro-
Pump  Storage  Power  Plant  was  repaired  in 
2024,  bringing  back  170  MW  of  flexible 
generation.  Bulgaria  is  exploring  solutions  to 
repair the other three turbines by 2026 in order 
to  restore  the  power  plant’s  full  capacity  of 
800 MW.  Under  its  RRP,  Bulgaria  will  by  2026 
deploy  at  least  350 MW  of  electricity  storage 
coupled  with  renewable  energy  production 
(C4.I6)  and  at  least  3000  MWh  of  grid-scale 
battery storage systems (C4.I8). Bulgaria needs 
to 
technical 
framework  for  the  participation  of  non-fossil 
flexibility  such  as  demand  response  and 
storage  in  all  wholesale  markets.  Bulgaria 

regulatory  and 

improve 

the 

registered  11  instances  of  negative  prices  on 
the day-ahead market (170). 

removing  barriers 

Bulgaria  could  do  more  to  empower 
to 
consumers  by 
demand  response,  energy  communities, 
dynamic  pricing  and  smart  grids.  The  roll-
out  of  smart  meters  is  still  below  10%. 
Together  with  fully  regulated  household  retail 
tariffs, this hinders the introduction of dynamic 
offers. A national framework for renewable and 
citizen  energy  communities  has  existed  since 
2023. However, the fact that only three energy 
communities  are 
in  Bulgaria 
underlines the scope for further policy action to 
remove barriers and improve the attractiveness 
of these regulatory opportunities. 

registered 

In  2023,  electricity  accounted  for  27.4% 
of  Bulgaria’s  final  energy  consumption 
(FEC)  (above  the  EU  average  of  22.9%) 
and  this  share  has  slightly  increased  in 
the last decade (171). Electricity accounted for 
51.7%  and  31.9%  of  households’  and 
industry’s  FEC  respectively 
(see  also  the 
Effective  Institutional  Framework  Annex).  For 
the  transport  sector,  this  share  remained 
negligible  at  1.0%.  Further  electrification 
across  sectors  will  contribute  to  the  cost-
effective  decarbonisation  of  the  economy  and 
renewable 
improve  access 
generation.  

to  affordable 

Renewables and long-term 
contracts 

Installed  renewables  capacity  in  Bulgaria  grew 
by  16%  in  2024,  the  total  renewable  energy 
capacity thus reached 7177 MW (see Graph X). 
The  deployment  of  solar  slowed  down 
compared  to  previous  years  reaching  a  total 
installed capacity of 3908 MW in 2024 (+1000 
MW,  a  34  %  increase  compared  to  2023).  In 

(170) ACER, Occurrences of day-ahead negative prices in EU 

bidding zones – 2023. 

(171) The CAGR (compound annual growth rate) was 0.0% 
between 2013 and 2023. The minimum/maximum 
shares were 25.9% and 27.4% respectively. 

70 

 
 
contrast,  wind  installed  capacity  in  Bulgaria 
stagnated at 704 MW since 2019 (172). 

Graph A8.3: Bulgaria's installed renewable 
capacity (left) and electricity generation mix 
(right) 

sources 

energy 
for  31% 

Renewable 
(RES) 
of  Bulgaria’s 
accounted 
electricity  generation  in  2024  (the  EU’s 
overall RES share was 47% (173). Bulgaria’s 
2030  target  for  renewable  energy  in  its  NECP 
is set at 34.96%, exceeding the ambition set by 
the  Renewable  Energy  Directive 
(33%). 
Investment 
(including 
distribution)  and  storage  is  needed  in  order  to 
facilitate the access of renewables to the grid. 

capacity 

grid 

in 

in 

took  steps 

administrative 

legislation  on 

Bulgaria 
to  better  coordinate 
permitting for renewable projects and to make 
it simpler and faster, but there is still room for 
improvement 
capacity, 
streamlined  procedures  and  digitalisation. 
Bulgaria  made  progress  in  aligning  national 
permitting 
renewables  with 
Commission  Recommendation  EU 2024/1343. 
Changes  in  the  Renewable  Energy  Act  and  a 
new ordinance (174) of the regulator accelerated 
permit-granting  and  decreased  administrative 
burdens  for  renewable  projects 
(including 
energy  storage).  A  presumption  of  overriding 
public  interest  for  renewable  energy  projects 
does not exist in Bulgarian legislation. Bulgaria 
has  not  outlined  measures  to  increase  the 
visibility of renewable projects. There is limited 
for 
use  of  power  purchase  agreements 
renewable energy. 

“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Ember 

Energy efficiency 

In 

primary 

transport 

Energy  efficiency  gains  have  improved  in 
Bulgaria, but there is still large untapped 
energy 
2023, 
potential. 
consumption  (PEC)  decreased  by  12.5%  to 
16.58  Mtoe.  Final  energy  consumption  (FEC) 
decreased  by  3.4%  to  9.59 Mtoe.  Compared 
with  2022,  FEC  decreased  in  almost  all  main 
sectors  except  for 
(where  FEC 
increased by 2.1%). In the industrial sector, FEC 
decreased by 9.2%, in residential by 4.2% and 
in services by 8%.  Bulgaria’s 2030 target PEC 
contribution of 13.19 Mtoe, as indicated in the 
NECP,  aligns  with  the  EED  recast  Annex  I 
(Reference 
formula 
Scenario)  and  14.20  Mtoe  (Updated  Reference 
Scenario).  However,  Bulgaria’s  NECP  2030 
target  for  FEC  contribution  of  8.82  Mtoe  falls 
short of the 8.42 Mtoe EED expectation. 

results:  13.71  Mtoe 

Bulgaria  should  take  measures  to  reach 
its  2030  reduction  target  for  energy 
consumption of buildings by 251 ktoe that 
was set in its latest long-term renovation 
strategy  (LTRS).  Between  2021  and  2030, 
Bulgaria  plans  to  renovate  about  8%  of  the 
total floor space of buildings and to save about 
2.9 TWh 
CO2 
and 
emissions. However,  FEC 
in  the  residential 
sector  increased  by  6.15%  between  2022  and 
2023  (climate-corrected  data).  Heating  and 
cooling  represent  the  highest  share  of  FEC  in 
residential  buildings  (at  about  67%).  The 

around  1.3 Mt 

of 

(172) Renewable capacity statistics 2025, IRENA 

(173) Yearly electricity data, Ember. 

(174) Ordinance No. 6 of March 28, 2024, on the Connection 
of Objects to the Electrical Networks by the Energy and 
Water Regulatory Commission (KEVR). 

71 

 
 
 
climate-corrected  FEC for space heating in the 
residential  sector  has  been  on  a  slight 
downward trend since 2020 (according to data 
until 2022). 

(i) residential; (ii) public; and (iii) manufacturing, 
trade and services sectors (C4.I11). 

of 

renewable 

The limited nature of data on heating and 
cooling  prevents  a  full  and  proper 
assessment 
energy’s 
potential  in  the  sector.  Bulgaria  has  not 
provided  a  comprehensive  assessment  on 
heating and cooling that identifies the potential 
of  high-efficiency  cogeneration  and  efficient 
district heating and cooling (as required by the 
recast  EED).  The  share  of  heat  pumps  for  the 
supply  of  energy  for  heating  and  cooling  is 
reported  at  just  3%,  compared  with  37%  for 
heating boilers (including biomass boilers). The 
residential  electricity-to-gas  price  ratio  has 
decreased  by  40%  over  the  past  five  years, 
making  heating  with  heat  pumps  financially 
attractive. In 2023 61% of households had an 
air  conditioner (175),  but  data  on  their  use  for 
space heating are not available (176). 

schemes 

promoting 

investments 

Bulgaria’s  national  financing  framework 
for  mobilising 
in  energy 
efficiency  is  mostly  composed  of  grants 
but it does not leverage sufficient private 
continued 
funding. 
In  2024,  Bulgaria 
implementing 
the 
renovation  of  the  public  and  commercial 
building  stock.  It  introduced  a  new  scheme 
targeting 
the  private  residential  segment. 
However, Bulgaria needs to leverage additional 
private  funding,  in  particular  by  supporting 
energy  services  as  a  key  market-enabler  for 
energy  efficiency  improvements.  The  building 
and  industry  sectors  have  the  greatest  access 
to funding programmes. Under its RRP, Bulgaria 
executed reforms which enable Energy Service 
Companies  (ESCO)  models  (C4.R4);  facilitate 
investment  in  energy  efficiency  renovations  in 
residential  buildings  (C4.R2)  and  reduce  the 
administrative  burden  linked  to  renovations 
(C4.R5). Under its RRP, Bulgaria will increase by 
30%  the  energy  efficiency  of  street  lighting 
systems  (C4.I3)  and  building  stocks  in  the 

(175) Bulgarian National Statistical Institute, Availability of 

Durables, 2023. 

Security of supply and 
diversification  

the 

LNG 

terminal 

Bulgaria  has  not  yet  phased  out  Russian 
it  has  made  efforts  to 
fuels,  but 
strengthen 
supply  and 
security  of 
diversify  its  natural  gas  sources  through 
infrastructure  investments.  Following  the 
expiry  of  the  Ukraine-Russia  agreement  for 
transit  of  gas,  Bulgaria  became  the  only  entry 
point for Russian pipeline gas into the EU. After 
the  completion  of  the  Interconnector  Greece-
Bulgaria  (ICGB),  Bulgaria  took  part  in  the 
in 
of 
finalisation 
Alexandroupolis 
in  2024.  Bulgaria  should 
accelerate  the  delayed  realisation  of  the 
project  of  common  interest  to  expand  the 
capacity of the Chiren underground gas storage 
to  1 bcm  in  view  of  its  relevance  for  regional 
security of supply. Bulgaria should support the 
upgrade  of  the  ICGB  (phase  II),  which  is  a 
priority  project  under  REPowerEU  and  the 
CESEC  High-Level  Group  and  which  will  allow 
increased flows from TAP and LNG terminals in 
Greece.  The  Bulgarian  authorities  and  the  gas 
TSO  should  maximise  the  use  of  existing 
infrastructure  essential  for  the  security  of 
supply  of 
region. 
Bulgarian  stakeholders  should  deliver  on  the 
commitment in the CESEC High-Level Group to 
harmonise  different  gas  quality  standards, 
which are currently impeding the full usage of 
the  Trans-Balkan  pipeline.  Between  August 
2022  and  November  2024,  Bulgaria  reduced 
its  gas  demand  by  14%,  just  below  the  15% 
voluntary 
the 
Council (177).  Bulgaria terminated its  temporary 
exemption  from  EU  sanctions  on  Russian  oil 
imports  in  March  2024  –  nine  months  before 
its expiry. 

the  south-east  Europe 

recommended  by 

target 

Bulgaria’s  Kozloduy  nuclear  power  plant 
operates  two  VVER-1000  reactors,  which 

(176) Eurostat, Disaggregated final energy consumption in 

(177) Council Regulation (EU) 2022/1369 of 5 August 2022 on 

households, data for 2022. 

coordinated demand-reduction measures for gas 

72 

 
 
 
tariffs for CHP and district heating and  (ii)  the 
systematically  renewed  order  of  the  state  for 
the  purchase  of  electricity  from  TPP  "Maritsa 
East  II".  Additionally,  Bulgaria’s  2023  Effective 
Carbon Rate (183) averaged EUR 65 per tonne of 
CO₂,  below  the  EU  weighted  mean  of  EUR 
84.80 (184). 

fuel, 

contribute  close  to  one  third  of  the 
national electricity generated. To phase out 
Russian  nuclear 
the  plant  signed 
diversification  agreements  with  Westinghouse 
and  Framatome  for  alternative  fuel  supplies. 
The new Westinghouse design fuel was loaded 
in  Unit 5  in  May  2024.  The  first  delivery  of 
Framatome  fuel  assemblies  is  expected  in 
November 2025. It is important for Bulgaria to 
develop  a  national  plan  to  fully  phase  out  its 
dependency  on  Russian  nuclear  fuel,  as 
foreseen by the REPowerEU  Roadmap  adopted 
on  6  May  2025.  The  government  has 
announced  that  work  will  start  on  two  new 
reactors  (AP1000)  at  the  existing  nuclear 
installation.  The  first  of  these  is  planned  for 
commissioning after 2030.  

Despite progress in renewables, Bulgaria’s 
overall  energy  mix  in  2023  remained 
heavily reliant on fossil fuels. Oil accounted 
for  27.4%  of  gross  inland  consumption,  coal  
for  21.3%  and  natural  gas  for  12.4%   (178), 
while  renewables  (and  biofuels)  contributed 
14.4% (179). Nuclear accounted for 24.2%. 

Fossil fuel subsidies 

In  2023,  environmentally  harmful  (180)  fossil 
fuel  subsidies  without  a  planned  phase-out 
(181)  of 
before  2030  represented  0.82% 
Bulgaria’s  GDP  (182),  above  the  EU  weighted 
Income/price  support 
average  of  0.49%. 
accounted  for  99%  of  this  volume  while  the 
remaining share were tax measures. Fossil fuel 
subsidies  without  a  planned  phase-out  before 
2030 and which do not specifically address, in 
a  targeted  way,  energy  poverty  nor  genuine 
energy  security  concerns  include  (i)  feed-in 

(178) Electricity and heat are excluded in order to avoid 

double-counting. The focus is on primary energy sources. 

(179) Gross inland consumption (Eurostat). 

(180) FFS that incentivises maintaining or increasing in the 
availability of fossil fuels and/or use of fossil fuels. 

(181) Ratio denominator is based on volumes cross-checked 

(183) The Effective Carbon Rates is the sum of carbon taxes, 

with Bulgarian authorities. 

(182) Ratio numerator is based on 2023 Gross Domestic 
Product at market prices provided by Eurostat. 

ETS permit prices and fuel excise taxes, representing the 
aggregate effective carbon rate paid on emissions. 

(184) OECD (2024), Pricing Greenhouse Gas Emissions 2024 

73 

 
 
 
Table A8.1:  Retail energy price components for household and non-household consumers, 2024 

(i) For household consumers, consumption band is DC for electricity and D2 for gas. Taxes and levies are shown including VAT. 
(ii) For non-household consumers, consumption band is ID for electricity and I4 for gas. Taxes and levies are shown excluding VAT 
and recoverable charges, as these are typically recovered by businesses. 
Source: Eurostat 

74 

20212022202320242021202220232024Household consumer - Electricity retail price (EUR/KWh)0.1057          0.1120              0.1165              0.1201          0.2314              0.2649          0.2877          0.2879          Energy & supply [%]57.5%49.1%46.9%56.1%36.6%54.3%55.6%47.8%Network costs25.8%34.2%36.5%27.2%26.7%25.3%24.8%27.2%Taxes and levies including VAT16.7%16.7%16.7%16.7%36.7%20.3%19.6%25.0%VAT16.7%16.7%16.7%16.7%14.5%13.4%13.8%14.6%Household consumer - Gas retail price0.0538          0.0969              0.0792              0.0634          0.0684              0.0948          0.1121          0.1128          Energy & supply61.3%80.7%67.0%59.1%43.7%61.0%64.5%53.9%Network costs26.6%15.2%19.8%24.1%22.5%17.3%17.1%18.3%Taxes and levies including VAT12.1%4.1%13.1%16.7%33.8%21.7%18.4%27.8%VAT16.7%12.5%13.1%16.7%15.5%11.6%10.2%13.6%Non-household consumer - Electricity retail price0.1188          0.1635              0.1366              0.1184          0.1242              0.1895          0.1971          0.1661          Energy & supply72.4%132.3%71.1%77.8%43.0%66.5%63.0%55.8%Network costs12.8%11.3%15.3%14.7%15.8%10.7%11.9%15.5%Taxes and levies excluding VAT-2.3%-72.3%-3.7%-11.1%30.4%9.9%11.2%15.4%Non-household consumer - Gas retail price0.0337          0.0886              0.0516              0.0378          0.0328              0.0722          0.0672          0.0517          Energy & supply76.0%93.0%81.3%75.9%66.2%77.3%77.3%68.7%Network costs5.9%3.3%5.8%6.6%7.7%3.8%5.3%7.1%Taxes and levies excluding VAT1.8%-8.6%0.6%1.1%12.5%6.1%7.3%11.6%Wholesale electrity price (EUR/MWh)211.8261.2104.1102.3111.0233.299.184.7Dutch TTF (EUR/MWh)n/an/an/an/a46.9123.140.534.420172018201920202021202220232024Gross Electricity Production (GWh)45 613           46 838              44 277              40 754           47 568              50 499           40 256           -Combustible Fuels23 633       22 606           21 573           17 827       23 079          26 583       15 831       -Nuclear15 545       16 125           16 555           16 626       16 487          16 462       16 163       -Hydro3 493         5 423             3 383             3 320         5 067             3 833         3 130         -Wind1 504         1 318             1 317             1 477         1 434             1 499         1 584         -Solar1 403         1 343             1 417             1 469         1 467             2 094         3 521         -Geothermal-              -                 -                 -              -                 -              -              -Other Sources34               22                  31                  36               35                  28               26               Gross Electricity Production [%]Combustible Fuels51.8%48.3%48.7%43.7%48.5%52.6%39.3%-Nuclear34.1%34.4%37.4%40.8%34.7%32.6%40.2%-Hydro7.7%11.6%7.6%8.1%10.7%7.6%7.8%-Wind3.3%2.8%3.0%3.6%3.0%3.0%3.9%-Solar3.1%2.9%3.2%3.6%3.1%4.1%8.7%-Geothermal0.0%0.0%0.0%0.0%0.0%0.0%0.0%-Other Sources0.1%0.0%0.1%0.1%0.1%0.1%0.1%-Net Imports of Electricity (GWh)-5 480-7 807-5 810-3 408-8 778-12 195-3 333-As a % of electricity available for final consumption -17.4%-24.9%-18.7%-11.2%-27.7%-39.1%-10.7%-Electricity Interconnection [%]7.1%9.3%9.2%11.3%14.7%23.5%21.2%16.8%Share of renewable energy consumption - by sector [%]Electricity19.0%22.4%23.5%23.6%21.4%20.1%29.4%-Heating and cooling29.9%33.3%35.4%37.2%30.0%31.6%34.9%-Transport7.3%8.1%7.9%9.1%7.6%7.7%8.1%-Overall18.7%20.6%21.5%23.3%19.4%19.0%22.5%-20202021202220232020202120222023Import Dependency [%] 38.2%36.2%37.1%39.7%57.5%55.5%62.5%58.3%of Solid fossil fuels 9.6%10.4%11.6%5.2%35.8%37.2%45.9%40.8%of Oil and petroleum products 97.5%97.2%106.1%101.8%96.8%91.7%97.8%94.5%of Natural Gas 96.4%96.2%106.1%99.7%83.6%83.6%97.6%90.0%Dependency from Russian Fossil Fuels [%]of Natural Gas 75.2%79.8%41.4%0.0%41.0%40.9%20.7%9.3%of Crude Oil0.0%0.0%0.0%0.0%25.7%25.2%18.4%3.0%of Hard Coal84.5%87.9%35.7%0.0%49.1%47.4%21.5%1.0%20172018201920202021202220232024Gas Consumption (in bcm)3.3                 3.1                     2.9                     2.9                 3.3                    2.7                 2.5                 Gas Consumption year-on-year change [%]3.4%-5.5%-7.6%1.3%14.3%-18.3%-8.6%Gas Imports - by type (in bcm)3.3                 3.1                     2.9                     2.9                 3.3                    2.9                 2.5                 Gas imports - pipeline3.3                 3.1                     2.9                     2.9                 3.3                    2.5                 2.3                 Gas imports - LNG0.00.00.00.00.00.40.2Gas Imports - by main source supplier [%]Azerbaijan0.0%0.0%0.0%0.7%8.2%18.9%35.2%Greece0.0%0.1%20.0%21.7%11.3%26.3%17.0%United States0.0%0.0%0.0%0.0%0.0%13.3%1.7%Russia100.0%99.9%79.4%75.2%79.8%41.4%0.0%BulgariaEU 
 
     
 
ANNEX 9: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

Bulgaria  faces  major  challenges  in  climate 
the  wide  climate 
adaptation  such  as 
insurance  coverage  gap  and 
increased 
vulnerability to extreme weather events such 
as heatwaves and heavy rainfall. Bulgaria has 
a  medium  level  of  vulnerability  to  floods  due  to 
the  increase  in  intense  and  frequent  extreme 
weather  events.  These  events  have  also  had  a 
devastating  effect  on  the  economy,  agriculture 
and  the  environment.  Overall,  sustainable  water 
management remains a challenge in Bulgaria. The 
rate  of  compliance  with  the  Urban  Wastewater 
Treatment  Directive  was  31%  in  2020.  Bulgaria 
also  has  the  highest  rate  of  water  loss  in  the  EU 
and  a  deteriorating  public  water 
supply 
infrastructure.  It  records  an  average  of  over  60% 
of  water  loss,  even  reaching  as  much  as  90%  in 
some regions. 

