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

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   EUROPEAN COMMISSION  Brussels, 4.6.2025  COM(2025) 202 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Bulgaria {SWD(2025) 202 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

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

THE COUNCIL OF THE EUROPEAN UNION, 

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

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

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

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

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

General considerations 

(1) 

Regulation (EU) 2024/1263, which entered into force on 30 April 2024, specifies the 
objectives  of  the  economic  governance  framework,  which  aims  at  promoting  sound 
and  sustainable  public  finances  and  sustainable  and  inclusive  growth  and  resilience 
through reforms and investments, and preventing excessive government deficits. The 
Regulation  stipulates  that  the  Council  and  the  Commission  conduct  multilateral 
surveillance in the context of the European Semester in accordance with the objectives 
and requirements set out in the TFEU. The European Semester includes, in particular, 
the  formulation,  and  the  surveillance  of  the  implementation  of  country-specific 
recommendations.  The  Regulation  also  promotes  national  ownership  of  fiscal  policy 
and  emphasises  its  medium-term  focus,  combined  with  more  effective  and  coherent 
enforcement. Each Member State must submit to  the Council and the Commission  a 
national  medium-term  fiscal-structural  plan,  containing  its  fiscal,  reform  and 
investment  commitments,  over  4  or  5  years,  depending  on  the  length  of the  national 
legislative  term.  The  net  expenditure2  path  in  these  plans  has  to  comply  with  the 

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OJ L, 2024/1263, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj. 
Net  expenditure  as  defined  in  Article  2,  point  (2),  of  Regulation  (EU)  2024/1263:  ‘net  expenditure’ 
means 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-offs and other temporary measures. 

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(2) 

(3) 

(4) 

Regulation’s  requirements,  including  the  requirements  to  put  or  keep  general 
government debt on a plausibly downward path by the end of the adjustment period, or 
for it to remain at prudent levels below 60% of gross domestic product (GDP), and to 
bring  and/or  maintain  the  general  government  deficit  below  the  3%-of-GDP  Treaty 
reference value over the medium term. Where a Member State commits to a relevant 
set  of  reforms  and  investments  in  accordance  with  the  criteria  set  out  in  the 
Regulation, the adjustment period may be extended by up to three years. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council3,  which 
established  the  Recovery  and  Resilience  Facility  (the  ‘RRF’),  entered  into  force  on 
19 February 2021.  The  RRF  provides  financial  support  to  Member  States  for 
implementing  reforms  and  investments,  delivering  a  fiscal  impulse  financed  by  the 
Union.  In  line  with  the  priorities  of  the  European  Semester  for  economic  policy 
coordination, the RRF fosters economic and social recovery while driving sustainable 
reforms and investments, in particular promoting the green and digital transitions and 
making  Member  States’  economies  more  resilient.  It  also  helps  strengthen  public 
finances  and  boost  growth  and  job  creation  in  the  medium  and  long  term,  improve 
territorial cohesion within the Union and support the continued implementation of the 
European Pillar of Social Rights. 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council4  (the 
‘REPowerEU  Regulation’),  which  was  adopted  on  27 February 2023,  aims  to  phase 
out the Union’s dependence on Russian fossil-fuel imports. This helps achieve energy 
security  and  diversify  the  Union’s  energy  supply,  while  increasing  the  uptake  of 
renewables, energy storage capacities and energy efficiency. 

On  15 October  2021,  Bulgaria  submitted  its  national  recovery  and  resilience  plan  to 
the  Commission,  in  accordance  with  Article 18(1)  of  Regulation  (EU)  2021/241. 
Pursuant  to  Article 19  of  that  Regulation,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance  with  the  assessment  guidelines  set  out  in  Annex  V.  On  4 May  2022,  the 
Council adopted its Implementing Decision approving the assessment of the recovery 
and  resilience  plan  for  Bulgaria5,  which  was  amended  under  Article 18(2)  on 
8 December  2023  to  update  the  maximum  financial  contribution  for  non-repayable 
financial  support6.  The  release  of  instalments  is  conditional  on  the  adoption  of  a 
decision  by  the  Commission,  in  accordance  with  Article 24(5),  stating  that  Bulgaria 
has  satisfactorily  achieved  the  relevant  milestones  and  targets  set  out  in  the  Council 
Implementing  Decision.  Satisfactory  achievement  requires  that  the  achievement  of 
preceding  milestones  and  targets  for  the  same  reform  or  investment  has  not  been 
reversed. 

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the  Recovery  and  Resilience  Facility 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12 February 2021 
establishing 
(OJ  L  57,  18.2.2021,  p. 17,  ELI: 
http://data.europa.eu/eli/reg/2021/241/oj). 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27 February 2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No 1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1, ELI: http://data.europa. eu/eli/reg/2023/435/oj). 
Council Implementing Decision of 4 May 2022 on the approval of the assessment of the recovery and 
resilience plan for Bulgaria (8091/22). 
Council  Implementing  Decision  of  8 December  2023  amending  the  Implementing  Decision  of  4 May 
2022 on the approval of the assessment of the recovery and resilience plan for Bulgaria (15837/2023). 

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(5) 

(6) 

(7) 

(8) 

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On  [date],  the  Council,  upon  the  recommendation  of  the  Commission,  adopted  a 
recommendation  endorsing  the  national  medium-term  fiscal-structural  plan  of 
Bulgaria7.  The  plan  was  submitted  in  accordance  with  Article  11  and  Article  36(1), 
point (a), of Regulation (EU) 2024/1263, covers the period from 2025 until 2028 and 
presents a fiscal adjustment spread over four years. 