Climate adaptation and preparedness 

Bulgaria is increasingly vulnerable to floods, 
heatwaves  and  droughts.  A  key  concern  is  the 
impact  of  heatwaves  and  droughts.  Central-
eastern  Europe  has  seen  the  highest  annual 
increase  in  vulnerability  to  droughts (185).  The 
average  impact  of  droughts  on  ecosystems  is 
significantly  higher  in  Bulgaria  (7%)  than  it  is  in 
other  EU  countries  (average  4%),  with  only  three 
other  European  countries  having  a  higher 
percentage  impact  area (186).  A  peak  was  reached 
in 2020 when 9.3% of ecosystems suffered from 
severe  drought.  The  impact  of  heatwaves  and 
droughts also extends to wildfires. Between 2006 
and  2023,  wildfires  burned  an  annual  average  of 
over  10 509 ha  in  Bulgaria.  In  2024,  there  were 
133  fires,  significantly  more  than  annual  average 
of  30  in  previous  years.  Under  a  3 °C  climate 
scenario,  heatwaves  that  are  currently  a  once-in-
50-year  event  may  happen  every  3-5  years  in 
Bulgaria (187). 

Sustainable  water  management 
is  also 
important  for  Bulgaria,  as  the country  faces 
increases  in  heavy  precipitation  and  flood 

events.  The  European  Climate  Risk  Assessment 
finds  that  climate  change  is  leading  to increasing 
river floods in the region, and a higher probability 
of  10  for  heavy  rainfalls  in  the  country (188).  A 
notable  example  is  the  impact  of  Storm  Daniel  in 
2023,  which  caused  severe  pluvial  and  fluvial 
floodings in Bulgaria. 

suffered  EUR 5.2 billion 

impact  on 
Climate  risks  have  a  direct 
Bulgaria’s economy and society. It is likely that 
increasing climate stress will produce higher debt-
to-GDP  projections  in  central-eastern  Europe,  as 
well  as  higher  pressure  on  the  already  changing 
demography of the region (189). Between 1980 and 
2023,  Bulgaria 
in 
economic  losses  caused  by  weather  and  climate-
related  extreme  events,  of  which  only  2%  was 
insured.  Bulgaria  has  one of  the  lowest  insurance 
coverage  rates  against  extreme  events  in  the  EU. 
On  the  link  between  climate  change  and  health, 
Bulgaria  also  recorded  around  156  deaths  per 
100 000  citizens  due  to  extreme  heat  for  the 
period 2013-2022, a 5% increase on the previous 
decade.  The  average  exposure  of  older  people  to 
heatwaves in Bulgaria has increased over the past 
decade.  Bulgaria  also  had  the  highest  level  of 
exposure to  wildfire smoke in central  and eastern 
Europe (190). 

Greater  national  policy  action  on  adaptation 
and  preparedness  is  needed  in  Bulgaria.  The 
country has several national governance structures 
in  place,  comprising  a  national  adaptation  plan,  a 
2030  adaptation  strategy,  a  national  expert 
council  on  climate  change,  and  a  climate  change 
coordination  council  as  well  as  a  unified  rescue 
system  and  focal  point  for  environmental  data 
collection  and  reporting.  However,  between  2021 
and  2023  limited  changes  were  made  to  the 
supporting 
national 
adaptation  to  climate  change.  The  Commission’s 
2023  assessment  of  Bulgaria’s  progress  on 
for 
adaptation 
up 
improvement. 
coordination  between  the  competent  national 
authorities,  developing  monitoring  and  modelling 
tools  and  better  reporting  and  planning  at 
subnational  level.  The  Bulgarian  recovery  and 

identifies 
They 

areas 
stepping 

governance 

structures 

several 

include 

(185) EEA, 2024, European Climate Risk Assessment. 

(188) EEA, 2024, European Climate Risk Assessment. p. 66. 

(186) EEA, 2024, Drought impact on ecosystems in Europe, Link. 

(189) EEA, 2024, European Climate Risk Assessment, p. 77. 

(187) PESETA IV, Climate change impacts of heat and cold 

(190) EEA, 2024, Economic losses from weather- and climate-

extremes on humans, p. 1, Link. 

related extremes in Europe, Link. 

75 

 
 
 
 
 
 
several 

resilience  plan  has 
reforms  and 
investments  related  to  adaptation  to  climate 
change.  In  particular,  the  national  action  strategy 
contributing  to  the  2030  targets  of  the  farm  to 
fork  strategy  promotes  adaptation.  Additionally, 
the  fund  to  promote  the  technological  and 
ecological  transition  of  agriculture  has  adaptation 
as  the  central  objective.  These  measures  aim  to 
address  the  challenges  related  to  the  increased 
to 
related 
climate 
sustainable water management and droughts. 

in  particular, 

risks  and, 

Climate adaptation is increasingly tackled at 
subnational  levels,  too.  Around  41.3%  of  the 
population  live  in  areas  covered  by  the  Covenant 
of Mayors for climate & energy, with signatories in 
10  of  the  49  cities  that  made  commitments  on 
adaptation.  Two  cities,  Sofia  and  Burgas,  have 
made  notable  policy  improvements  on  climate 
adaptation,  with  an  adaptation  strategy  for  Sofia 
and  a  vision  to  develop  the  Burgas  municipality. 
This  is  illustrated  in  the  initiatives  to  develop 
training  courses  and  publicity  material  on  climate 
adaptation for both Burgas and Sofia, organised in 
recent years. There is also an increase in projects 
between  Bulgarian  municipalities  and  partners 
from  European  countries  to  discuss  innovative 
measures  to  support  climate  mitigation  and 
adaptation.  13  of  the  294  EU  regions  and  local 
authorities  participating  in  the  EU  Mission  on 
Adaptation are in Bulgaria. 

Water resilience 

In  Bulgaria, 
issues  with  water  resource 
management persist. Large areas of Bulgaria 
are subject to water stress, in particular due 
to  demand  from  energy,  agriculture  and  for 
the public water supply/tourism. These sectors 
are heavily dependent on water supply. The Water 
Exploitation  Index  Plus (WEI+),  which  tracks  water 
use against renewable water resources, measured 
1.2% 
in  2022  (EU  average:  5.2%).  Bulgaria 
reported its second flood risk management plan in 
January  2024  but  has  not  yet  reported  its  third 
river  basin  management  plan.  Based  on  reporting 
in  the  second  river  basin  management  plan,  46% 
of all surface water bodies have a good ecological 
status  and  97%  have  a  good  chemical  status.  An 
analysis  of  the  second  plan  identified  nutrients 
leached  from  agriculture  as  a  major  source  of 
pressure  on  groundwater  and  surface  water.  This 

76 

affects  the  water  status  and  is  one  of  the  main 
reasons  for  failure  to meet the  Water  Framework 
Directive  objectives.  Moreover,  Bulgaria’s  marine 
waters are not yet in a good environmental status. 
It  has  not  yet  communicated  its  programme  of 
measures under the Marine Strategy Directive. 

Bulgaria’s  wastewater  treatment  is  a  cause 
for  concern.  The  Urban  Wastewater  Treatment 
Directive  aims  to  protect  human  health  and  the 
environment  from  the  effects  of  untreated  urban 
waste  water.  Overall,  in  Bulgaria,  the  compliance 
rate  was  31%  in  2020  which  is  the  4th  lowest 
value  in  the  EU.  According  to  data  from  the 
Bulgarian  Water  Association  and  the  World  Bank, 
Bulgaria  ranks  the  highest  in  the  EU  on  water 
losses in the depreciated network, with an average 
of over 60% losses, in places reaching as much as 
90% (191).  Monetary  losses  due  to  leaks  reach 
EUR 140  million.  Measures  to  comply  with  the 
the  Directive  are  therefore 
requirements  of 
essential.  This  is  particularly  important  as  the 
Directive  has  been  revised  to  strengthen  existing 
treatment standards and bring in a new, additional 
treatment  for  micropollutants  in  urban  waste 
water  (192).  To  meet  the  various  environmental 
targets  under the  Water  Framework Directive  and 
the  Floods  Directive,  more  investment  is  needed. 
Bulgaria  has  a  water  investment  gap  of  EUR 439 
(0.52%  of  gross  domestic 
million  per  year 
product),  EUR 239  million  per  year 
just  for 
wastewater  measures  (see  Graph  A9.1).  Drinking 
water  measures  require  an  additional  EUR 31 
million  per  year  and  the  other  aspects  of  the 
Water  Framework  Directive  around  EUR 167 
million per year over existing levels of financing. 

Biodiversity and ecosystems 

The  state  of  nature  and  ecosystems  is  a 
cause  for  concern  in  Bulgaria,  reducing  the 
country’s climate resilience.  Bulgaria is one of 
the most biologically diverse countries in the EU. It 
hosts 92 habitat types and 209 species covered by 
the  Habitats  Directive.  In  2022,  34.9%  of  land  in 
Bulgaria was covered by the Natura 2000 network 

(191) Ivanova, M., 2025, Bulgarian solutions to major water 

problems, Kapital Insights, Link. 

(192) Directive (EU) 2024/3019, of 27 November 2024. The 

deadline for transposition is 31 July 2027. 

 
 
(EU  average:  18.6%).  Including  both  Natura  2000 
and  other  nationally  designated  protected  areas, 
Bulgaria  legally  protects  41%  of  its  land  (EU-27 
average:  26%)  and  8.1%  of  marine  areas  (EU-27 
average:  12%).  The  current  level  of  biodiversity 
financing is estimated at EUR 332 million per year 
(in 2022 prices) in the 2021-2027 period. 62% of 
this 
is  direct  financing  for  biodiversity  and 
ecosystems. To meet the environmental objectives 
on  protecting  and  restoring  biodiversity  and 
ecosystems 
horizontal 
other 
measures,  Bulgaria  has  an  estimated  investment 
gap  of  EUR 1.4  billion  per  year,  corresponding  to 
1.7% of its GDP (see Graph A9.1). 

related 

and 

Graph A9.1: Investment needs and gaps in EUR 
million, in 2022 constant prices 

Source: European Commission, DG Environment, 
Environmental investment needs & gaps assessment 
programme, 2025 update.  

Nature  degradation  creates  significant  risks 
to  the  economy  and  to  competitiveness. 
Several  sectors  such  as  agriculture,  forestry, 
fisheries,  construction,  mining  and  metals,  water 
utilities  and  healthcare  (see  Graph  A9.2)  are 
particularly  dependent  on  ecosystem  services. 
100%  of  the  gross  value  generated  by  these 
sectors 
is  directly  dependent  on  ecosystem 
services. In addition, Bulgaria’s economy is heavily 
dependent  on  ecosystem  services  in  its  supply 
chain,  with  30%  of  the  gross  value  added  highly 
dependent.  This  is  driven  by  a  particularly  high 
degree  of  dependency  in  the  mining  and  oil  and 
gas  sectors.  This  means  that  failure  to  maintain 
the  capacity  of  ecosystems  to  deliver  services 
could  entail  significant  costs  or  even  stop 

77 

in 

production 
these  sectors.  Protecting  and 
restoring key ecosystems would help maintain the 
long-term competitiveness of these sectors. 

Graph A9.2: Direct dependency(1) on ecosystem 
services(2) of the gross value added generated by 
economic sector in 2022 

(1) Dependency based on the sector’s own operations, 
excluding value chain operations within countries and across 
international value chains. A high dependency indicates a high 
potential exposure to nature-related shocks or deteriorating 
trends, which means that the disruption of an ecosystem  
service could cause production failure and severe financial 
loss. 
(2) Ecosystem services are the contributions of ecosystems to 
the benefits that are used in economic and other human 
activity, including provisioning services (e.g. biomass 
provisioning or water supply), regulating and maintenance 
services (e.g. soil quality regulation or pollination), and cultural 
services (e.g. recreational activities). 
Source: Hirschbuehl et al., 2025, The EU economy's 
dependency on nature, Link. 

Sustainable agriculture and land use 

Bulgaria’s  carbon  removals  fall  short  of  the 
level  of  ambition  needed  to  meet  its  2030 
target  for  land  use,  land-use  change  and 
forestry 
(LULUCF).  Forests  and  grassland 
management  play  a  key  role  in  Bulgaria  in 
removing  carbon  through  land  use.  The  main 
contributions  to  carbon  removals  are  from  forest 
afforestation/reforestation. 
management 
fallen 
However, 

removals  have 

total  net 

and 

 - 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000BiodiversityWaterBaselineGap0%20%40%60%80%100%AgricultureForestryFishery and acquacultureMining and metalsConstructionWater utilitiesHealthcare deliveryAviation travel and tourismFood beverages and tobaccoSupply chain and transportPublic services and othersElectricityChemical and materials industryElectronicsOil and gasReal estateHeat utilitiesAutomotiveRetail consumer goods and…Information technologyBanking and capital marketsInsurance and asset…Digital communicationsHighMediumLow 
   
   
LULUCF 

its  2030 

from  -16.3  million  tonnes  of  CO2  equivalent 
(CO2eq)  in  2005  to  -9.5  in  2022.  This  indicates  a 
long-term  deterioration  of  the  situation,  despite 
net removals remaining broadly stable since 2016. 
To  meet 
target,  an 
additional  -1.2  CO2eq  removals  are  needed  (193). 
The  latest  available  projections  show  a  gap  to 
target  of  1.4  million  tonnes  of  CO2eq  for 
2030 (194).  Therefore,  additional  measures  are 
needed  to  reach  the  2030  target.  The  Bulgarian 
national  and  energy  climate  plan  details  further 
territories,  afforestation  of 
action 
in  forest 
recovery  of 
abandoned  agricultural 
wetlands  and  woodland  belts.  It  is  important  for 
Bulgaria  to  systematically  provide  information  on 
the  timeframe  for  implementation,  the  source  of 
funding  and  especially  the  quantified  impact  of 
the measures. 

lands, 

the 

impact 

Bulgaria  is  transitioning  to  a  sustainable 
food  system  by  implementing  policies  to 
reduce 
of 
environmental 
agriculture.  The  utilised  agricultural  area  in 
Bulgaria  decreased  from  5.12  million  hectares  in 
2012  to  5.02  million  hectares  in  2022.  In  2022, 
6.2%  of  agricultural  land  had  landscape  features 
such  as  woods  and  non-productive  grasslands, 
above  the  EU  average  of  5.6%.  Bulgaria  aims  to 
increase the area under organic farming, which is 
currently  very 
low  (2.25%).  To  mitigate  the 
environmental  impact  of  agriculture,  Bulgaria’s 
common  agricultural  policy  strategic  plan  aims  to 
improve freshwater management through on-farm 
investments 
installations. 
These investments should increase potential water 
savings by 20% and reduce water use by 60% in 
areas  with  water  bodies 
less  than  good 
condition.  Standards  for  good  agricultural  and 
environmental  conditions  set  more  demanding 
basic requirements for farmers that aim to protect 
the  soil,  preserve  soil  potential,  reduce  water 
pollution and increase biodiversity. 

in  existing 

irrigation 

in 

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

Regulation (EU) 2023/839. 

(194) Climate Action Progress Report 2024 COM/2024/498. 

78 

 
 
Table A9.1:  Key indicators for progress on climate adaptation, preparedness and environment 

(1) The data show the average for the timespan 2006-2023 based on EFFIS - European Forest Fire Information System. 
(2) Scale: 0 (no protection gap) – 4 (very high gap). EIOPA, 2024, Dashboard on insurance protection gap for natural catastrophes. 
(3) van Daalen, K. R. et al., 2024, The 2024 Europe report of the Lancet Countdown on health and climate change: unprecedented 
warming demands unprecedented action, The Lancet Public Health. 
(4) This indicator measures total water consumption as a percentage of the renewable freshwater resources available for a given 
territory and period. Values above 20% are generally considered to be a sign of water scarcity, while values equal or greater than 
40% indicate situations of severe water scarcity. 
(5) European Commission, 2024, 7th Implementation Report from the Commission to the Council and the European Parliament on 
the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) (Third River Basin 
Management Plans and Second Flood Risk Management Plans). 
(6) For this indicator, the EU average includes figures for the UK under the previous configuration, EU-28. 
(7) European Commission, 2023, EU Bioeconomy Monitoring System dashboards. 
(8) Nitrates can persist in groundwater for a long time and accumulate at a high level through inputs from anthropogenic sources 
(mainly agriculture). The EU drinking water standard sets a limit of 50 mg NO3/L to avoid threats to human health. 
(9) 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. 
Source: Eurostat, EEA. 

79 

Climate adaptation and preparedness:20182019202020212022202320182021Drought impact on ecosystems0.020.139.330.813.562.496.772.76[area impacted by drought as % of total]Forest fires burned area (1)10 509     10 509     10 509     10 509     10 509     10 509     [ha, annual average 2006-2023]Economic losses from extreme events-           -           6              2              40            23            24 142       62 981       [EUR million at constant 2022 prices]Insurance protection gap (2)----1.75         1.63         [composite score between 0 and 4]Heat-related mortality (3)156          156          156          156          156          [number of deaths per 100 000 inhabitants in 2013-2022]Sub-national climate adaptation action38            36            36            37            38            41            4144[% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:20182019202020212022202320182021Water Exploitation Index Plus, WEI+ (4)0.81.01.00.91.2-4.54.5[total water consumption as % of renewable freshwater resources]Water consumption976          970          915          976          1 055       -           [million m3]Ecological/quantitative status of water bodies (5)[% of water bodies failing to achieve good status]Surface water bodies-------59%Groundwater bodies-------93%Biodiversity and ecosystems:20182019202020212022202320182021Conservation status of habitats (6)12.2-----14.7-[% of habitats having a good conservation status]Common farmland bird index------72.274.42000=100Protected areas---4141--26[% of terrestrial protected areas]Sustainable agriculture and land use:20182019202020212022202320182021Bioeconomy's added value (7)4 001       4 225       4 471       5 335       634 378     716 124     [EUR million]Landscape features----6              -[% of agricultural land covered with landscape features]Food waste--10810393-[kg per capita]Area under organic farming2.62.32.31.72.27.99-[% of total UAA]Nitrogen balance61.828.854.235.038.7-[kg of nitrogen per ha of UAA]Nitrates in groundwater (8)29.829.530.530.5--[mgNO3/l]Net greenhouse gas removals from LULUCF (9)9 872-       9 586-       9 605-       9 579-       9 540-       -           256 077-     240 984-     [Kt CO2-eq]BulgariaEU-27BulgariaEU-27BulgariaEU-27BulgariaEU-27 
 
 
  
 
FAIRNESS 
ANNEX 10: LABOUR MARKET 

labour  market 

Bulgaria’s 
is  marked  by 
growing  employment  –  surpassing  pre-
pandemic 
levels  –  and  strong  wage 
increases.  However,  the  country  continues  to 
struggle with structural challenges that negatively 
impact  its  competitiveness  and  undermine  its 
economic growth potential. They include: i) adverse 
demographic developments; ii) migration of talent; 
iii)  skills  shortages  in  the  face  of  the  twin  green 
and  digital  transition;  iv) underrepresentation  of 
some groups due to low capacity of active labour 
market  policies,  particularly  Roma,  persons  with 
disabilities,  young  people  and  people  with  low 
levels  of  education;  and  v) stark 
regional 
disparities.  As  Bulgaria  is  progressing  well  on  its 
2030 employment rate target of 79%, it is crucial 
that  the  country  fosters  a  resilient  and  more 
inclusive  labour  market  and  supports  economic 
growth by means of i) expanding the workforce by 
activating  underrepresented  groups;  ii) addressing 
skills  and  labour  shortages;  iii)  preparing  the 
labour  force  for  the  twin  transition;  and  iv) 
increasing productivity and job quality. 

is 

Bulgaria’s  labour  market  performs  strongly 
but 
shrinking 
characterised  by  a 
workforce.  The  employment  and  activity  rates 
rose to historically high levels, reaching 76.8% and 
80.1%  in  2024,  respectively  against  EU  averages 
of  75.8%  and  80.4%,  with  Bulgaria  closing  in  on 
its  2030  employment  target  of  79%  (see  Social 
Scoreboard  in  Annex  13).  However,  the  total 
number  of  people 
in  employment  follows  a 
negative trend mainly due to adverse demographic 
change,  with  a  decline  of  3%  in  the  working-age 
population  between  2019  and  2023.  The 
unemployment rate remained low (4.2% in 2024), 
(5.9%),  following  a 
below 
continuous  downward  trend  in  recent  years.  The 
labour market slack (195) continues to decline (from 
6.9%  in  Q3-2023  to  6%  in  Q3-2024),  remaining 
well below the EU  average of 10.1% in Q3-2024. 
This  decrease  was mainly  due  to  a  lower  number 
of unemployed and fewer people available to work 
(but  not  seeking).  The  job  vacancy  rate  has  been 
consistently  low  for  the  last  10  years;  it  stood  at 
0.8%  in  2024,  1.6 percentage  points  (pps)  below 
the EU average and is one of the lowest in the EU. 

the  EU  average 

(195) Labour market slack refers to all unmet needs for 

employment, namely representing the extent to which labour 
supply exceeds labour demand in the short run. 

80 

In 

has 

2024, 

Employers  report  significant  labour  needs  in 
the  short  and  long  term,  but  overall  labour 
demand 
a 
decreased. 
comprehensive  annual  employers’  survey  (196) 
suggested  that  the  demand  for  workers  had 
remained  high,  with  an  estimated  total  need  of 
over  260 000  additional  workers  (9.3%  of  the 
workforce), only 2.6% less than what was reported 
in  2023.  However,  the  number  of  published  job 
vacancies  decreased 
in  2023  and  2024. 
Nonetheless,  the  share  of  employers  expecting 
labour  shortages  to  limit  their  production  was 
above  the  EU  average  in  Q4-2024,  standing  at 
43.8%  for  construction,  39.9%  for  industry  and 
29.4% for the service sector (197). Growing deficits 
have  emerged  for  certain  occupations,  including 
some in sectors with low pay and difficult working 
conditions  The  most  requested  occupations  were 
accounting clerks, office professionals, researchers 
and  engineers,  teachers,  nurses  and  personal 
service  workers (198).  Skills  shortages  reported  by 
the  Bulgarian  employers  relate  to  structural 
the  education  system,  and 
challenges  with 
deficiencies  in  upskilling  and  reskilling  the  labour 
force. 

The strong overall performance of the labour 
market 
is  accompanied  by  pronounced 
regional  disparities.  The  Severozapaden  region 
had  the  lowest  employment  rate  with  67.2%  in 
2023  (20-64  age  group),  while  the  Yugozapaden 
region  (thanks  to  the  strong  economy  of  the 
capital  city  Sofia)  was  the  best  performer  with 
80.5%, surpassing the 2030 national target (79%) 
(see  Graph  A10.1).  In  Q4  2024,  the  average 
monthly  wages  varied  from  EUR 968  in  the 
Severen tsentralen region (followed closely by the 
the 
Severozapaden  region)  to  EUR 1 533 
Yugozapaden  region (199).  Similarly,  in  terms  of 
activity  rates,  the  Severozapaden  region  is  the 
worst performer, with 72.9% and the Yugozapaden 
region  reports  the  highest  rate  at  83.3%.  Over 
recent  years,  regional  disparities  in  terms  of 
employment  levels  and  job  opportunities,  as  well 

in 

(196) https://www.az.government.bg/pages/prouchvane-

potrebnosti-2024/ 

(197) ECFIN European Business and Consumer Surveys. 

(198) EURES - Countries and occupations | CEDEFOP. Data from 

January to September 2024. 

(199) Average monthly wages per region, National Statistical 

Institute data. 

 
 
 
 
 
 
 
in 

to 

the 

the  gap 

as wage levels show little signs of improvement. In 
labour  market 
addition 
performance  in  the  Severozapaden  region,  some 
municipalities in the best performing regions such 
as  Yugozapaden  (highly  influenced  by  the  capital 
Sofia)  have  unemployment  rates  that  are  three 
times the national average. This is indicative of the 
considerable  divide 
labour  market’s 
in 
performance between big cities and smaller towns 
and rural areas. 

the 

Graph A10.1: Employment per region, 2008-2024 

market  shares  at  rapid  pace.  Due  to  the  stark 
regional  disparities,  the  minimum  wage  is  around 
60%  of  the  average  salary  in  the  Severozapaden 
region and below 40% of the average salary in the 
Yugozapaden  region.  Despite  hourly  labour  costs 
recording  double-digit  growth  in  2022  and  2023, 
Bulgaria continues to be one of the Member States 
with  the  lowest  labour  costs,  more  than  three 
times 
the  EU  average.  Labour 
productivity  (GDP  per  hour  worked)  has  been 
growing  in  the  last  10 years  (except  for  2023), 
averaging  2.4%  growth  over  this  period  and  it 
in  2024 (201).  However,  the 
improved  further 
nominal  labour  productivity  remains  among  the 
lowest in the EU. 

lower 

than 

% of population 20-64 
Source: Eurostat, LFS [lfst_r_lfe2emprt] 

While remaining among the lowest in the EU, 
wages  and  labour  costs  continue  to  grow, 
outpacing  inflation  and  labour  productivity 
growth.  Despite  the  disinflation  (from  13%  in 
2022 to 8.6% in 2023 and 2.6% in 2024), wages 
kept growing rapidly in 2023 and 2024, driven by 
increases in public sector wages and the minimum 
In  2023,  the  government  adopted  a 
wage. 
mechanism  setting  the  statutory  minimum  wage 
at  50%  of  the  average  gross  wage  for  the  past 
12 months. This led to a sharp increase of 19.6% 
in  2024  (setting  the  minimum  wage  at  EUR 551) 
and  an  increase  of  15.4%  for  2025,  outpacing 
inflation.  Real  wages  grew  by  6.4%  in  2024  and 
are  expected  to  increase  by  8.4%  in  2025,  after 
moderate growth, but which is still higher than the 
EU average growth rates in 2022 and 2023 (1.4% 
and  4.7%,  respectively)  (200).  The  strong  increases 
in  wages  in  recent  years  have  pushed  up  unit 
labour  costs  more  than  in  other  EU  Member 
States. However, unit labour costs remain at a very 
low  level  and  Bulgaria  continues  to  gain  export 

considerably 

The  relatively  high  employment  rate  is  not 
evenly  distributed  and  vulnerable  groups 
experience 
higher 
unemployment  rates.  Young  people,  persons 
with  disabilities,  those  with  lower  educational 
attainment  and 
face  difficulties 
the  Roma 
integrating into the labour market. While the share 
of  young  people  (15-29)  neither  in  employment 
nor in education and training (NEET) is declining in 
line  with  the  overall  trend  in  the  EU,  it  remained 
high  at  12.7%  in  2024  (1.7 pps  above  the  EU 
average). However, the decline is not equal for all 
groups.  52%  of  young  persons  with  disabilities 
were NEET in 2022 (202). The disability employment 
gap has also been consistently one of the highest 
in  the  EU  (except  for  2021),  standing  at  35.4 pps 
in  2024  (vs  EU:  24 pps),  a  5.9 pps  increase  from 
2022 (see Graph A10.2).  So far, Bulgaria has not 
set  an  employment  target  for  persons  with 
disabilities. Employment outcomes are closely tied 
to  educational  attainment.  The  employment  rate 
for  people  with  at  most 
lower-secondary 
education,  at  48.5%, is  around  42 pps lower  than 
for  those  with  tertiary  education  (compared  to  a 
27.8 percentage  point  gap  in  the  EU  on  average) 
(see  Graph  A10.2).  The  Roma  are 
facing 
substantial challenges in gaining employment with 
only 47% in employment while the share of Roma 
women in employment is two times lower than for 
Roma men (31% vs 63%) (203). 

(201) See National Statistical Institute’s annual data. 

(202) European comparative data on persons with disabilities - 

(200)Based on the European Commission Autumn 2024 economic 

forecast. 

Publications Office of the EU 

(203) FRA Roma Survey 2021. 

81 

56586062646668707274767880828420082009201020112012201320142015201620172018201920202021202220232024BG31 SeverozapadenBG32 Severen tsentralenBG33 SeveroiztochenBG34 YugoiztochenBG41 YugozapadenBG42 Yuzhen tsentralen2030 employment rate target 
   
 
 
 
facilities 

overall, 

(particularly 

challenges 

their  working 

to  decide  on 

While  women’s  participation  in  the  labour 
market  remains  consistently  above  the  EU 
average 
remain, 
especially  concerning  the  gap  in  wages  and 
in  management 
the  share  of  women 
positions.  In  2024,  women’s  participation  in  the 
labour market stood at 73.1% compared to an EU 
average  of  70.8%.  The  gender  pay  gap  has  been 
fluctuating showing  no  an  upward  trend in  recent 
years,  standing  at  13.5%  in  2023  vs  an  EU 
average  of  12%.  The  share  of  women  in  senior 
management positions is improving, but it stood at 
only 18.3% compared to an EU average of 33.8%. 
Contributing  factors  include  workers  having  less 
flexibility 
time 
compared to the EU average, limited availability of 
in  densely 
childcare 
populated  cities) (204),  stereotypes  about  women’s 
family  responsibilities  and  limitations  as  regards 
working hours. The limited capacity and quality of 
childcare  facilities  is  particularly  worrying  as  it  is 
not showing signs of improvement contrary to the 
overall  EU  trend.  With  participation  of  children 
under the age of 3 in formal childcare standing at 
21.2% in 2024, Bulgaria is considerably below the 
EU  average  (39.2%).  All  these  factors  result  in 
women 
in 
professions  with  lower  pay  (e.g.  social  workers, 
waitresses,  hotel  maids  or  cashiers).  Bulgaria 
consistently  reports  the  lowest  share  of  people 
working part-time or on temporary contracts in the 
EU (1.5% vs an EU average of 17.2% in 2024). At 
the same time, the share of involuntary part-time 
employment  in  Bulgaria  was  more  than  twice  the 
EU average in 2024 (38.7% vs 18.2%), suggesting 
that even the modest use of part-time contracts in 
many cases is not to the worker’s benefit. 

job  opportunities 

finding  more 

(204) Education in the Republic of Bulgaria, National Statistical 

Institute, Sofia, 2024. 

82 

Graph A10.2: Employment low-skilled and 
disability employment gap 

Source: Eurostat, LFS [lfsa_ergaed, tepsr_sp200] 

the  negative  growth (206), 

Demographic  decline  is  limiting  Bulgaria’s 
competitiveness  and 
growth  potential. 
Bulgaria lost 19.1% of its working-age population 
between 2011 and 2021, mainly due to migration 
outflows (205)  and  ageing,  with  the  negative  trend 
set  to  continue.  Bulgaria  had  one  of  the  highest 
shares  of  people  aged  65  or  older  in  the  EU  in 
2024 (23.8% vs 21.6% EU average) and the share 
of children (0-14 years) was below the EU average 
(14.1%  vs  14.6%).  In  the  short  term,  despite  a 
slowdown  of 
the 
population  is  expected  to  decline  by  additional 
3.4% by 2027 (207). Long-term projections suggest 
a  further  decrease  of  21%  from  by  2050 (208). 
Despite  subsiding,  outward  migration  of  workers 
and  loss  of  talent  continue  to  be  an  issue,  with 
differences  in  living  standards  in  the  EU  being  a 
major  driver.  Even  with  its  relatively  high  growth 
rate,  the  average  wage  in  Bulgaria  reached  only 
36% of the EU average in 2023, while the labour 
productivity  was  56.3% (209)  and  the  GDP  per 
capita was 64% of the EU average. The disparities 
in  wage 
levels  between  Bulgaria  and  other 
Member States appear to be more pronounced for 

(205) A total of 344 000 people emigrated during that period, 
which was the cause of 40.7% of the decline in the total 
population (see the press release and the Statistical 
reference book for the 2021 census, National Statistical 
Institute, Sofia 2023). 

(206) 2023 and 2024, were the years with the smallest negative 
growth in the last decade: -0.54% and -0.03%, respectively. 

(207) Analytical Report on Labour Market Imbalances, the 
Employment Agency by Metric Analytics (2023). 

(208) See World Health Organisation’s projection at 

https://data.who.int/countries/100. 

(209) Nominal labour productivity per hour worked. 

051015202530354045010203040506020142015201620172018201920202021202220232024Disability gap pps% of ISCED 0-2 age 20-64Share of low-skilled in employment EU-27Share of low-skilled in employmnet BGDisability employment gap EU-27Disability employment gap BG 
 
  
 
jobs (210).  Nevertheless,  Bulgarian 
low-skilled 
citizens  leaving  the  country  are  often  highly 
educated (211),  suggesting  that  Bulgaria  is  also 
losing some of its most skilled workers. Because of 
this  demographic 
situation,  activating  and 
integrating  underrepresented  groups  in  the  labour 
market  is  critical  for  Bulgaria’s  competitiveness 
and  economic  growth,  as  the  shrinking  labour 
force  poses  long-term  challenges.  Some  recent 
positive developments in relation to migration (212) 
suggest  that  efforts  to  attract  workers  to  the 
country  could  be  successful  thanks  to  growing 
wages and might help address the potential labour 
shortages to some extent. 

to 

of 

human 

groups. 

The  public  employment  service  (PES)  has 
but 
implemented  activation  measures, 
further  efforts  will  be  needed  to  boost  its 
capacity and further expand the labour force. 
The investments in and capacity to provide  active 
labour  market  policies  (ALMPs)  in  Bulgaria  is 
among the lowest in the EU, negatively impacting 
vulnerable 
resources 
The 
development  programme  financed  by  European 
Social Fund Plus (ESF+) has set aside a dedicated 
budget 
integrate 
EUR 315  million 
unemployed  or  inactive  young  people  into  the 
labour  market  and  enable  them  to  develop  their 
skills.  Key  strategic  operations  targeted  at  young 
people, unemployed people and inactive people are 
already  being  implemented.  A  data  exchange 
mechanism  to  register  inactive  people  is  being 
prepared,  with  expectations  that  it  would  enable 
the  PES  to  identify,  target  and  support  them  as 
well as include them in the labour market. Further 
development  of  the  network  of  Roma  mediators 
and  the  digitalisation  of  the  PES  (with  support 
from the Recovery and Resilience Facility, the ESF+ 
and the Technical  Support Instrument) could  have 
more impact on the ground. ALMPs in Bulgaria still 
allocate  substantial 
to  subsidised 
employment at the expense of training, while data 
show  that  training  measures  are  the  most 

resources 

(210) Statistics | Eurostat. Largest differences in pay are visible for 
elementary workers and for service and sales. Skilled labour 
is also paid much lower, but the gap is smaller 

(211) Garrote Sánchez, Daniel, Janis Kreuder, Mauro Testaverde, 

‘Migration in Bulgaria: Current Challenges and Opportunities’, 
Social Protection & Jobs, Discussion paper No 2109, World 
Bank Group, Washington, December 2021. 

(212) Data from the National Statistical Institute show a reverse in 
the overall negative migration flow since 2020, with positive 
net migration both for EU and non-EU citizens (see here and 
here). 

83 

effective and should play a more prominent role in 
the  mix  of  ALMPs.  In  addition  to  targeted  ALMPs 
along with upskilling and reskilling, fostering legal 
migration  and  attracting  talent,  particularly  from 
non-EU  countries,  may  be  increasingly  needed  to 
alleviate labour and skills shortages in key sectors 
and bolster Bulgaria’s competitiveness. 

The  workforce  faces  challenges  to  adapting 
to  the  green  and  digital  transitions,  with  a 
growing need for skilled workers in emerging 
sectors.  In  2024,  employment  in  the  country’s 
energy-intensive  industries  represented  3%  of 
total  employment  or  more  than  98 000  (3.5%  in 
the  EU),  with  15 000  employees  to  be  directly 
impacted  by  the  green  transition  in  the  most 
affected  regions  of  Kyustendil,  Pernik  and  Stara 
Zagora. Jobs in the green economy have expanded 
rapidly  – employment in the environmental goods 
and services sector grew by 34.7% between 2016 
and  2022  (one  of  the  largest  increases,  but 
starting  from  a  low  base),  reaching  2.5%  of  total 
employment  (EU:  3.3%)  in  2022.  The  greenhouse 
gas emission intensity of Bulgaria’s workforce has 
improved, decreasing from 17.6 tonnes per worker 
in  2011  to  12.3  in  2023,  in  line  with  the  EU 
average,  suggesting  some  progress  has  been 
made  in  the  green  transition.  As  to  the  digital 
transition,  the  information  and  communication 
technology  (ICT)  sector  remains  underdeveloped, 
with  ICT  specialists  accounting  for  4.3%  of  total 
employment in 2023, compared to 4.8% in the EU, 
due  to,  among  other  things,  a  low  level  of 
enrolment 
in  higher  education  programmes 
preparing  ICT  specialists,  despite  an  increase. 
Nevertheless,  the  number  of  ICT  specialists  grew 
by  13.2%  between  2022  and  2023,  compared  to 
an EU average growth of 4.3%. Also, Bulgaria had 
the highest share of female ICT specialists (29.1% 
vs  EU  19.4%).  Broader  digital  skills  among  the 
working population also lag behind, with 46.4% of 
workers (aged 25-64) having at least basic digital 
skills  (EU  average  64.74%),  while  just  35.5%  of 
the  general  population  meets  this  threshold  (see 
Annex 12). Only 9.1% of Bulgarian businesses with 
10  or  more  employees  provide 
ICT  training, 
against  an  EU  average  of  22.4%.  Moreover,  only 
one  third  of  people  in  Bulgaria  believe  they  have 
the  necessary  skills  to  contribute  to  the  green 
transition (see Annex 12) underscoring the need to 
further 
strengthen  people's  upskilling  and 
reskilling. 

While  wages  have  increased,  a  high  in-work 
poverty  rate,  as  well  as  low  levels  of  adult 

 
 
learning  and  occupational  safety  negatively 
impact on job quality. Despite the rapid growth 
in  2023  and  2024  and  a  projected  considerable 
increase  in  2025,  real  wage  levels  remain  low 
compared to other EU Member States and Bulgaria 
had one of the highest rates of in-work poverty in 
the EU in 2024 at 11.8%, considerably  above the 
EU  average  of  8.2%.  The situation is much  worse 
for  those  working  part-time,  where  the  share  of 
those at risk of poverty reached 30.1%  compared 
to an EU average of 12.6% in 2023. Despite some 
fluctuations,  the  overall  in-work  poverty  rate  has 
been  steadily  rising  over  time.  In  addition,  people 
in  employment  often  have  limited  access  to 
training  courses,  with  only  28%  being  involved  in 
education or training in 2022 (among the lowest in 
the EU), compared to an EU average of 53.9%.  In 
addition, with one of the highest incidence rates of 
fatal  accidents  in  the  EU  in  2022  at  3.33  per 
100 000 employed (twice the EU average of 1.66), 
Bulgaria  has  made  little  progress  in  improving 
safety  at  work  in  the  period  2018-2022.  These 
characteristics  of the labour  market,  coupled  with 
the  poor  outcomes  of  the  education  system, 
undermine  the  potential  to  create  quality  jobs, 
reduce  the  attractiveness  of  employment 
in 
general,  and  negatively  affect  the  quality  and 
jeopardising 
availability  of 
for 
Bulgaria’s  competitiveness  and  potential 
economic growth. 

therefore 

labour, 

84 

 
Graph A11.1: Components of AROPE, 2015-2024 

ANNEX 11: SOCIAL POLICIES 

Social  conditions  are  improving  in  Bulgaria 
as  overall  poverty  has  decreased.  At  the 
same  time  the  country  continues  to  face 
significant  challenges  related  to  very  high 
poverty  and  social  exclusion,  particularly 
among  some  groups,  notably  children.  Income 
inequalities  remain  high,  partially  due  to  the  low 
impact  of  the  tax  and  benefit 
redistributive 
these 
challenges  will 
system.  Addressing 
contribute 
and 
inclusive 
competitiveness.  The  acute  demographic  decline 
raises 
and 
sustainability  of  social  security,  specifically 
pensions,  and  the  care  system.  The 
limited 
capacity  of  the  social  protection  system  and 
uneven  access  to  quality  services  also  pose  risks 
for Bulgaria’s sustainable and inclusive growth. 

adequacy 

concerns 

growth 

the 

for 

to 

Despite  progress,  poverty  and 
social 
exclusion  risks  continue  to  be  widespread. 
The  rate  of  people  at  risk  of  poverty  or  social 
exclusion  (AROPE)  has  been  declining  gradually 
since  2015,  with  an  annual 
increase  of 
0.3 percentage points (pps) in 2023 and a total of 
13.0 pps over this period. This is mainly driven by 
a  reduction  in  the  severe  material  and  social 
deprivation  rate,  which  is  20.2 pps  lower  than  in 
2015.  Conversely,  the  at-risk-of-poverty  rate 
(AROP)  has  largely  stagnated,  only  decreasing  by 
0.3 pps  since  2015  (see  Graph  A11.1).  These 
positive  developments  can  be  attributed 
to 
economic  growth  above  the  EU  average  (2.8%  vs 
1.0% in the EU in 2024) as well as a longer-term 
convergence  process.  However,  poverty  rates 
remain  among  the  highest  in  the  EU,  with  the 
AROPE rate at 30.3% in 2024 (EU: 21.0%), severe 
material  and  social  deprivation  at  16.6%  (EU: 
6.4%),  and  the  AROP  rate  at  21.7%  (EU:  16.2%). 
Persistent  poverty 
risks  are  driven  by  a 
including  unequal 
factors, 
combination  of 
economic  opportunities  and  limited  access  to 
quality  education,  healthcare  and  social  services, 
especially  in  rural  areas  and  for  disadvantaged 
groups,  notably  Roma.  The  number  of  people  in 
AROPE  decreased  by  371 000  since  2019 
(reaching around 2 million in 2024). At the current 
pace, Bulgaria appears to be on track to reach the 
2030  reduction  target  of  787 000  compared  to 
2019.  Still,  continuous  and  sustained  support  is 
important  to  reach  the  national  poverty  reduction 
target by 2030. 

% of total population 
Source: Eurostat, EU-SILC [ilc_peps01n,ilc_li02, ilc_mdsd11, 
ilc_lvhl11n] 

The  risk  of  experiencing  poverty  or  social 
exclusion  is  affected  by  several  factors, 
including  age,  place  of  residence,  disability 
status  and  ethnicity.  In  2024,  people  living  in 
rural  areas  were  almost  twice  as  likely  to  face 
poverty  or  social  exclusion  risks  (at  40.8%)  than 
those  residing  in  cities  (22.1%).  The  AROPE  rate 
was also very high for older people (36.6% vs the 
EU  average  of  19.4%),  and  Roma  people 
(78.3%) (213), and was one of the highest in the EU 
for  persons  with  disabilities  (43.8%).  In-work 
poverty affected 11.8% of the workforce in 2024 
(up  from  11.4%)  vs  8.2%  in  the  EU,  with  large 
differences  across  economic  sectors  and  regions. 
Approximately EUR 632 million from the European 
Social  Fund  Plus  (ESF+)  is  allocated  for  social 
inclusion  and  a  further  EUR 180  million  for 
the  most  vulnerable.  More 
material  aid  to 
sustainable,  holistic  and  multisectoral  initiatives 
could  help  effectively  address  the  challenges 
faced  by  children,  persons  with  disabilities,  Roma 
and the rural population. 

The risk of poverty or social exclusion among 
children  remains  among  the  highest  in  the 
EU.  The  AROPE  rate  for  children  has  increased  to 
35.1% 
(EU:  24.2%),  pointing  to  a 
persistently  critical  situation.  Children  whose 
parents  have  low  levels  of  education  are  more 

in  2024 

(213) Bulgaria National Statistics Institute. 

85 

051015202530354045502015201620172018201920202021202220232024At-risk-of-poverty or social exclusion rateAt-risk-of-poverty rateSevere material and social deprivationPeople living in low work intensity households 
 
   
 
 
 
likely  to  experience  poverty:  more  than  4  in  5 
children from households with a lower educational 
attainment are affected, compared to around 1 in 
8 from households with a high level of education. 
In  2024,  the  proportion  of  materially  deprived 
children  was  18.5%  among  the  Bulgarian  ethnic 
group  and  77.7%  among  Roma (214).  By  2030, 
Bulgaria aims to reduce the number of children at 
risk  of  poverty  or  social  exclusion  by  at  least 
196 750  compared  to  the  2019  level.  In  2024, 
40 000  fewer  children  were  AROPE  compared  to 
the baseline of 434 000, highlighting the need for 
more  support.  To  mitigate  the  impact  of  poverty 
on children, Bulgaria is implementing the European 
Child  Guarantee  (ECG)  according  to  its  national 
action  plan  and  targeted  two-year  operational 
plans.  The  2024  ECG  progress  report  shows 
considerable  progress,  but 
it  also  underlines 
outstanding challenges in terms of proper nutrition 
and  healthy  diet,  affordable  housing  and  the 
accessibility of early childhood education and care. 
The  ECG’s  implementation  is  supported  by  EU 
cohesion  policy  funds  and  the  Recovery  and 
Resilience  Facility  (RRF),  including  through  the 
educational 
construction 
assistance,  food  and  material  support,  and 
integrated services provision.  

kindergartens, 

of 

low 

(S40)  was  particularly 

Despite  improvements  since  2018,  income 
inequality  remained  high.  The  income  of  the 
richest 20% of the population was nearly 7 times 
that of the poorest 20% in 2024. The sum of the 
income  shares  of  the  first  and  second  income 
quintiles 
(17.5%, 
4.3 pps  below  the  EU  average).  It  has  increased 
gradually  but  is  still  far  from  the  pre-2008  value 
(20.6%). The income in the first and second decile 
groups 
increased  by  50-60% 
between  2020  and  2023,  while  in  the  eighth  and 
ninth decile groups, income increased by only 30-
40%. Moreover, income inequality is influenced by 
the  inequality  of  opportunities  in  early  childhood, 
whereby  aspects  such  as parents’  education  have 
a  disproportionate  effect  on  income  prospects 
later  in  life (215).  According  to  a  recent  European 

(the  poorest) 

(214) Self-assessment in survey of applicable ethnic group 

(Bulgarian, Turkish, Roma, etc.), National Statistics Institute. 

(215) Inequality of opportunity in Bulgaria: Policy Note (2024). 

World Bank. Available 
at https://openknowledge.worldbank.org/entities/publication/4
6e9792b-7 879-4354-b1d8-faa7d44986b8. 

86 

Commission  study (216)  on  inequality  trends  post-
2007, the inequality-reducing effect of taxes (see 
Annex 2) and social transfers on income inequality 
(S80/S20) is one of the lowest in the EU (27% vs 
48% for the EU). 

Graph A11.2: Components of energy poverty 2015-
2024 

% of population 
Source: Eurostat, [ilc_mdes01, ilc_mdes07] 

Energy  and  transport  poverty,  coupled  with 
environmental  inequalities,  pose  significant 
challenges  to  the  fair  green  transition.  The 
share  of  the  population  unable  to  keep  their 
homes adequately warm decreased between 2016 
and 2024 (by 20.2 pps, to 19%; see Graph A11.2). 
Nevertheless,  it  remains  significantly  higher  than 
the  EU  average  (9.2%)  and  particularly  high  for 
people  at  risk  of  poverty,  almost  double  the 
national  average, at  37.2%. Arrears on utility bills 
are  also  more  pronounced  than  in  most  other 
Member  States  with  17.6%  of  households  facing 
arrears on utility bills in 2024, a sizeable decrease 
of 16.4 pps compared to the peak of 34% in 2013, 
but still more than double the EU average of 6.9%. 
this,  Bulgaria  has 
To  address 
implemented 
benefiting 
allowances 
targeted 
approximately  340 000  households  annually. 
Long-term  strategies  include  the  renovation  of 
multi-family residential buildings to upgrade them 
to  energy  class  C.  The  updated  national  energy 
and  climate  plan  includes  plans  for  a  knowledge 
centre  on  energy  poverty  but  does  not  include 
specific targets or timelines. Bulgaria has adopted 
a  definition  of  energy  poverty  and  energy 
vulnerability (as part of its recovery and resilience 
plan  (RRP)),  but  the  support  mechanisms  are  still 
under development and more targeted efforts will 
be  necessary,  especially  in  light  of  Bulgaria’s 
commitment  to  liberalising  the  electricity  market. 
In  the  area  of  transportation,  the  share  of  the 

heating 

(216) Economic Inequalities in the EU (2024). European 

Commission: 960863c4-b2b3-45ac-a79b-
e693d5cec7da_en.  

051015202530350510152025303540452015201620172018201920202021202220232024Arrears on utility billsInability to keep home adequately warmInability to keep home adequately warm (EU27)Inability to keep home adequately warm (BG)Arrears on utility bills (EU27)Arrears on utility bills (BG) 
 
   
 
trolleybuses  for 

population who could not afford a car was 10.5% 
in  2024  (vs  EU:  5.6%),  even  more  pronounced 
(22.9%)  for  people  in  AROP.  Reliance  on  private 
cars  for  inland  transport  rose  to  86.9%  in  2022 
(80.6%  in  2011),  exceeding  the  EU  average  of 
83.4%.  In  the  same  period,  the  share  of  trains, 
motor  coaches,  and 
inland 
transport  declined  from  19.4%  to  13.1%.  Overall, 
Bulgaria’s  transportation  infrastructure  and  public 
transportation  system  may  not  be  adequately 
meeting  the  needs  of  its  population,  especially 
lower 
income  households.  On  environmental 
inequalities, the consumption footprint for 20% of 
the  population  with  the  highest  income  was  2.3 
times higher than the footprint of the poorest 20% 
in 2022 (EU: 1.9). 

the 

According 

(19.1%  of 

Despite  recent 
improvements,  the  social 
protection  system  still  has  adequacy  and 
coverage  gaps.  Expenditure  on  social  protection 
benefits is among the lowest in the EU (18.3% vs 
26.8%  of  GDP  in  2023),  especially  on  social 
assistance,  family  benefits  and  unemployment 
benefits. 
benchmarking 
to 
income,  Bulgaria 
framework  on  minimum 
performs  much  worse  than  the  EU  average  in 
terms  of  adequacy 
the  poverty 
threshold  vs  56.3%  for  the  EU  in  2023),  with  an 
observable decrease in the longer term. Moreover, 
only  25.1%  of  the  unemployed  (unemployed  for 
less  than  12  months)  received  unemployment 
benefits in 2024 (EU: 36.6%). The limited capacity 
of  the  system  to  alleviate  poverty  suggest  a 
potential  to  increase  the  efficiency,  coverage  and 
effectiveness.  In  2024,  the  impact  of  social 
transfers (excluding pensions) on poverty reduction 
was  still  limited  at  27.7%,  significantly  less  than 
the  EU  average  of  34.4%.  Some  workers  in  non-
standard  forms  of  employment  (including  certain 
in 
seasonal  workers)  and  the  self-employed 
general  have  little  social  protection  coverage  and 
face  substantially  higher  poverty  and  deprivation 
rates.  The  social  protection  system  has  been 
recently  strengthened  through  the  inclusion  of 
automatic  indexation  mechanisms  and  simplified 
eligibility  criteria,  which  are  expected  to  result  in 
better  adequacy  and  coverage.  The  minimum 
income  reform  (a  deliverable  under  the  RRP),  in 
force  since  June  2023,  has  improved  the  social 
assistance  system  allowing  for  better  adequacy, 
and  larger  coverage  of  a  variety  of  support 
schemes. The take-up of disability-related benefits 
has  increased,  and  their  adequacy  has  been 
improved. Yet, there is scope for further measures 

to  strengthen  access  to  social  protection,  in  line 
with the 2019 Council recommendations (217). 

Demographic 
trends  pose  a  significant 
challenge  for  the  future  adequacy  of  the 
pension system. In 2024, the aggregate pension 
replacement ratio (excluding other social benefits), 
defined  as  the  gross  median  individual  pension 
income (for the 65-74 age group) relative to gross 
median  individual  earnings  from  work  (for  those 
aged  50-59),  decreased  annually  from  0.46  to 
0.44  (below  the  EU  average  of  0.61).  Since  2022 
its  efforts  on 
the  government  has  focused 
improving  the  adequacy  of  the  pension  system 
with  the  latest  indexation  of  11%  taking  place  in 
July 2024. The age cohorts above 65 are expected 
to  account  for  a  greater  proportion  of  the  overall 
population  by  2070,  rising  to  31%  compared  to 
22%  in  2022  (218).  Retaining  older  people  in  the 
labour  market  and  incentivising  them  to  prolong 
to  achieving  a 
their  working 
sustainable  job  market  and  a  balanced  social 
system in the longer term. Yet demographic trends 
will  put  financial  pressure  on  the pension  system, 
the National Insurance Institute calculated that the 
expenditure 
in 
2026/2027  at  11.5%  of  GDP,  and  that  it  would 
then  stabilise  at  around  10%,  but  this  would 
central 
require 
budget (219).  To  compensate  for  the  increased 
costs  and  to  guarantee  the  long-term  financial 
sustainability, a number of recommendations were 
made by the National Insurance Institute, such as 
increasing  pension  contributions,  weighing  in  the 
automatic indexation mechanism, and limiting the 
impact of the special categories of workers. 

for  pensions  would  peak 

transfers 

is  key 

large 

from 

lives 

the 

Amid  a  rapidly  ageing  population,  access  to 
long-term care services for older people and 
persons  with  disabilities  remains  limited.  In 
2022,  spending  on 
in 
Bulgaria was among the lowest in the EU (0.5% of 
GDP  vs  1.7%  in  the  EU).  This  is  reflected  in  the 
very  low  share  of  people  aged  65+  who  receive 
public  home  care  or  residential  care  (0.7%  and 

long-term  care 

(LTC) 

(217) Council Recommendation of 8 November 2019 on access to 
social protection for workers and the self-employed 2019/C 
387/01; Council Recommendation of 30 January 2023 on 
adequate minimum income ensuring active inclusion 2023/C 
41/01. 

(218) 2024 Ageing Report – Country Fiche for Bulgaria. 

(219) Ministry of Labour and Social Policy, Analysis of the 

Mandatory Pension Insurance, 2024. 

87 

 
 
1.1% respectively vs 5.5% and 3.3% in the EU). In 
addition  to  the  challenges  concerning  access  and 
adequacy,  LTC  provision  is  also  hampered  by  the 
shortage  of  social  care  workers,  due  to  factors 
such as ageing and emigration. With the overhaul 
of  social  services  initiated  by  the  Social  Services 
Act  in  2020,  Bulgaria  has  started  to  gradually 
improve its system in an effort to build up access, 
affordability  and  quality.  The  ordinance  on  the 
quality  of  social  services  (2022)  and  the  national 
map  of  social  services 
(2024),  adopted  as 
commitments  under  the  RRP,  will  act  as  the 
in 
future 
cornerstones 
accessibility,  quality  and  attractiveness  of  social 
services,  but  sustained  implementation  is  key. 
Furthermore,  in  March  2024,  the  2024-2030 
strategy  for  human  resource  development  in  the 
social  sphere  was  adopted,  aiming  to  boost  staff 
qualifications, 
tackle 
training,  wages 
shortages.  Funding  from  the  ESF+,  the  European 
Regional  and  Development  Fund,  and  the  RRF, 
together  with  national  co-financing,  of  EUR 790 
million  is  being  channelled  towards  addressing 
issues of quality, access and human resources. 

investments 

and 

for 

Access  to  healthcare  remains  challenging, 
notably  for  vulnerable  groups.  The  self-
reported unmet need for medical care was 1.1% in 
2024,  below  the  EU  average  of  2.5%,  but  the 
burden  falls  disproportionately  on  people  in  the 
lowest  income  group  at  2.7%,  compared  to  0.3% 
in the highest income group,  indicating significant 
socio-economic  disparities  in  healthcare  access. 
Vulnerable  groups  and  people  living  in  rural  and 
remote  areas  often  have 
limited  access  to 
healthcare services, including specialised care and 
emergency  services,  also  due  to  shortages  of 
certain medical professionals (see Annex 14). 

House  prices  have  been  rising  significantly 
(in  2023  they  were  up  87%  compared  to 
2015)  and  are  estimated  to  be  slightly 
overvalued.  In  2024,  house  prices  showed  signs 
of acceleration, growing by 16.5% year-on-year in 
Q3-2024. They are estimated to be overvalued by 
10-15%.  In  2023,  mortgages  grew  by  20.5%, 
while  still  at  a  low  level  in  terms  of  stock,  at 
10.8%  of  GDP.  Furthermore,  the  share  of  the 
population with  a mortgage is very low (1.8%). In 
terms  of  financial  stability,  in  February  2024  the 
European  Systemic  Risk  Board  concluded  that  the 
residential  real  estate  market  in  Bulgaria  was 
subject  to  medium  risks  and  the  macroprudential 

policy  mix  was  only  partially  appropriate  and 
partially sufficient to mitigate the situation (220). 

Graph A11.3: Housing cost overburden 2015-2024 

% of population and % of people in AROP 
Source: Eurostat, [ilc_lvho07a] 

less 

Overall  housing  affordability  has  improved 
amid  strong  growth  of  household  incomes, 
but mounting housing costs and poor housing 
conditions  still  affect  households  in  rural 
areas  and  lower  income  communities.  The 
standardised house price-to-income ratio has been 
steadily decreasing over the past decade as house 
prices  have  grown  significantly 
than 
household  income.  In  2023,  it  stood  at  around 
60%  of  its  long-term  average.  The  ratio  of 
dwellings per capita has increased by nearly 20% 
since  2015  and  is  the  highest  in  the  EU.  This 
reflects  a  dynamic  growth  of  the  number  of 
dwellings  while  population  decreased  (‑8%  since 
2015), though this decline has been slowing down 
in  the  last  years.  The  ratio  of  house  completions 
per  capita  has  also  increased  over  the  past years 
but remains below the EU average. Despite a slight 
decrease  over  the  past  two  years,  residential 
building  permits  stand  above  their  pre-pandemic 
levels. A large portion of the housing stock (40%) 
remains  vacant  in  absence  of  policies  supporting 
return  of  the  vacant  properties  to  the  market. 
Taking into account the cost of mortgage funding, 
the  borrowing  capacity  of  households  improved 
significantly over the last ten years as well. While 
the  rental  market  is  extremely  small,  the  ratio  of 
new rents to incomes also decreased over the last 
decade.  In  2024,  8.%  of  the  population  faced 
housing costs above 40% of their total disposable 
household  income  (net  of  housing  allowances) 
below  the  EU  average  of  8.2%,  it  has  been 
decreasing  in  recent  years,  as  house  prices  have 

(220) ESRB (2024), Follow-up report on vulnerabilities in the 

residential real estate sectors of the EEA countries, February 
2024. 

88 

01020304050602015201620172018201920202021202220232024EU27BGEU27 (AROP)BG (AROP) 
   
 
grown  significantly  less  than  household  income. 
The  ratio  of  new  rents  to  incomes  has  also 
decreased.  For  people  experiencing  poverty  risks, 
this housing cost overburden rate remains close to 
four  times  higher,  driven  by  limited  access  to 
affordable housing. Housing cost overburden rates 
are  also  higher  in  rural  areas  than in  cities  (9.3% 
vs  %).  In  2024,  33.8%  of  people  lived  in  an 
overcrowded household (EU: 16.9%). For people at 
risk of poverty, this percentage rose to 42.9% (EU: 
28.8%).  Despite  an  improvement  of  2.6 pps  since 
2020,  structural  deficiencies  in  dwellings,  such  as 
leaks, damp or rot, affected 8.4% of the Bulgarian 
population in 2023. Furthermore, a relatively  high 
share  of  the  population  and  specifically  those  in 
poverty  lacked  access  to  basic  sanitary  facilities 
such  as  indoor  flushing  toilets  (7%  and  20.6% 
respectively  in  2020).  Despite  plans  to  renovate 
the  building  stock  (see  energy  poverty  above), 
insufficient  structural  and  strategic 
there 
is 
in  terms  of 
in  the  housing  sector 
planning 
accessibility  and  affordability  and 
limited 
piecemeal  social  housing  projects  carried  out  by 
municipalities. 

89 

 
ANNEX 12: EDUCATION AND SKILLS 

and 

and 

digital 

transitions 

Low  levels  of  basic  skills,  inequalities  in 
education,  and  limited  adult  participation  in 
learning  exacerbate  skills  shortages  and 
hinder  Bulgaria’s  competitiveness.  Rapidly 
changing labour market needs, stemming from the 
green 
other 
technological  changes,  together  with  Bulgaria’s 
shrinking workforce, put pressure on the education 
and  training  systems’  ability  to  effectively  equip 
young  people  and  adults  with  the  relevant  skills. 
Weaknesses in skills development start at an early 
age  with 
low  participation  of  disadvantaged 
children  in  quality  early  childhood  education  and 
care  (ECEC).  In  addition,  around  half  of  15-year-
olds  are  failing  to  meet  minimum  standards  in 
basic  skills.  Strong  inequalities  in  education  leave 
3  out  of  4  disadvantaged  pupils  without  basic 
skills, 
their  upskilling 
opportunities  and  employment  prospects  later  in 
life.  The  share  of  adults  engaged  in  learning 
activities  is  very  low.  This  can  be  attributed  to 
limited  access  to  training  opportunities,  including 
online  and  flexible  training,  and  a 
lack  of 
awareness  of  the  value  of  lifelong  learning. 
Moreover,  higher  education  and  vocational 
education  and  training  (VET)  do  not  adequately 
respond  to  labour  market  needs,  leading  to  skills 
mismatches  (221),  exacerbated  by  a  low  share  of 
science, technology, engineering and mathematics 
(STEM)  graduates  and  a low  level  of  digital  skills. 
Major  weaknesses 
in  skills  development  and 
formation  hinder  Bulgaria’s 
human 
potential  for  research  and  innovation,  productivity 
growth and competitiveness. 

negatively  affecting 

capital 

impacts 

Low  participation  of  disadvantaged  children 
in  quality  ECEC 
foundational 
learning  and  increases  inequalities.  In  2022, 
enrolment  was  87.8%  for  children  aged  3  to  the 
starting age of compulsory primary education (EU: 
93.3%). Substantial efforts were made to improve 
participation (222),  including  with  funding  from  the 
European Social Fund Plus (ESF+). However, lack of 
places still affects large urban areas. Participation 
from  disadvantaged 
is 

children 

lower 

for 

backgrounds  and  Roma  (58%  in  2021 (223)),  who 
stand  to  benefit  the most  from  quality  ECEC.  The 
government  has  started  integrating  nurseries  into 
the  education 
the 
system  and 
pedagogical  qualifications  of  childcare  staff,  but 
progress is slow. 

improved 

Lack  of  basic  skills  among  young  people  is 
the main barrier to later skills development. 
In  the  2022  OECD  Programme  for  International 
Student  Assessment  (PISA),  53.6%  of  Bulgarian 
15-year-olds  underperformed 
in  mathematics, 
52.9%  in  reading  and  48%  in  science (224).  These 
rates  are  some  of  the  highest  in  the  EU  and 
significantly above the EU averages (mathematics: 
29.5%, reading: 26.2%, science: 24.2%). Moreover, 
young  Bulgarians  underperform 
38.3%  of 
simultaneously 
reading  and 
in  mathematics, 
science  (EU:  16.1%).  This  points  to  challenges 
stemming  from  the  school  curriculum,  teaching 
quality  and  socio-economic  factors.  Bulgaria  has 
made  efforts  to  identify  and  reintegrate  out-of-
school  children  and  provided  large-scale  remedial 
education  (co-financed  by  ESF/ESF+)  to  students 
at risk of dropping out. Consequently, early school 
leaving  dropped  to  8.2%  in  2024  (EU:  9.3%), 
compared  to  13.9%  in  2019,  although  it  remains 
high in rural areas (17.7%) (225) and for the Roma. 
On the other hand, a strong decline in basic skills 
was  recorded  and  is  of  major  concern.  Compared 
to 2012, low achievement increased by 9.8 pps in 
mathematics  (EU:  7.3 pps),  13.5 pps  in  reading 
(EU: 8.2 pps) and 11.1 pps in science (EU: 7.4 pps). 
These trends show the need for efforts to focus on 
educational outcomes, including by evaluating the 
effectiveness  of  the  remedial  education  provided 
and expanding support to all those in need. 

There  are  large  inequalities  in  educational 
outcomes,  leaving  significant  parts  of  the 
population  behind.  Bulgaria  has  one  of  the 
highest rates of people at risk of poverty or social 
exclusion (AROPE) in the EU (see Annex 11). AROPE 
rates  are  more  than  eight  times  higher  for  the 
lowest-skilled  people  than  for  the  highest-skilled 
(51.6% vs 6.1% in 2024). This leads to educational 
disadvantages  for  a  large  share  of  children  and 

(221) The macroeconomic skills mismatch decreased from 20.5% 
in 2022 to 19.2% in 2024 (in line with the EU average). It is 
measured by an indicator that is based on the dispersion of 
employment rates for different skill groups (skills are 
represented by the level of education - ISCED). 

(222) E.g., preschool education for children aged 4-6 is compulsory, 

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

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

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

Learning and Equity in Education. 

kindergarten fees were eliminated.  

(225) Compared to 10% in towns and suburbs and 4.2% in cities. 

90 

 
 
 
 
 
 
which 

exacerbates 

the  Roma,  which 

students,  particularly 
the 
education  system  struggles  to  overcome.  There  is 
a  high  degree  of  social  segregation  affecting 
schools, 
learning 
disadvantages.  64%  of  Roma  children  aged  6-15 
attend  school  where  all  or  most  pupils  are 
Roma (226).  62%  of  students  from  the  poorest 
quartile  underachieve  simultaneously  in  all  three 
PISA  subjects  (EU:  28.8%).  These  educational 
inequalities  have  negative  implications,  such  as 
the  lower  participation  of  disadvantaged  young 
people  in  higher  education  and  of  less  qualified 
adults  in  lifelong  learning.  This  leads  to  worse 
employment,  career  and  wage  prospects,  which 
hinders productivity and competitiveness. 

The  low  share  of  top-performers  in  basic 
skills and creative thinking limits the pool of 
innovative  talent.  In  PISA  2022,  very  few 
Bulgarian  students  demonstrated  advanced  skills 
in maths (3.1% vs EU 7.9% and 1.4% in science vs 
EU 6.9%). Moreover, Bulgarian pupils proved to be 
the  weakest  in  the  EU  in  creative  thinking  with  a 
top  performance  rate  of  only  7.8%  (EU-23: 
25.1%).  These  challenges  weaken  the  country’s 
innovation  potential. 
lack  of 
excellence  and  insufficient  competences  in  maths 
and  science  are  some  of  the  key  drivers  for  low 
participation  in  higher  education  STEM  subjects, 
alongside poor career guidance.  

In  addition,  a 

tend 

to  score  better 

Bulgaria’s  2016  curricular  reform  did  not 
improvements  to  basic  skills. 
result 
in 
Bulgaria  students 
in 
international  surveys  that  take  into  account  the 
national  curriculum, such as in the TIMMS (Trends 
in  International  Mathematics  and  Science  Study) 
(227)  and  PIRLS  (Progress  in  International  Reading 
Literacy  Study) (228).  By  contrast,  the  PISA  survey 
assesses  how  students  apply  their  skills  and 
knowledge.  The  effectiveness  of 
the  2016 
curricular reform was limited, partly due to a lack 
of  guidance  and  support  for  teachers,  insufficient 
implementation 
teacher 
approaches across regions, and an unalignment of 

inconsistent 

training, 

(226) FRA (2021) Roma survey, Figure 15. 

(227) For example, the average score in mathematics obtained by 
Bulgarian fourth graders was above the EU average for the 
countries surveyed in 2023 (530 and 512.7, respectively). 

assessment  practices (229).  To 
the 
curriculum,  Bulgaria  is  working  on  refining  the 
curricular  framework  for  grades  5-7,  with  EU 
support.  There  are  plans  for  wider  curricular 
revisions. 

improve 

in 

or 

the 

the 

interest 

selective 

comprehensive. 

the  attractiveness  of 

Structural  challenges  for 
teaching 
profession  are  reflected  in  poor  levels  of 
basic  skills.  Bulgaria  has  made  major  efforts  to 
improve 
teaching 
profession and tackle challenges in the sector, but 
there  are  still  major  challenges.  With  Bulgarian 
the  EU (230), 
the  oldest 
teachers  among 
shortages  are  emerging,  including  for  subjects 
linked  to  STEM.  There 
is  no  forecasting  of 
recruitment  needs.  Mechanisms  to  attract  highly 
qualified  teachers  to  poor  performing  schools  are 
insufficient.  Despite  high 
in  teacher 
education programmes (231), admission criteria are 
not 
These 
programmes  do  not  generally  attract  high-
performing  upper  secondary  graduates,  and 
practical learning during initial teacher education is 
limited; large shares of graduates do not enter the 
profession (232). Drop-out among novice teachers is 
high,  partly  due  to 
insufficient  training  and 
support.  Continuous  professional  development  is 
not  based  on  a  robust  assessment  of  teachers’ 
training  needs.  It  is  fragmented  and  lacks  quality 
control (233).  As  a 
result,  making  quality 
improvements  through  teaching  is  challenging. 
Dual  VET  remains  underused  (at  only  9%  of  VET 
students),  due  to  its.  The  employment  rate  of 
recent  VET  graduates  has  dropped  to  66.2%  in 
2024,  now  13.8  pps  below  the  EU  average,  and 
nearly  half  of  them  (and  up  to  2/3  in  some 
regions)  do  no  find  employment (234).  This  has  a 
negative impact on productivity levels. In its 2021-
2030  strategic  framework  for  education  and 
training, Bulgaria has prioritised  VET, and  the RRP 
is investing in the renovation of and equipment for 
VET  schools.  In  addition,  the  ESF+  supports  the 

(229) OECD (2023b) Skills Strategy Bulgaria. 

(230) 49.1% are over 50 (EU 39.8%); 31.4% over 55 (EU 24.8%). 

(231) In 2023, 14% of bachelor students were pursuing a degree 

in education, compared to 11% in 2019. 

(232) World Bank (2020), Bulgaria Teaching Workforce. Policy Note 
and Recommendations and OECD (2023b) Skills Strategy 
Bulgaria  

(233) OECD (2023b) Skills Strategy Bulgaria 

(228) The average reading score of Bulgarian fourth graders was 
540, compared to 527 for the 19 EU countries surveyed in 
2021. 

(234) Bulgarian Institute for Market Economics (2023), Index of the 

Correspondence between Vocational Education and 
Economic Profiles. 

91 

 
 
 
and 

implementation 

extension  of  dual  VET,  the  creation  of  20  sector 
skills  councils  (which  developed  a  new  list  of  VET 
professions) 
of 
the 
modernised  curricula  in  417  VET  schools.  In  the 
VET standards developed in 2022 and 2023, there 
learning 
are  mandatory 
outcomes  relating  to  the  digital  and  green  skills. 
Despite these efforts, there is a need for a greater 
awareness  of  dual  VET, 
career 
orientation  for  learners,  and  a  stronger  role  for 
social  partners  and  other  local  bodies  in  VET  (i.e. 
employers, trade unions, municipalities, NGOs). 

requirements 

improved 

for 

Skills  shortages  are  exacerbated  by  a 
declining  number  of  higher  education 
graduates.  In  2024,  40.5%  of  Bulgarians  aged 
25-34  had  a  tertiary  education  degree  (EU: 
44.21%),  with  especially  low  rates  among  men 
(32.2% vs 49.2% for women). Between 2019 and 
2023, 
the  percentage  of  bachelor  students 
dropped  by  12%,  caused  by  demographic  trends 
and  a  high  proportion  of  Bulgarians  studying 
abroad.  The  number  of  higher  education 
professionals  is  further  limited  by  the  fact  that 
students  from  poor  backgrounds  are  very  under-
represented  in  higher  education  (235).  To meet  the 
demands  of  businesses,  it  is  forecasted  that 
Bulgaria  will  need  over  226 000  specialists  with 
the  next  3-5 
higher  education  degrees 
years (236). However, the number of new graduates 
will  be  insufficient  to  meet  the  new  demand.  The 
fields  are 
sought-after 
most 
pedagogy,  economics  and 
social  activities, 
medicine and engineering. 

professional 

in 

is 

in  STEM  fields 

low  and 
Enrolment 
declining.  Despite  national  efforts,  in  2022,  only 
23.8%  of  higher  education  students  (ISCED  5-8) 
were pursuing a degree in STEM (EU: 27.1%), with 
particularly  fewer  women  enrolled.  In  medium-
level  VET  in  STEM  fields,  enrolment  was  higher 
than the EU average in 2022: 50.7% vs 36.2% in 
the  EU.  Enrolment  in  higher  education  STEM 
dropped  by  12%  between  2017  and  2022. 
Nevertheless,  enrolments  in  ICT  improved  (by 
19%). The share of ICT graduates is around the EU 
average  (4.8%,  EU:  4.5%),  but  numbers  are 
insufficient  to  meet  the  growing  demand.  Only 
3.5% of PhD students are studying ICT (EU: 3.7%). 

(235) World Bank (2022), Bulgaria Higher Education: Situation 

Analysis and Policy Direction Recommendations 

(236) National Employment Agency (2024): The Workforce Needs 

still 

Despite  some  improvements,  the  alignment 
of  higher  education  to  labour  market  needs 
is 
hampers 
insufficient,  which 
competitiveness.  Despite  policy  efforts,  higher 
education  remains  insufficiently  responsive  to 
labour  market  needs,  including  for  the  green 
consistently 
transition.  Universities  are  not 
equipping  graduates  with  strong 
transversal 
cognitive  skills  and  the  practical  skills  needed  by 
the labour market, delivering enough graduates or 
sufficiently  trained  professionals  in  the  key  areas 
of  demand.  Only  53%  of  tertiary  graduates  work 
in  positions  requiring  tertiary  education (237):  the 
highest unemployment rate is among graduates in 
tourism,  and 
lowest  for  medicine  and 
pedagogy. This suggests there is a need to further 
improve  the  labour  market  relevance  and  quality 
of  tertiary  education.  Bulgaria  is  implementing 
large-scale  ESF+  operations 
to  modernise 
university  curricula,  but  the  need  to  improve 
cooperation  with  industry  remains.  ESF+  is  also 
supporting green skills as a cross-cutting theme in 
higher education and VET. 

the 

is 

facing  a 

restructuring 

As  part  of  the  broader  need  for  upskilling 
and  reskilling  the  workforce,  developing 
green and digital skills is particularly critical. 
The  country’s  economy  is  highly  energy  intensive 
and 
to  decrease 
dependence  on  coal.  The  needs  for  reskilling  the 
workforce are particularly relevant for the regions 
with  coal  mines  and  coal-fired  power  plants 
(Kyustendil,  Pernik  and  Stara  Zagora)  where 
15 000 jobs will be directly impacted by the green 
transition.  In  2024,  there  were  already  shortages 
in  occupations  requiring  specific  skills  related  to 
the  green 
including  garbage  and 
recycling  collectors,  forestry  and  related  workers, 
(238).  At  the  same  time,  only  35%  of  people  in 
Bulgaria  believe  that  they  have  the  necessary 
skills  to  contribute  to  the  green  transition, 
significantly  below  the  EU  average  of  54% (239). 
Skills  and  labour  shortages  are  exacerbated  by 
very  low  levels  of  digital  skills.  In  2023,  only 

transition, 

(237) Ministry of Education and Science (2021), Ranking system of 

higher education institutions in Bulgaria. 

(238) European  Labour  Authority  2025  EURES  Report  on  labour 
shortages  and  surpluses  2024,  based  on  data  from  EURES 
National  Coordination  Offices.  Skills  and  knowledge 
requirements align with the ESCO taxonomy on skills for the 
green  transition,  with  examples  analysed  using  the  ESCO 
green intensity index.   

Survey 2024 

(239) Special Eurobarometer 527. 

92 

 
 
 
Graph A12.1: Skills development in Bulgaria 

35.5% of the population aged 16-74 had at least 
a basic level of digital skills, still well below the EU 
average of 55.6% (see Graph A12.2). The share is 
higher  among  young  people  (16–24-year-olds)  at 
53.1% but still low compared to the EU average of 
is  funding  digital 
69.9% 
education infrastructure in schools and investing in 
an  adult 
learning  platform  and  digital  skills 
training. Additionally, ESF+ will support more than 
215 000  pupils  and  students  to  improve  their 
digital skills. 

in  2023.  The  RRP 

is 

crucial 

intelligence 

(241).  Skills 

development 

for 
Skills 
competitiveness, 
resilience  and  fairness 
given  the  shrinking  labour  force  and  skills 
shortages.  79%  of  small  and  medium-sized 
enterprises  in  Bulgaria  cite  skills  shortages  as 
hindering  general  business  activities (240). 
In 
addition,  over  40%  of  employers  report  that 
applicants  do  not  meet  the  necessary  skills 
requirements.  Employers  in  some  sectors  (e.g. 
finance  and  insurance)  report  the  use  of  on-the-
job  training  to  tackle  skills  shortages  in  newly 
employed  workers 
in 
Bulgaria  involves  many  activities,  such  as  regular 
forecasts  by  the  Ministry  of  Labour  and  Social 
Policy,  skills  assessment 
initiatives,  employer 
surveys  and  privately  funded  sectoral  studies. 
Nevertheless,  turning  skills  intelligence  into  skills 
development is fragmented. A robust evaluation of 
existing measures could enable the government to 
allocate  or  reallocate  funding  to  activities  where 
highest. 
returns 
on 
Furthermore, 
and 
coordination  of  skills  policies  could  ensure  an 
effective  response  to  these  challenges.  Increased 
stakeholder involvement and more evidence-based 
policymaking  would  also  be  beneficial.  With 
support  from  the  Technical  Support  Instrument 
(TSI),  Bulgaria  identified  priority  policy  actions  for 
the development of an action plan for skills. These 
aim  to  address  the  fragmented  system  and  the 
need to better use the skills available. 

are 
governance 

investment 
effective 

the 

(1) % of total population 
Source: Eurostat, tepsr_sp410, Circabc (AES and LFS data) 

Low  participation  in  adult  learning  hinders 
the  workforce’s  ability  to  adapt  to  labour 
market  changes.  In  2022,  participation  in  adult 
learning  stood  at  9.5%,  the  lowest  in  the  EU  and 
significantly  below  the  EU  average  of  39.5% (242). 
This was a decline from 11.6% in 2016, widening 
the  gap  with  the  2030  national  target  of  35.4%. 
Younger workers (25-34) reported higher levels of 
participation (16.9%) than other age groups, as did 
those  with  higher  education  (20.3%).  However,  in 
both cases, the Bulgarian rate is about one third of 
the  EU  average.  Similarly,  participation  in  training 
among  employed  people  is  the  lowest  in  the  EU 
(12%  vs  44.7%),  especially  among  low-qualified 
people. In addition, in 2024, the employment rate 
gap  between  those  with  the  highest  and  lowest 
educational levels was particularly high in Bulgaria 
(42 pps  vs  27.8 pps  in  the  EU).  The  low  levels  of 
adult participation in learning indicate the need to 
facilitate  access  to  training  by: 
(i)  reducing 
unnecessary administrative burdens; (ii) increasing 
the  flexibility  of  training  and  schedules,  including 
online  training;  (iii)  intensifying  the  dialogue  with 
social partners on the implementation of effective 
measures  (such  as  individual  learning  accounts 
(ILAs));  and  (iv)  increasing  awareness  of  the 
benefits of lifelong learning. A pilot project on ILAs 
is  planned  to  run  from  2025  to  2027.  A  working 
group  on  developing  the  ILA  model  has  been  set 
up with the participation of stakeholders, including 
social partners, but progress appears to be slow. 

(240) Eurobarometer survey 

(241) Survey on the needs of employers 2024 

(242) Data from the Adult Education Survey 2022, special 
extraction excluding guided-on-the-job training. 

93 

0102030405060700102030405060702021202320162022Individuals with at least basic digital skillsAdults participating in learningBG 2030 targetEU 2030 targetBGEU 
 
   
 
ANNEX 13: SOCIAL SCOREBOARD 

Table A13.1:Social Scoreboard for Bulgaria 

(1) Update of 5 May 2025. 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 2025 for details on the 
methodology (https://employment-social-affairs.ec.europa.eu/joint-employment-report-2025-0). 
Source: Eurostat 

94 

9.58.235.512.77.26.9676.84.22.230.335.127.735.48.021.21.1Critical situationTo watchWeak but improvingGood but to monitorOn averageSocial Scoreboard for BulgariaEqual 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, 2024)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, 2024)Gender employment gap(percentage points, population aged 20-64, 2024)Income quintile ratio (S80/S20, 2024)Dynamic labour markets and fair working conditionsEmployment rate(% of the population aged 20-64, 2024)Unemployment rate(% of the active population aged 15-74, 2024)Long term unemployment(% of the active population aged 15-74, 2024)Gross disposable household income (GDHI) per capita growth(index, 2008=100, YYYY)Social protection and inclusionAt risk of poverty or social exclusion (AROPE) rate (% of the total population, 2024)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2024)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2024)Disability employment gap (percentage points, population aged 20-64, 2024)Housing cost overburden (% of the total population, 2024)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2024)Self-reported unmet need for medical care (% of the population aged 16+, 2024)Better than averageBest performers 
 
 
 
   
 
 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

Bulgaria’s  health  system  faces  significant 
challenges. These need to be addressed if the 
country  is  to  improve  the  health  of  its 
population  and 
fairness,  while 
social 
boosting the competitiveness of its economy. 
Challenges  include  low  life  expectancy,  resulting 
from high preventable and treatable mortality, and 
limited  access  to  care.  These  issues  are  mainly 
(i) suboptimal  funding  and  cost-
caused  by: 
effectiveness  of 
(ii) an 
the  health  system; 
insufficient  focus  on  disease  prevention  and 
(iii) shortages  of  healthcare 
outpatient  care; 
geographical 
workers; 
distribution of healthcare resources.  

uneven 

(iv) an 

and 

Graph A14.1: Life expectancy at birth, years 

Source: Eurostat (demo_mlexpec) 

the  highest 

Life  expectancy  at  birth 
in  Bulgaria 
rebounded  above  its  pre-COVID-19  level  but 
was still one of the lowest in the EU in 2023. 
The  gender  gap  in  life  expectancy  is  higher  than 
the  EU  average.  In  2022,  treatable  mortality  was 
one  of 
the  EU,  suggesting 
in 
shortcomings  in  the  effectiveness  of  the  health 
system. Moreover, mortality from treatable causes 
has  increased  in  Bulgaria  over  the  last  10  years, 
increasing  to  more  than  twice  the  EU  average. 
Diseases of the circulatory system (‘cardiovascular 
diseases’) and cancer remain the leading causes of 
death.  COVID-19  was  the  third  highest  cause  of 
death. 
from 
cardiovascular  diseases  and  COVID-19  were 
particularly high in Bulgaria (more than three and 
two  times  the  EU  average  respectively).  As  a 
result,  the  number  of  potential  productive  life 
years  lost  due  to  non-communicable  diseases  is 
considerably  higher  than  the  EU  average  (2 531 
per  100 000  inhabitants  vs  1 017) (243).  Bulgaria 
participates  in  several  EU4Health  joint  actions, 

Standardised 

death 

rates 

which aim to reduce the burden of cancer, such as 
EUnetCCC  (the  European  Comprehensive  Cancer 
Centre 
JA 
PreventNCD (245). 

JANE-2 (244) 

Network), 

and 

The  poor  health  outcomes  negatively  affect 
Bulgaria’s  workforce, 
productivity  and 
competitiveness.  Cancer  in  particular  has  a 
impact  on  workforce  participation  and 
major 
productivity (246).  In  Bulgaria,  mortality  at  working 
age as a proportion of total mortality is among the 
highest  in  the  EU,  exacerbating  the  effects  of 
population ageing on a shrinking labour force (see 
Annex  10).  Between  2022  and  2040,  Bulgaria’s 
working  age  population  is  forecast  to  shrink  by 
0.9% every year (EU: 0.3%).  

Graph A14.2: Treatable mortality 

Age-standardised death rate (mortality that could be 
avoided through optimal quality healthcare) 
Source: Eurostat (hlth_cd_apr) 

Health  expenditure  in  Bulgaria  is  low,  as  is 
the  share  of  health  spending  covered  by 
public  funds.  Bulgaria’s  health  system  is 
strongly  hospital  centred.  Despite 
rising 
significantly  since  2019,  health  spending  per 
inhabitant in Bulgaria was one of the lowest in the 
EU  in  2022,  with  the  largest  share  going  to 
hospital  services  (around  38%  of  total  health 
expenditure),  and  one  of  the  EU’s  lowest  shares 
going to outpatient care. This, together with one of 
the highest numbers of hospital beds in the EU in 
2022, 
illustrates  Bulgaria’s  strongly  hospital-
centred  care  model.  In  2023,  the  National  Health 
Insurance  Fund  (NHIF)  reported  an  increase  in 
hospitalisations  by  11.2%  compared  to  2022, 

(244) JANE-2: Shaping the EU Networks of Expertise on cancer! 

(245) JA PreventNCD - Reducing Europe's cancer and NCD burden 
through coordinated strategies on health determinants. 

(243) Update to 2022 data of analysis presented by Health at a 

Glance: Europe 2016 - © OECD 2016. 

(246) OECD/European Commission (2025), EU Country Cancer 
Profiles Synthesis Report 2025, OECD Publishing, Paris. 

95 

75.173.371.274.275.881.380.480.180.681.420192020202120222023BulgariaEU188.3189.0213.0225.1194.191.389.291.793.389.720182019202020212022per 100 000 populationBulgariaEU 
 
               
 
             
 
 
 
Table A14.1:Key health indicators 

*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 based on 2022 (or latest 2021) data except for Luxembourg (2017). Doctors’ density data refer to practising 
doctors in all countries except Greece, Portugal (licensed to practise) and Slovakia (professionally active). Density of nurses: data 
refer to practising nurses (EU recognised qualification) in most countries except France and Slovakia (professionally active) and 
Greece (hospital only). **‘Available hospital beds’ covers somatic care, not psychiatric care. ***The EU median is used for patents. 
Source:  Eurostat database; European Patent Office; ****European Centre for Disease Prevention and Control (ECDC) for 2023. 

while  the  trend  of  very  low  investment  in  the 
health  sector  continued (247).  The  number  of 
hospital discharges per 1 000 inhabitants is one of 
the highest in the EU, but the occupancy rate and 
the  average  length  of  stay  are  among  the 
lowest (248).  This  points  to  a  suboptimal  use  of 
resources  and  suggests  room  for  increasing  the 
efficiency  of  care,  in  particular  by  improving  the 
effectiveness of both primary and preventive care, 
and access to outpatient care. Public spending as a 
proportion of total health expenditure was among 
the lowest in the EU in 2022. This translated into 
the  highest  proportion  of  out-of-pocket  payments 
for healthcare in the EU (35% in 2022, about 2.5x 
the  EU  average),  even  though  it  had  decreased 
somewhat  (from  38%  in  2019).  In  2022,  medical 
goods  (retail  pharmaceuticals  and  therapeutic 
appliances)  accounted  for  almost  three  quarters 
(73%) of all out-of-pocket payments (249). In 2024, 
the  NHIF  increased  the  reimbursement  level  and 
eliminated  co-payments  for  more  than  400 
medicinal  products  for  the  home  treatment  of 
chronic  cardiovascular  diseases.  The  aim  was  not 
only  to  reduce  the  out-of-pocket  payment  level, 
but  also  to  increase  adherence  to  the  prescribed 
therapy.  

Under  the  Bulgarian  recovery  and  resilience  plan 
(RRP),  around  EUR 287.5  million  is  planned  to  be 
used  for  health  reforms  and  related  investment. 
Six  reforms  are  planned,  including  an  update  of 

(247) On capital formation, see Health at a Glance Europe 2018, 

2020, 2022 and 2024. 

(248) OECD/European Commission (2024), Health at a Glance: 
Europe 2024 - State of Health in the EU Cycle, p. 201. 

(249) Health at a Glance: Europe 2024, pp. 186-187. 

the strategic framework of the health system and 
access  to  health  services  (set-up  and  staffing  of 
outpatient  care  units).  Investments  also  aim  at 
modernising  hospitals  and  medical  facilities, 
emergency  communication  and  air  ambulance 
services (helicopters). 

investment 

in 
As  regards  public  health, 
disease  prevention  remains  low  in  Bulgaria. 
The share of spending directed at prevention stood 
at  3.1%  of  total  spending  on  health  in  2022  - 
around half of the EU average. To address the very 
high  rate  of  preventable  mortality  (much  higher 
than  the  EU  average  in  2022),  in  January  2024 
to  certain  preventive  services  was 
access 
expanded  by  the  Ministry  of  Health.  This  included 
medical  care  for  chronically  ill  patients,  regular 
breast  cancer  screening  for  women  aged  45  and 
over and annual prostate cancer screening for men 
aged  45  and  over.  Preventable  mortality 
in 
Bulgaria is closely linked to environmental factors 
such as air pollution (see Annex 7) and behavioural 
risk  factors.  Bulgaria  has  a  low  consumption  of 
fruit  and vegetables  and one  of  the  lowest  levels 
of physical activity outside working time of all EU 
countries. Both adults and adolescents also report 
a  high  level  of  alcohol  consumption  and  the 
highest  smoking  rate  in  the  EU (250).  Moreover,  in 
2023,  the  consumption  of  antibiotics  was  well 
above  the  EU  average,  and  had  further  increased 
since  2019,  despite  the  recommended  national 
target (251) of a 18% decrease between 2019 and 

(250) Health at a Glance: Europe 2024, Chapter 4. 

(251) National target set by the Council Recommendation on 

stepping up EU actions to combat antimicrobial resistance in 
a One Health approach, 2023/C 220/01. 

96 

20192020202120222023EU average* (latest year) Cancer mortality per 100 000 population242.2245.3229.4217.3n.a.234.7 (2022)Mortality due to circulatory diseases per 100 000 population1 051.91 119.71 211.01 074.3n.a.336.4 (2022)Current expenditure on health, purchasing power standards, per capita1 2651 4701 7071 786n.a.3 684.6 (2022)Public share of health expenditure, % of current health expenditure 60.6 63.1 65.0 63.5n.a.81.3 (2022)Spending on prevention, % of current health expenditure 3.02.83.93.1n.a.5.5 (2022)Available hospital beds per 100 000 population** 717 725 735 764n.a.444 (2022)Doctors per 1 000 population*4.24.34.34.4n.a.4.2 (2022)*Nurses per 1 000 population* 4.4 4.2 4.2 4.3n.a.7.6 (2022)*Mortality at working age (20-64 years), % of total mortality19.920.019.818.719.514.3 (2023)Number of patents (pharma / biotech / medical technology)1240229 (2023)***Total consumption of antibacterials for systemic use,                    daily defined dose per 1 000 inhabitants****20.722.724.425.726.320.0 (2023) 
 
 
 
        
 
2030.  This  raises  concerns  about  antimicrobial 
resistance. 

There are significant challenges in accessing 
healthcare,  with  geographical  and  income-
related  disparities.  Access  to  care  is  limited  by 
suboptimal public funding for outpatient care, high 
out-of-pocket payments, insurance coverage gaps, 
a system of referral quotas limiting the number of 
times a general practitioner can refer patients to a 
in  a  given  year,  and  an  uneven 
specialist 
distribution  of  healthcare 
resources  between 
regions and between income-level groups. In 2023 
and  2024,  the  proportion  of  the  Bulgarian 
population reporting unmet needs for medical care 
was  below  the  EU  average  (see  Annex  11),  with 
unmet  needs  primarily  due  to  financial  reasons 
and travel distances (see also Annex 17).  

(defined  as  60%  of 

However,  comparatively  high  unmet  needs  for 
medical  examination  are  still  reported  in  rural 
areas, which may also be due to greater shortages 
of healthcare workers in some rural areas. Among 
people  declaring  unmet  medical  needs,  the  gap 
between  people  below  and  above  the  poverty 
threshold 
the  median 
equivalised  income)  is  also  higher  than  the  EU 
average. A range of measures under the RRP and 
the  cohesion  policy  aim  to  improve  access  to 
healthcare  in  Bulgaria.  These  include  investments 
to:  (i)  modernise  hospitals  and  medical  facilities 
that  provide  paediatric,  oncological  or  psychiatric 
care;  (ii)  set  up  outpatient  care  units  in  remote 
areas  and  underserved  regions;  and  (iii)  address 
shortages 
geographical 
distribution  of  healthcare  professionals  (see  also 
Annexes 15 and 16). 

unbalanced 

and 

Persistent  shortages  of  nurses  and  general 
practitioners  limit  the  availability  of  care  in 
Bulgaria.  In  2022,  the  number  of  practising 
nurses per 1 000 population remained among the 
lowest in the EU, posing a significant challenge to 
the  health  system  and,  more  broadly,  the  care 
system (see Annex 11). In addition, Bulgaria had a 
comparatively low number of nursing graduates in 
relation  to  its  population.    Moreover,  more  than 
40%  of  nurses  were  aged  55  and  over  and  less 
than 9% were aged 34 and under in 2023, raising 
further concerns about the long-term accessibility 
of health services. In the last 10 years, the number 
of  doctors  per  1 000  inhabitants  in  Bulgaria  has 
been  above  the  EU  average.  However,  in  2023 
over half of them were 55 and over and only 17% 
were 34 and under. Moreover, the share of general 

practitioners  is  very  low  compared  to  specialists. 
The  National  Map  of  the Long-Term  Needs  of  the 
Healthcare Sector adopted in 2022 is part of a key 
reform  under  the  RRP  aimed  at  improving  the 
attractiveness  of  healthcare  professions  and 
promoting  a  more  balanced  distribution  of 
healthcare  professionals  across 
territory. 
Measures 
(ii)  more 
university places; (iii) better remuneration; and (iv) 
increased reimbursement by the NHIF, in particular 
for  medical  personnel  in  hard-to-reach  and/or 
remote areas. Related measures are also planned 
under the European Social Fund Plus. 

(i)  scholarships; 

include: 

the 

foster 

innovation  and 

The  potential  of  Bulgaria’s  health  system  to 
drive 
industrial 
development in the EU medical sector seems 
largely  untapped.  Public  and 
to  remain 
private (252) 
Bulgaria’s 
pharmaceutical sector in R&D is among the lowest 
in  the  EU.  The  number  of  European  patents 
granted 
of 
pharmaceuticals,  biotechnologies  and  medical 
technologies is very low (253) and very few clinical 
trials are held in Bulgaria (254). 

investment 

combined 

areas 

the 

for 

of 

of 

phone) 

instead 

The  uptake  of  e-health  and  the  overall 
digitalisation  of  the  health  system  is  slowly 
improving  with  the  support  of  EU  funds,  yet 
it  still  lags behind  other  EU  countries  and  is 
uneven across the population. While the shares 
of  people  accessing  their  personal  health  records 
online  and  of  those  using  online  health  services 
(excluding 
in-person 
consultations further increased in Bulgaria in 2024 
compared to 2022, they are far below most other 
EU  countries.  This  illustrates  the  generally  low 
level  of  digital  literacy  in  the  country  (35.5%  of 
individuals with at least basic digital skills in 2023 
vs  an  EU  average  of  55.6%  -  see  Annex  12). 
Moreover,  major  differences  in  the  use  of  these 
tools are observed depending on individuals’ socio-
economic  background.  Investments  to  boost  the 
digital  transformation  of  Bulgaria’s  health  sector 
are planned under the cohesion policy 2021-2027 
and  under  the  RRP.  Measures  include  rolling  out 
Information  System  and 
the  National  Health 

(252) Private: as reported by the members of the European 

Federation of Pharmaceutical Industries and Associations: 
see EFPIA. 

(253) European Patent Office, Data to download | epo.org. 

(254) EMA (2024), Monitoring the European clinical trials 

environment, p. 9. 

97 

 
 
developing  a  platform  for  medical  diagnostics.  In 
2024,  a  national  strategy  and  related  action  plan 
for  e-health  and  the  digitalisation  of  the  health 
system  2021-2030  were  adopted,  and 
the 
National Health Information System in place since 
2020  was  upgraded  with  a  new  feature  which 
allows  the  e-health  app  to  notify  individuals  and 
their  general  practitioners  about  upcoming 
screening  exams  and  vaccinations.  Access  to  the 
e-health app has also been simplified with a view 
to  significantly  increasing  the  number  of  people 
with  access  to  their  e-dossiers,  and  raising 
awareness and control over the system. 

98 

 
 
HORIZONTAL 
ANNEX 15: SUSTAINABLE DEVELOPMENT GOALS 

social 

fairness 

This  Annex  assesses  Bulgaria’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  dimensions  of  competitiveness, 
and 
sustainability, 
macroeconomic stability. 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 
inequalities  and  tackle  climate 
poverty,  fight 
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 is improving on indicators related to 
competitiveness  (SDGs  4,  8  and  9)  but  still 
lags behind the EU average. On SDG 8 (Decent 
work and economic growth), Bulgaria is improving 

Graph A15.1: Progress towards the SDGs in Bulgaria 

on the employment rate of people aged 20 to 64, 
with  an  average  of  76.8%  in  2024  compared  to 
76.2%  in  2023  and  compared  to  the  EU  average 
of  75.8%.  Similarly,  the  rate  of  young  people 
neither  in  employment  nor  in  education  and 
training (NEET) decreased from 18.1% in 2018 to 
12.7%  in  2024  (EU  average:  11.2%).  The  long-
term  unemployment  rate  decreased  to  2.2%  in 
2024  close  to  the  EU  average  of  1.9%.  However, 
Bulgaria  is  regressing  on  indicators  related  to 
decent  work,  with  the  in-work  at-risk-of-poverty 
rate  at  11.4%  in  2023  compared to  2022  (9.7%) 
and  the  EU  average  (8.3%).  Despite  still  lagging 
significantly  behind  the  EU,  Bulgaria  has  made 
some  progress  on  R&D  and  innovation  indicators 
(SDG 9), 
in  particular  on  Gross  domestic 
expenditure  on  R&D  (from  0.76%  in  2018  to 
0.79%  in  2023,  compared  to  the  EU  average  of 
sustainable 
2.22%). 
infrastructure also show a positive trend in  2023, 
with  88.6%  of  households  having  a  high-speed 
internet  connection,  a  significant  increase  from 
2019 (65.2%) and above the EU average (78.8%). 

indicators 

The 

for 

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 
five 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 28 April 2025. Data refer mainly to the period 2018-2023 or 2019-2024. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

99 

 
 
 
 
 
Bulgaria  is  moving  away  from  SDG 4  (Quality 
education), for instance on the achievement of 15-
year-olds  in  mathematics  and  adult  participation 
in  learning,  but  40.5%  of  the  population  aged  25 
to  34  graduated  from  tertiary  education  in  2024, 
up from 32.6% in 2019 (EU average: 44.2%). The 
Bulgarian  Recovery  and  Resilience  Plan  (RRP) 
includes  significant  measures 
to  strengthen 
education, such as reforms in preschool and school 
education and lifelong learning, and learning in the 
fields  of  STEM  (science,  technology,  engineering 
and maths). 

Bulgaria  is  improving  on  several  indicators 
related to sustainability (SDGs 2, 7, 9, 11, 12, 
13,  14)  but  often  remains  below  the  EU 
average  and  is  moving  away  from  SDGs  6 
and  15.  Bulgaria  outperforms  the  EU  average 
indicators  on  SDG  14 
(Life  below  water), 
particularly  improving  on  Coastal  water  bathing 
sites  with  excellent  water  quality  (94.6%  in  2023 
compared to 53.9% in 2018, with the EU average 
being 88.8% in 2023).  Bulgaria is also improving 
on Climate action (SDG 13) even though it remains 
below  the  EU  average.  Bulgaria  needs  further 
efforts to reach the EU average on the Sustainable 
agricultural  production  indicator  (SDG  2).  Despite 
performing 14% above the EU average on SDG 15 
(Life on land), Bulgaria continues to move away in 
indicators  such  as  land  degradation.  In  addition, 
the  country  is  lagging  behind  the  EU  average 
regarding sustainable cities and communities (SDG 
11), with the recycling rate of municipal waste  at 
24.6%  in  2022  compared  to  the  EU  average  of 
48.2%.  Similarly,  Bulgaria  lags  45.4%  behind  the 
EU  average  on  indicators  related  to  responsible 
consumption and production (SDG 12) and remains 
slightly below EU average on indicators related to 
Clean  Water  and  Sanitation  (SDG  6).  Bulgaria’s 
RRP  includes  measures  to  address  some  of  the 
sustainability  challenges,  such  as  developing  a 
framework  to  deploy  renewable  energy  projects 
and promoting sustainable agriculture. 

While Bulgaria continues to improve on most 
of  the  SDGs  related  to  social  fairness 
(SDGs 1,  3,  5,  7,  8,  10),  a  significant  gap  to 
the EU average remains on the indicators for 
quality  education  (SDG 4).  There  has  been  an 
overall  improvement  towards  SDG 1  (No  poverty), 
with  most  indicators  showing  positive  trends. 
Bulgaria  further  reduced  its  severe  material  and 
social  deprivation  rate  from  22.3%  in  2018  to 
18%  in  2023  (EU  average:  6.8%).  Another  area 
where  Bulgaria  is  improving  is  SDG  5  (Gender 

equality),  where  the  share  of  women  in  senior 
management positions increased to 17% in 2024. 
At the same time, the gender employment gap of 
7.2%  remains  below  the  EU  average  of  10%  in 
2023.  Bulgaria  continues  to  improve  on  SDG  7 
(Affordable  and  clean  energy),  with  all  indicators 
having improved or stalled compared to 2022. The 
share  of  renewable  energy  in  gross  final  energy 
consumption  increased  from  20.6%  in  2018  to 
22.5%  in  2023.  Bulgaria  needs  to  catch  up  with 
the  EU  average  on  SDG 3  (Good  health  and  well-
being).  The 
rate  of  standardised  avoidable 
mortality per 100 000 workers of 470.7 in 2022 is 
almost  double  the  EU  average  of  257.8  and  has 
increased  compared  to  2017.  Lastly,  Bulgaria  is 
improving  on  SDG  10  (Reduced 
inequalities), 
catching up with the EU average. All indicators on 
inequalities  within the  country  have  improved;  for 
instance,  the  income  quintile  share  ratio  dropped 
from 7.66 in 2018 to 6.61 in 2023, nearing the EU 
average  of  4.7.  The  Bulgarian  European  Social 
Fund  Plus  (ESF+)  and  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  continues  to  perform  well  on 
SDG 17  (Partnerships  for  the  goals).  It  is 
stability 
on  macroeconomic 
stalling 
indicators 
(SDGs 8  and  16),  where  the 
country  still  needs  to  catch  up  with  the  EU. 
Bulgaria  performs  27.8%  better  than  the  EU 
average  on  SDG 17  (Partnerships  for  the  goals) 
indicators.  The  Bulgarian  debt-to-GDP  ratio  for 
2024  was  24.1%,  which  is  well  below  the  EU 
average  of  81.%.  While  the  trust  in  institutions 
(SDG 16)  increased  slightly  between  2018  and 
2023, the country is lagging the EU average (43% 
in  Bulgaria  compared  to  62%  EU  average  on  the 
Corruption  Perception  Index  for  2024)  and  the 
share of the population with a very good or fairly 
good perception of the independence of the justice 
system  decreased  from  34%  in  2019  to  24%  in 
2024.  Regarding  sustainable  economic  growth 
(SDG  8),  the  country  still  needs  to  catch  up  with 
the  EU  on  real  GDP  per  capita  even  though  the 
indicator continued its increase from EUR 9 670 in 
2019 to EUR 11 300 in 2024. 

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

100 

 
ANNEX 16: CSR PROGRESS AND EU FUNDS IMPLEMENTATION 

benefits  for  the  economy  and  Bulgarian  society. 
Project  selection  under  the  2021-2027  cohesion 
policy  programmes  has  accelerated,  while 
significant  volumes  of  investment  are  yet  to  be 
mobilised. 

of 

the 

end 

the  RRF 

The  Bulgarian  RRP  contains  50  investments 
and  47  reforms  to  stimulate  sustainable 
growth  and  reach  climate  objectives.  A  year 
before 
timespan, 
implementation  is  on  its  way  with  23%  of  the 
funds  disbursed,  but  significantly  delayed.  At 
the 
present,  Bulgaria  has  fulfilled  23%  of 
milestones  and  targets  in  its  RRP  (259).  The 
implementation of reforms and investments needs 
to  urgently  accelerate to ensure  completion  of  all 
RRP  measures  by  31 August  2026.  The  main 
bottlenecks related to implementation of EU funds 
in Bulgaria are insufficient administrative capacity, 
political  instability  and  a  lack  of  effective  and 
competitive public procurement.  

the 

Bulgaria  also  receives  funding  from  several 
other  EU  instruments,  including  those  listed  in 
common 
table  A16.1.  Most  notably, 
agricultural policy (CAP) provides Bulgaria with an 
EU  contribution  of  EUR 5.6  billion  under  the  CAP 
strategic  plan  for  2023-2027 (260).  Operations 
amounting  to  EUR  523,7  million (261)  have  been 
signed  under  the  InvestEU  instrument  backed  by 
the  EU  guarantee,  improving  access  to  financing 
for riskier operations in Bulgaria. 

Bulgaria  faces  structural  challenges  in  a 
wide  range  of  policy  areas  as  identified  in 
the country-specific recommendations (CSRs) 
addressed  to  the  country  as  part  of  the 
European  Semester.  They  refer,  among  other 
things, to renewable energy, energy infrastructure 
and  networks,  budgetary  framework  and  fiscal 
governance,  energy  efficiency, 
labour  market 
policies,  healthcare  and  poverty  and  social 
inclusion. 

The Commission has assessed the 2019-2024 
CSRs  considering  the  policy  action  taken  by 
Bulgaria to date and the commitments in its 
recovery  and  resilience  plan  (RRP).  At  this 
stage, Bulgaria has made at least ‘some progress’ 
on 58% of the CSRs (255), and ‘limited progress’ on 
34% (Table A16.2). 

by 

to  Bulgaria 

competitiveness, 

EU funding instruments provide considerable 
resources 
supporting 
investments  and  structural  reforms  to 
increase 
environmental 
sustainability  and  social  fairness,  while 
helping  to  address  challenges  identified  in 
the  CSRs. 
In  addition  to  the  EUR 5.7 billion 
funding  from  the  Recovery  and  Resilience  Facility 
(RRF) in 2021-2026, EU cohesion policy funds (256) 
are  providing  EUR  10.7  billion 
to  Bulgaria 
(amounting  to  EUR 12.9  billion  with  national  co-
financing)  for  2021-2027 (257)  to  boost  regional 
competitiveness  and  growth.  Support  from  these 
instruments combined represents around 17.3% of 
2024  GDP (258).  The  contribution  of 
these 
instruments  to  different  policy  objectives 
is 
in  Graphs  A16.1  and  A16.2.  This 
outlined 
substantial  support  comes  on  top  of  financing 
provided 
the  2014-2020 
multiannual  financial  framework,  which  financed 
projects  until  2023  and  has  had  significant 

to  Bulgaria  under 

(255) 0.03% of the 2019-2024 CSRs have been fully 

implemented, 26% substantially implemented, and some 
progress has been made on 32%. 

(256) In 2021-2027, cohesion policy funds include the European 
Regional Development Fund, the Cohesion Fund, the 
European Social Fund Plus and the Just Transition Fund. The 
information on cohesion policy included in this annex is 
based on adopted programmes with the cut-off date of 5 
May 2025. 

(257) European territorial cooperation (ETC) programmes are 

excluded from the figure. 

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

(259) As of mid-May 2025, Bulgaria has submitted one payment 

request.  

(260) An overview of Bulgaria’s formally approved strategy to 

implement the EU’s common agricultural policy nationally 
can be found at: https://agriculture.ec.europa.eu/cap-my-
country/cap-strategic-plans/bulgaria_en 

applicable. GDP figures are based on Eurostat data for 2024. 

(261) Data reflect the situation on 31.12.2024. 

101 

 
 
 
 
 
 
Graph A16.1: Distribution of RRF funding in 
Bulgaria by policy field 

people  and  adults  will  be  included  in  the  labour 
innovative  approaches  and 
market 
measures. 

through 

are 

fuel 

funds 

contributing 

infrastructure, 

Other 
to 
competitiveness  in  Bulgaria,  for  instance 
through  open  calls.  The  Connecting  Europe 
Facility  has  financed  strategic  investments,  for 
example  in  rail  infrastructure,  inland  waterways 
and  maritime  transport,  and  the  development  of 
alternative 
to  enhance 
connectivity,  sustainability,  and  efficiency  within 
the  Trans-European  Transport  Network  (TEN-T); 
energy  market  integration,  decarbonisation  of  the 
energy  system  and  security  of  energy  supply, 
including the diversification of natural gas sources 
and  routes;  as  well  as  increasing  the  capacity, 
resilience  and  security  of  backbone  digital 
infrastructure,  deploying  submarine  cables,  and 
advancing  the  deployment  of  5G 
in  smart 
communities.  Horizon  Europe  has  supported 
research 
scientific 
innovation, 
breakthroughs  to  scaling  up  innovations  with 
Climate,  Energy,  and  Mobility  as  top  priorities  for 
the  Technical  Support 
Bulgaria. 
Instrument  has 
the 
development of the national industrial strategy for 
the manufacturing and mining sectors and on the 
innovative  approaches  to  address 
design  of 
negative demographic trend. 

focused  on  supporting 

In  Bulgaria, 

from 

and 

to 

the 

Bulgaria’s  RRP  also  contains  ambitious 
measures 
business 
improve 
environment  and  competitiveness.    Measures 
covered  by  previous  payment  requests  include: 
implementation  of  a  guarantee  instrument  to 
alleviate  the  challenges  faced  by  businesses  in 
obtaining  credit  finance  to  quickly  recover  from 
the  COVID-19  crisis  and  create  opportunities  for 
to  achieve  growth  and 
business  expansion 
sustainable  development;  initiatives  to  modernise 
teaching  tools  and  enhance  learning  in  the  fields 
of 
and 
mathematics  (STEM)  in  Bulgarian  schools  and 
initiatives  to  enhance  the  effectiveness  of  higher 
education across the territory of Bulgaria. 

engineering 

technology, 

science, 

EU  funds  are  playing  a  significant  role  in 
promoting  environmental  sustainability  and 
green  transition 
in  Bulgaria  during  the 
current  seven-year  EU  budget  (multiannual 
financial framework). Cohesion policy funds are 
investing  over  EUR 3.2  billion 
the  green 
transition.  Investment  in  the  energy  efficiency  of 
buildings  is  expected  to  benefit  to  approximately 

in 

(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 circle 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. 
Source: European Commission 

Graph A16.2: Distribution of cohesion policy 
funding across policy objectives in Bulgaria 

Source: European Commission 

The 

and 

European 

competitiveness 

Cohesion  policy  funds  aim  to  increase  the 
productivity 
of 
Bulgarian  firms  and  improve  the  business 
Regional 
environment. 
Development  Fund  (ERDF)  supports  over  10 500 
companies  and  leverages  an  additional  EUR 1.1 
billion  in  private  investment.  Small  and  medium-
sized  enterprises  lie  at the  heart  of  ERDF  support 
for businesses, and selection procedures align with 
Bulgaria’s  smart  specialisation  strategy  by  region. 
In  addition,  the  European  Social  Fund  Plus  (ESF+) 
is  investing  more  than  EUR 1  billion  to  support 
better  access  to  employment,  modernise  labour 
market institutions, and promote life-long learning 
and  gender-balanced  labour  market  participation. 
The  ESF+  provides  support  to  train  over  212 000 
people  for  the  twin  transitions,  with  an  additional 
161 000  workers  to  be  supported  in  improving 
their  digital  skills.  Nearly  136 000  inactive  young 

102 

Green transitionDigital transformationSmart, sustainable andinclusive growthSocial & territorial cohesionHealth & resilienceNext generationSmarter EuropeGreener EuropeConnected EuropeSocial EuropeEurope closer to citizensJTF specific objective 
     
 
   
investing 

the  Just  Transition  Fund 

3 800 homes and to cover 180 000 square metres 
of  public  buildings  in  urban  and  rural  areas. 
Simultaneously, 
is 
assisting Bulgaria  by 
in sustainable 
energy  solutions,  training  and  education,  and 
diversification of the local economy in three coal-
affected 
regions:  Stara  Zagora,  Pernik  and 
Kyustendil. As for the CAP  strategic  plan, Bulgaria 
is  using  39%  of  its  rural  development  budget 
(EUR 555 115 007)  for  environmental  objectives, 
as  well  as  additional  EUR 1 026 590  for  eco-
schemes.  Interventions  aim  to  increase  the  area 
under  organic  farming 
through  support  for 
200 380  hectares,  to  improve  the  quality  of  soil 
and water and to support low-intensity agricultural 
in  existing 
practices.  On-farm 
irrigation installations will increase potential water 
savings to 20% and the reduction in water use to 
60%  for  installations  in  areas  with  water  bodies 
that are not in good condition. 

investments 

the  most 
children  by  2027.  Additionally, 
disadvantaged groups, living in poverty and social 
exclusion,  will  be  supported  with  350 000  food 
packages annually and hot lunch for about 50 000 
vulnerable people every month. 

Bulgaria’s RRP contains several reforms and 
investments  related  to  fairness  and  social 
policies.  These  include  social  inclusion  initiatives 
promoting  personal  mobility  and  accessibility  for 
people  with  permanent  disabilities;  promotion  of 
the  social  economy  through  assistance  for  the 
development  of  social  and  solidarity  economy 
businesses  and  organisations,  and  reforms  to  the 
minimum 
income  system.  To  help  Bulgaria 
implement  its  RRP,  in  2024  the  TSI  assisted  with 
measures  to  raise  the  quality  of  early  childhood 
education  and  care  and  reform  educational 
curriculum to ensure quality and excellence. 

Bulgaria’s  RRP  has  a  comprehensive  set  of 
reforms  and 
investments  for  the  green 
in  previous  payment 
transition.  Measures 
requests  include  reforms  to  tackle  barriers  to 
energy  efficiency  investment  in  multi-apartment 
buildings; the liberalisation of electricity markets in 
Bulgaria and integration with electricity markets in 
neighbouring  EU  Member  States;  initiatives  to 
promote 
and 
investment  to  increase  the  use  of  renewable 
energy in final household energy consumption. 

urban  mobility 

sustainable 

Promoting  fairness,  social  cohesion  and 
improving  access  to  basic  services  are 
among  the  key  priorities  of  EU  funding  in 
Bulgaria.  For  instance,  the  ERDF  and  Cohesion 
Fund support public services, including the creation 
of  additional  capacity  in  healthcare  facilities  to 
host an additional 400 000 people a year, and an 
additional  53 800  places  in  education  facilities. In 
addition,  Bulgaria  has  allocated  EUR 632 million 
(more  than  25%  of  its  total  ESF+  resources)  to 
social 
to 
EUR 137 million  to  combat  child  poverty.  The 
operations  strive  towards  improving  the  situation 
of  vulnerable  groups,  particularly  children,  older 
people,  people  with  a  disabilityy  and  Roma.  They 
aim  at  fostering  active  inclusion  and  developing 
social  and  health  services,  including  long-term 
focus  has  been  put  on 
care.  A  strong 
implementation  of  the  European  Child  Guarantee, 
and actions under the ESF+ aimed at tackling child 
poverty  are  expected  to  benefit  over  200 000 

inclusion  measures,  with 

close 

103 

 
 
 
Table A16.1:Selected EU funds with adopted allocations - summary data (million EUR) 

(1) The cut-off date for data on disbursements under the RRF is 31 May 2025. 
(2) Cohesion policy 2014-2020 allocations include REACT-EU appropriations committed in 2021-2022. 
(3) These amounts relate only to disbursements made from 2021 onwards and do not include payments made to the Member 
State before 2021.  Hence the figures do not comprise the totality of payments corresponding to the 2014-2020 allocation. The 
cut-off date for data on disbursements under EMFAF and EMFF is 29 April 2025.  The cut-off date for data on disbursements 
under cohesion policy funds, AMIF, BMVI and ISF is 5 May 2025. 
(4) AMIF - Asylum, Migration and Integration Fund; BMVI - Border Management and Visa Instrument; ISF - Internal Security Fund. 
(5) Expenditure outside the CAP strategic plan is not included. 
(6) The cut-off date for data on EARDF disbursements is 5 May 2025. The information on EAGF disbursements is based on the 
Member State declarations until March 2025.  Disbursements for the Direct Payments (EAGF) started in 2024. 
Source: European Commission 

104 

Instrument/policyDisbursed since 2021   (1)             RRF grants (including the RepowerEU allocation)1 368.9RRF loans 0 Instrument/policyAllocation 2014-2020 (2)Allocation 2021-2027 Disbursed since 2021 (3)    (covering total payments to the Member State on commitments originating from both 2014-2020 and 2021-2027 programming periods) Cohesion policy (total)7 924.310 705.95 307.8European Regional Development Fund (ERDF)3 884.55 641.42 395.7Cohesion Fund (CF)2 186.41 241.21 464.2European Social Fund (ESF, ESF+) and the Youth Employment Initiative (YEI)1 853.42 625.21 079.3Just Transition Fund (JTF)1 198.1 368.7European Maritime, Fisheries and Aquaculture Fund (EMFAF) and the European Maritime and Fisheries Fund (EMFF) 80.8 84.954.1Migration, border management and internal security - AMIF, BMVI and ISF (4) 152.9 363.5105.7The common agricultural policy under the CAP strategic plan (5)Disbursements under the CAP Strategic Plan (6)Total under the CAP strategic plan1 343.2European Agricultural Guarantee Fund (EAGF)1 261.2European Fund for Agricultural Development (EAFRD)82.0Allocation 2023-20275 639.94 228.31 411.6Allocation 2021-2026 5 688.80FisheriesMigration and home affairs 
 
 
       
 
Table A16.2:Summary table on 2019-2024 CSRs 

(Continued on the next page) 

105 

BulgariaAssessment in May 2025Relevant SDGs2019 CSR 1(cid:9)Substantial ProgressImprove tax collection through targeted measures in areas such as fuel and labour taxes.(cid:9)Substantial ProgressSDG 8, 16UpgradetheState-ownedenterprisecorporategovernancebyadopting and putting into effect the forthcoming legislation.(cid:9)Substantial ProgressSDG 92019 CSR 2Substantial 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.Substantial progressSDG 8Ensure effective supervision and the enforcement of the AML framework.Substantial progressSDG 8Strengthen the non-banking financial sector by effectively enforcing risk-based supervisionSubstantial progressSDG 8, the recently adopted valuation guidelinesSubstantial progressSDG 8and group-level supervision.Substantial progressSDG 8Implement the forthcoming roadmap tackling the gaps identified in the insolvency framework. Substantial progressSDG 8Foster the stability of the car insurance sector by addressing market challenges and remaining structural weaknesses.Substantial progressSDG 82019 CSR 3Limited progressFocus investment-related economic policy on research and innovationLimited progressSDG 9, 10, 11, transport, in particular on its sustainabilityLimited progressSDG 10, 11, water, waste and energy infrastructure and energy efficiency, taking into account regional disparities, Limited progressSDG 6, 7, 9, 10, 11, 12, 13and improving the business environment.Limited progressSDG 8, 92019 CSR 4Some progressStrengthen employability by reinforcing skills, including digital skills.Some progressSDG 4, 8Improvethequality,labourmarketrelevance,andinclusivenessofeducationandtraining,inparticularforRomaandotherdisadvantaged groups.Some progressSDG 4, 8, 10Addresssocialinclusionthroughimprovedaccesstointegratedemployment and social servicesSome progressSDG 1, 2, 10and more effective minimum income support.Some progressSDG 1, 2, 10Improveaccesstohealthservices,includingbyreducingout-of-pocket payments and addressing shortages of health professionals.Limited progressSDG 3 
 
 
  
 
Table (continued) 

(Continued on the next page) 

106 

2020 CSR 1Limited progressInlinewiththegeneralescapeclause,takeallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability,whileenhancinginvestment. Not relevant anymoreSDG 8, 16Mobiliseadequatefinancialresourcestostrengthentheresilience,accessibilityandcapacityofthehealthsystem,andensureabalanced geographical distribution of health workers.Limited progressSDG 32020 CSR 2Some progressEnsure adequate social protection and essential services for all Some progressSDG 1, 2, 10and strengthen active labour market policies.Some progressSDG 8Improve access to distance workingSome progressSDG 8and promote digital skillsSome progressSDG 4and equal access to education.Limited progressSDG 4, 8, 10Addresstheshortcomingsintheadequacyoftheminimumincomescheme. Some progressSDG 1, 2, 102020 CSR 3Some progressStreamline and accelerate the procedures to provide effective support to small and medium-sized enterprises and self-employed, Substantial progressSDG 8, 9alsoensuringtheircontinuedaccesstofinanceandflexiblepaymentarrangements.Substantial progressSDG 8, 9Front-load mature public investment projectsLimited progressSDG 8, 16and promote private investment to foster the economic recovery.Some progressSDG 8, 9Focusinvestmentonthegreenanddigitaltransition,inparticularonclean and efficient production and use of energy and resources,Some progressSDG 6, 7, 9, 12, 13, 15environmental infrastructure Limited progressSDG 7, 9, 13andsustainabletransport,contributingtoaprogressivedecarbonisation of the economy, including in the coal regions.Limited progressSDG 10, 112020 CSR 4Some progressMinimiseadministrativeburdentocompaniesbyimprovingtheeffectiveness of public administrationSome progressSDG 16and reinforcing digital government. Some progressSDG 9, 16Ensure an effective functioning of the insolvency framework. Some progressSDG 8Stepuptheeffortstoensureadequateriskassessment,mitigation,effectivesupervisionandenforcementoftheanti-moneylaunderingframework. Substantial progressSDG 8, 16 
 
 
  
 
Table (continued) 

(Continued on the next page) 

107 

2021 CSR 1Not relevant anymoreIn2022,pursueasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationallyfinancedinvestment.Keepthegrowthofnationallyfinanced current expenditure under control.Not relevant anymoreSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term.Not relevant anymoreSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticular investment supporting the green and digital transition.Not relevant anymoreSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Not relevant anymoreSDG 8, 162022 CSR 1Not relevant anymoreIn 2023, ensure that the growth of nationally financed primary current expenditureisinlinewithanoverallneutralpolicystance,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeingUkraine.Standreadytoadjustcurrentspendingtotheevolvingsituation.Not relevant anymoreSDG 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryandResilienceFacilityandother Union funds.Not relevant anymoreSDG 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachieving prudent medium-term fiscal positions.Not relevant anymoreSDG 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 progressSDG 7, 9, 13by accelerating the development of renewables,Some progressSDG 7, 9, 13anddiversifygassupplysourcesandroutesbyincreasinginterconnections with neighbouring countries.Substantial progressSDG 7, 9, 13Stepupeffortstoreduceenergydemandbyincreasingenergyefficiency in industry and in private and public building stock.No progressSDG 7Promote new sustainable solutions in centralised district heating.No ProgressSDG 72023 CSR 1Some progressWinddowntheemergencyenergysupportmeasuresinforce,usingtherelatedsavingstoreducethegovernmentdeficit,assoonaspossiblein2023and2024.Shouldrenewedenergypriceincreasesnecessitateneworcontinuedsupportmeasures,ensurethatsuchsupportmeasuresaretargetedatprotectingvulnerablehouseholdsandfirms,arefiscallyaffordableandpreserveincentivesforenergysavings.Some progressSDG 8, 16Ensureprudentfiscalpolicy,inparticularbylimitingthenominalincreaseinnationallyfinancednetprimaryexpenditurein2024tonotmore than 4,6 %.Some progressSDG 8, 16PreservenationallyfinancedpublicinvestmentandensuretheeffectiveabsorptionofgrantsundertheFacilityandofotherUnionfunds, in particular to foster the green and digital transitions.Limited progressSDG 8, 16Fortheperiodbeyond2024,continuetopursueamedium-termfiscalstrategyofgradualandsustainableconsolidation,combinedwithinvestmentsandreformsconducivetohighersustainablegrowth, in order to achieve a prudent medium-term fiscal position.Substantial progressSDG 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) 

Source: European Commission 

108 

2023 CSR 2Ensureaneffectivegovernancestructureandstrengthentheadministrativecapacitytoallowforaswiftandsteadyimplementationofitsrecoveryandresilienceplan.SwiftlyfinalisetheREPowerEUchapterwithaviewtorapidlystartingitsimplementation.Proceedwiththespeedyimplementationofcohesionpolicyprogrammes,inclosecomplementarityandsynergywith the recovery and resilience plan.2023 CSR 3Limited progressReduce reliance on fossil fuels andLimited progressSDG 7, 9, 13acceleratetheenergytransitionthroughfasterdeploymentofrenewableenergysources,whileensuringstoragecapacitiestoincrease the flexibility of the energy system.Limited progressSDG 7, 9, 13Strengthen the electricity grid infrastructure and improve the management thereof by streamlining the connection procedures and introducing smart grid elements.Limited progressSDG 7, 9, 13Continueeffortstoincreaseinterconnectionwithneighbouringcountries.Some progressSDG 7, 9, 13Acceleratebuildingrenovationinordertoincentiviseenergyefficiency and address energy poverty.Limited progressSDG 1, 2, 7, 10Promote new future-proof solutions in district heating andNo progressSDG 7sustainableurbantransport,andacceleratedevelopmentofrailwayinfrastructure.Limited progressSDG 11Stepuppolicyeffortsaimedattheprovisionandacquisitionofskillsand competences needed for the green transition.Limited progressSDG 42024 CSR 1Full implementationSubmit the medium-term fiscal-structural plan in a timely manner.Full implementationSDG 8, 16In line with the requirements of the reformed Stability and Growth Pact, limit the growth in net expenditure in 2025 to a rate consistent with, inter alia, 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.Full implementationSDG 8, 162024 CSR 2Significantly 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.2024 CSR 3Some progressImprove education and training, including for disadvantaged groups, by enhancing teacher training and implementing competence-based teaching and learning.Some progressSDG 4, 10, 8Address labour shortages and improve workers’ skills to boost competitiveness and support the green transition.Some progressSDG 8, 42024 CSR 4 Limited progressReduce 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.Limited progressSDG 7, 8Address energy poverty by implementing targeted measures to reduce the share of population unable to keep their homes adequately warm.Limited progressSDG 7Promote the deployment and uptake of sustainable urban and railway transport, including by accelerating the development of the necessary infrastructure.Limited progressSDG 11RRP 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.RRP 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. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union. 
 
  
 
ANNEX 17: COMPETITIVE REGIONS 

and 

gaps 

labour 

Regional disparities in terms of GDP per head 
remain  very  high  in  Bulgaria.  They  go  hand  in 
productivity, 
hand  with 
in 
demographics, 
training, 
education 
employment,  wages,  infrastructure  endowment, 
innovation 
competitiveness  and  research  and 
performance.  These  indicators  are  all  typically 
worse  in  the  north  of  the  country.  In  addition, 
Bulgaria continues to experience strong disparities 
between  the  Yugozapaden  region,  where  the 
capital  Sofia  is  located  and  the  other  regions. 
However,  there  are  also  strong  disparities  within 
the Yugozapaden region. 

GDP  (purchasing  power  standard  -  PPS)  per 
head in 2023 varied between 102% of the EU 
average  in  the  Yugozapaden  region  and  41-
54% in all other regions, with one out of the 
three  Northern  and  one  out  of  the  three 
Southern  regions  at  the  bottom.  Economic 
activity in Bulgaria remains highly concentrated in 
the  Yugozapaden  region  which  generates  about 
half  of  the  national  GDP.  This  region's  (generally 
better) performance is largely driven by that of the 
NUTS 3 region of Sofia (137%), whereas the other 
NUTS 3 regions within the Yugozapaden region are 
largely comparable to the rest of the country. 

Competitiveness 

Labour productivity has steadily increased in 
Bulgaria  since  2010,  and  more  quickly  than 
the  EU  average.  Real  productivity  growth  during 
2013-2022  was  high  in  all  Bulgarian  regions. 
Yugoiztochen  showed  the  lowest  growth  in  real 
productivity per hour worked at 1.5% per year, but 
this  still  exceeds  the  EU  average  of  0.9%  (Graph 
A17.1). 

labour  productivity 

Nevertheless, 
is  still 
lagging  behind  the  EU  average.  In  2022, 
Bulgaria  had  the  lowest  GDP  (PPS)  per  hour 
worked in the EU, equal to around 55% of the EU 
average.  The  country's  highest  level  of  labour 
productivity is in the Yugozapaden region at 71%, 
considerably  higher 
in  Severozapaden, 
than 
Severen  tsentralen  and  Yuzhen  tsentralen,  the 
least  productive  regions,  all  at  41%  of  the  EU 
average. The capital Sofia is home to 20% of the 
population,  and  it  is  attracting  more  and  more 
highly  skilled  people,  providing  them  with  more 
opportunities for business development. 

Graph A17.1: Labour productivity per hour 

Unit: Real GDP per hour worked (EUR, 2015 prices) 
Source: ARDECO (JRC) 

the 

regions. 

less  developed 

knowledge-intensive 
in 
Employment 
activities  and 
innovative  companies  has 
increased  significantly  in  the  country  since 
2017.  However,  employment  in  high-technology 
sectors  and  R&D  expenditure  remain  very  low  in 
some  of 
In 
Yugoiztochen,  Severozapaden  and  Severoiztochen 
only between 1.4% and 2.4% of the workers were 
employed  in  high-technology  sectors  in  2024.  At 
national  level,  R&D  expenditure  in  2024  was 
33.3%  of  the  EU  average  in  the  business  sector 
and 19.7% (262) in the public sector, but there are 
variations by region. R&D expenditure in 2022 was 
between  0.3%  and  0.4%  of  GDP  in  all  regions 
except  the  Yugozapaden  region,  where  it  was 
much higher at 1.2%. 

to 

region  had 

The  ICT  uptake  remains  low  in  Bulgaria.  In 
2021, only 26.6% of the total population used the 
interact  with  public  authorities 
internet 
compared  to  the  EU  average  of  58.5%.  The 
Yugozapaden 
the  highest  share 
(36.3%), while in Severozapaden and Yugoiztochen 
the  shares  were  17.7%  and  18.5%,  respectively. 
Improving  the  country’s  digital  infrastructure  and 
environment  can  provide  opportunities,  especially 
to young people across the country, to increase the 
productivity  of  local  businesses,  innovation,  and 
access to digital services. 

Bulgaria  has  made  significant  progress  in 
delivering  online  services  to  businesses  and 
developing  digital 
technologies.  However, 
significant challenges persist as regards basic and  

(262) European Innovation Scoreboard 2024, Country Profile 

Bulgaria. 

109 

051015202530354045201220132014201520162017201820192020202120222015 EUR per hour workedOther NUTS 2 regionsCapital regionNational averageEU27 
 
            
 
 
 
Table A17.1:Selection of indicators at regional level in Bulgaria 

(1) University of Gothenburg 
Source: Eurostat and JRC 

of  advanced 

advanced  digital  skills  (see  also  Annex  12)  and 
closing  urban-rural  divides.  Although  it  would  be 
beneficial if Bulgarian firms made progress in the 
take-up 
technologies, 
significant progress  has  been  made in  developing 
strategic technologies such as chips and quantum 
computing (263). In addition, Bulgaria has advanced 
considerably in building competitive capabilities in 
green 
clean-tech 
manufacturing over the last two decades (264). 

products, 

including 

digital 

There are opportunities to further accelerate 
the  implementation  of  digital  and  deep-tech 
solutions,  and  clean  technologies,  which  is 
important  for  the  long-term  sustainability 
and  competitiveness  of  Bulgarian  regions. 
This  can  be  done  by:  i)  investing  in  research, 
development,  and  manufacturing  of  critical 
technologies,  strengthening  value  chains,  and 
ii) addressing skills shortages (see Annex 12). 

Bulgaria  has  significant  potential  to  drive 
convergence in innovation across regions, by 
public-private 
stronger 
encouraging 
technology 
strengthening 
collaboration, 
transfer capacity, and increasing the market 
presence  of  innovative  small  to  medium-
sized  enterprises.  With  their  capacity  to  drive 
regional  innovation  and  create  high  value  added 
jobs,  the  centres  of  excellence  and  competence 
could  play  a  central  role  in  achieving  regional 

(263) Bulgaria 2024 Digital Decade country report. 

competitiveness  and  spurring  convergence 
innovation across regions. 

in 

and 

infrastructure 

The  key  growth  prerequisites  such  as 
transport 
human 
capital (265)  are  still  lacking  in  many  of  the 
country’s  less  developed  regions.  In  2024,  in 
the  Severozapaden,  Yugoiztochen  and  Yuzhen 
tsentralen  regions,  less  than  30%  of  people  aged 
25-64  had  a  tertiary  degree.  By  contrast,  in  the 
Yugozapaden  region  the  proportion  (42.9%)  was 
higher  than  the  EU  average  (36.1%).  This  can  be 
attributed  to  more  opportunities  for  studying  at 
universities  in  the  capital,  large  differences  in 
wages, as well as more ample job opportunities in 
Sofia  for  people  with  a  higher  education.  The 
upgrading  and  modernising  of  the  transport 
network is progressing very slowly and needs to be 
further  developed.  In  the  Yugozapaden  region, 
74%  of  the  population  within  a  120 km  radius 
could be reached in less than 90 minutes by car in 
2021. This ratio is considerably lower in the three 
northern regions of Severozapaden (30%), Severen 
tsentralen (36%) and Severoiztochen (46%). 

All  Bulgarian  regions  rank  below  the  EU 
average  in  terms  of  competitiveness  (Map 
A17.1).  The  Regional  Competitiveness 
Index 
(RCI) (266)  value  is  highest  in  the  Yugozapaden 

(265) Human capital encompasses knowledge, skills and 

competences, highlighting the importance of education, 
training and experience in building a workforce that drives 
economic growth, innovation and productivity. 

(266) Inforegio - EU Regional Competitiveness Index 2.0 - 2022 

(264) Error! Hyperlink reference not valid. 

edition. 

110 

GDP per head (PPS)Real GDP per head growthProductivity - GDP per person employed (PPS)Real productivity growth (per person employed)Productivity - GDP per hour worked (PPS)Real productivity growth (per hour worked)Human resources in science and technology (core)Employment in knowledge-intensive servicesEuropean Quality of Government Index (1)Population growthAt-risk-of-poverty or social exclusionAccess to alternative fuel infrastructureGreenhouse gas emissionsIndex EU-27 = 100Average annual % changeIndex EU-27 = 100Average annual % changeIndex EU-27 = 100Average annual % change% of total employment% of total employmentEU-27=0Average annual change per 1000 residents% of total populationNumber of electric vehicles charging points within 10 kmtCO2eq. per person20232014-202320232014-202320222013-20222024202420242014-2023202420222023European Union (27 MS)1001.61000.61000.948.341.31.721.02877.1Bulgaria643.7572.5552.338.232.3-9.930.3498.3Severozapaden424.1544.1411.930.730.7-2.42-18.635.83.58.0Severen tsentralen444.0453.2412.532.224.6-0.56-17.836.66.77.0Severoiztochen502.9532.9482.135.431.0-0.97-11.226.32310.2Yugoiztochen541.4591.3571.530.226.2-1.33-9.335.81319.5Yugozapaden1024.0661.4712.450.140.6-1.93-4.120.11294.9Yuzhen tsentralen413.8433.6413.132.128.0-2.26-9.238.3164.8 
 
 
 
      
 
 
region  (85)  while  the  lowest  values  are  found  in 
Severozapaden  (49)  and  Yugoiztochen  (53).  While 
the  Yugozapaden  region  consistently  outperforms 
the other regions for the various sub-indices of the 
RCI,  the  divide  is  particularly  striking  as  regards 
innovation,  where  the  Yugozapaden  region  scores 
75, compared to only 28 in both Yugoiztochen and 
Severozapaden.  This 
the 
contribution of the capital city,  which offers more 
attractive  conditions  for  firms  to  operate  or 
develop and for residents to live and work in. 

is  mainly  due 

to 

Map A17.1:  Regional Competitiveness Index 2.0, 
2022 edition 

Source: DG REGIO, JRC based on Eurostat 

Social fairness 

Bulgaria's population, particularly in some of 
its  less  developed  regions,  is  falling  rapidly. 
Between 2014 and 2023, the country's population 
decreased  by  9.9 per  1 000  residents  on  average 
per year (267). In some regions, the population loss 
is  extremely  high.  In  Severozapaden  and  Severen 
tsentralen, the population shrank by 18.6 and 17.8 
per  1 000  residents,  respectively.  In  comparison, 
the  population 
region 
decreased  by  only  4.1  per  1 000  residents  in  the 
same period and the Yugozapaden region was the 
only  region  to  show  net 
in-migration,  albeit 
modest, during this period. Nevertheless, there are 
severe  intraregional  disparities  when  it  comes  to 
the  population  of  the  separate  NUTS  3  regions 
within the Yugozapaden region. While in the NUTS 
3  region  of  Sofia  (capital)  the  population  has 

the  Yugozapaden 

in 

decreased  by  only  0.2  per  1 000  residents  on 
average  per  year,  the  index  for  the  regions  of 
Kyustendil,  Pernik  and  Blagoevgrad  –  18.1,  13.5 
and  9.2,  respectively  –  is  comparable  to  those  in 
the northern regions. 

reached  9.7% 

The unemployment rate in Bulgaria (4.2%) is 
lower than the EU average (5.9%), but there 
are  wide  regional  disparities.  In  2024,  the 
unemployment  rate  was  as  low  as  2.8%  in 
in  Yuzhen 
region  and  2.9% 
Yugozapaden 
in 
tsentralen,  whereas 
it 
in  this 
Severozapaden.  The  employment  rate 
region is also particularly low, at 69.3% compared 
to  the  national  average  of  76.8%.  This  is  the 
country's  least  developed  region  offering  limited 
opportunities  for  attractive  jobs  with  sufficient 
salaries  and  business  development.  Therefore, 
highly  skilled  people  are  instead  moving  to  the 
capital  or  other  regions.  Moreover,  poverty  and 
social  exclusion  risks  continue  to  be  high  (see 
Annex  11),  and  there  are  considerable  disparities 
between  rural  and  urban  areas.  In  2024,  people 
living in rural areas were almost twice as likely to 
face  poverty  or  social  exclusion  risks  than  those 
residing in cities (40.8% vs 22.1%). 

Bulgarian  regions  show  mixed  results  in 
terms of access to essential services (Graph 
A17.2). The proportion of people in rural areas in 
all  Bulgarian  regions  who  can  access  healthcare 
services within a 10-minute drive is below the EU 
average,  ranging  from  13%  to  25%  (EU  average: 
29%).  The  rate  of  early  leavers  from  education 
and  training  is  significantly  higher  in  rural  areas 
for 
(see  Annex  12)  and 
International  Student  Assessment 
test 
showed a large performance gap between schools 
in rural areas and urban areas (e.g. 79 score points 
in  2022,  EU:  46),  reflecting 
in  mathematics 
challenges  in  accessing  quality  education  and  the 
impact  of  socio-economic  factors  on  educational 
outcomes.  However,  better  access  to  essential 
services  is  expected  thanks  to  the  completion  of 
the  core  or  comprehensive  parts  of  the  trans-
European  Transport  network,  the  improvement  of 
transportation  services,  and  actions  to  raise  the 
quality of education. 

the  Programme 
(PISA) 

(267) ARDECO (tables: SNPTN, SNPCN, SNMTN). 

111 

 
 
 
 
 
Graph A17.2: Access to healthcare and primary 
education, 2023 

infrastructure. (268) In 2022, in the Yugozapaden 
region,  the  average  number  of  electric  vehicle 
charging  points  within  10 km  of  people’s  homes 
was  129,  less  than  half  the  EU  average  value  of 
287,  and  much  lower  even  in  the  other  regions 
to 
(between  4  and  23). 
alternative  fuel  infrastructure  in  urban  centres 
across the country and introducing more incentives 
for  buying  electric  cars  could  help  make  mobility 
more sustainable and reduce emissions. 

Improving  access 

Graph A17.3: Greenhouse gas emissions per capita 

Units: Percentage of population that can reach nearest 
hospital within 10 minutes by car (EU-27).  
Percentage of children under 15 who can reach primary 
school within 15-minute walk (EU-24). 
Source: Eurostat 

Sustainability 

emissions 

Greenhouse  gas  emissions  per  person  in 
Bulgaria  reached  8.3  tonnes  per  year  in 
2023,  which  is  above  the  EU  average  of  7.1 
(Graph  A17.3).  Moreover, 
have 
decreased by only 4% since 2018, compared to an 
EU average decrease of 19%. In the three northern 
regions,  emissions  even  increased  during  this 
period.  The  variation  in  emissions  across  regions 
continued  to  be  very  large  in  2023,  ranging  from 
4.8 tonnes per person in Yuzhen tsentralen to 19.5 
in  Yugoiztochen,  where  the  most  polluting  mining 
industries are located. 

The  decarbonisation  of  energy  production  is 
a  key  regional  challenge  for  Bulgaria.  It 
comes  with  challenges  and  opportunities  for  the 
human  capital  and  renewable  energies.  There  are 
many ways to tackle some of the challenges faced 
by  the  just  transition  regions  of  Stara  Zagora, 
Kyustendil  and  Pernik,  for  example:  i) developing 
photovoltaic parks with electrolysers and/or energy 
storage  systems;  ii) establishing  industrial  parks 
for clean technologies; iii) creating hydrogen-based 
value chains; iv) using green hydrogen.   

Bulgarian  regions  perform  relatively  poorly 
in  terms  of  access  to  alternative  fuel 

Unit: Tonnes per person per year 
Source: Eurostat and JRC 

(268) Indicators of access to alternative fuel infrastructure are 

based on calculations by DG REGIO and the JRC, using data 
from the European Alternative Fuels Observatory (EAFO), 
Eurostat, TomTom and Eco-Movement. 

112 

020406080100SeveroiztochenYugoiztochenSeveren tsentralenSeverozapadenYuzhen tsentralenYugozapadenBulgariaEU27Access to healthcare (% of population)Access to primary school (% of children under 15 years old)0510152025EU-27SeverozapadenSeveren tsentralenSeveroiztochenYugoiztochenYugozapadenYuzhen tsentralen20182023