On  26  November  2024,  on  the  basis  of  Regulation  (EU)  No 1176/2011,  the 
Commission  adopted  the  2025  Alert  Mechanism Report,  in  which  it  did  not  identify 
Bulgaria as one of the Member States for which an in-depth review would be needed. 
The  Commission  also  adopted  a  recommendation  for  a  Council  recommendation  on 
the economic policy of the euro  area and  a proposal  for the 2025 Joint  Employment 
Report,  which  analyses  the  implementation  of  the  Employment  Guidelines  and  the 
principles  of  the  European  Pillar  of  Social  Rights.  The  Council  adopted  the 
Recommendation on the economic policy of the euro area8 on 13 May 2025 and the 
Joint Employment Report on 10 March 2025. 

On  29 January 2025,  the  Commission  published  the  Competitiveness  Compass,  a 
strategic framework that aims to boost the EU’s global competitiveness over the next 
five  years.  It  identifies  the  three  transformative  imperatives  of  sustainable  economic 
growth: (i) innovation; (ii) decarbonisation and competitiveness; and (iii) security. To 
close  the  innovation  gap,  the  EU  aims  to  foster  industrial  innovation,  support  the 
growth of start-ups through initiatives like the EU Start-up and Scale-up Strategy, and 
promote the adoption of advanced technologies like artificial intelligence and quantum 
computing.  In  pursuit  of  a  greener  economy,  the  Commission  has  outlined  a 
comprehensive Affordable Energy Action Plan and a Clean Industrial Deal, ensuring 
that  the  shift  to  clean  energy  remains  cost-effective,  competitiveness-friendly, 
particularly  for  energy-intensive  sectors,  and  is  a  driver  for  growth.  To  reduce 
excessive dependencies and increase security, the Union is committed to strengthening 
global  trade  partnerships,  diversifying  supply  chains  and  securing  access  to  critical 
raw materials and clean energy sources. These priorities are underpinned by horizontal 
enablers, namely regulatory simplification, deepening of the single market, financing 
competitiveness and a Savings and Investments Union, promotion of skills and quality 
jobs, and better coordination of EU policies. The Competitiveness Compass is aligned 
with  the  European  Semester,  ensuring  that  Member  States’  economic  policies  are 
consistent with the Commission’s strategic objectives, creating a  unified approach to 
economic governance that fosters sustainable growth, innovation and resilience across 
the Union. 

In  2025,  the  European  Semester  for  economic  policy  coordination  continues  to 
develop  alongside  the  implementation  of  the  RRF.  The  full  implementation  of  the 
recovery and resilience plans remains essential for delivering on the policy priorities 
under the European Semester, as the plans help effectively address all or a significant 
subset  of  challenges  identified  in  the  relevant  country-specific  recommendations 
issued in recent years. The country-specific recommendations remain equally relevant 
for  the  assessment  of  amended  recovery  and  resilience  plans  in  accordance  with 
Article 21 of Regulation (EU) 2021/241. 

Council  Recommendation  of  [21  January/18  February/…]  2025  [endorsing  the  medium-term  fiscal-
structural  plan 
[Country],  OJ  C/2025/[6xx/xxx], 
[10.2/dd.mm].2025. 
Council  Recommendation  of  13  May  2025  on  the  economic  policy  of  the  euro  area  (OJ  C, 
C/2025/2782, 22.5.2025, ELI: http:// data.europa.eu/eli/C/2025/2782/oj).)  

the  net  expenditure  path]  of 

/  setting 

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(9) 

The  2025  country-specific  recommendations  cover 
the  key  economic  policy 
challenges that are not sufficiently addressed by measures included in the recovery and 
resilience  plans,  taking  into  account  the  relevant  challenges  identified  in  the  2019-
2024 country-specific recommendations. 

(10)  On  4  June  2025,  the  Commission  published  the  2025  country  report  for  Bulgaria.  It 
assessed  Bulgaria’s  progress 
relevant  country-specific 
in  addressing 
recommendations  and  took  stock  of  Bulgaria’s  implementation  of  the  recovery  and 
resilience plan. Based on this analysis, the country report identified the most pressing 
challenges Bulgaria is facing. It also assessed Bulgaria’s progress in implementing the 
European  Pillar  of  Social  Rights  and  in  achieving  the  Union  headline  targets  on 
employment, skills and poverty reduction, as well as progress in achieving the United 
Nations Sustainable Development Goals. 

the 

Assessment of the Annual Progress Report 

(11)  On  [date]  the  Council  recommended  the  following  maximum  growth  rates  of  net 
expenditure  for  Bulgaria:  6.2%  in  2025,  4.9%  in  2026,  4.4%  in  2027,  and  4.0%  in 
2028,  which  correspond  to  the  maximum  cumulative  growth  rates  calculated  by 
reference to 2024 of 6.2% in 2025, 11.4% in 2026, 16.3% in 2027, and 21% in 2028. 
On  2  May  2025  Bulgaria  submitted  its  Annual  Progress  Report9,  on  relevant  fiscal 
outturn  data  and  projections,  and  the  implementation  of  reforms  and  investments 
responding  to  the  main  challenges  identified  in  the  European  Semester  country-
specific  recommendations.  The  Annual  Progress  Report  also  reflects  Bulgaria’s 
biannual reporting on the progress made in achieving its recovery and resilience plan 
in accordance with Article 27 of Regulation (EU) 2021/241. 

(12)  Russia’s  war  of  aggression  against  Ukraine  and  its  repercussions  constitute  an 
existential  challenge  for  the  European  Union.  The  Commission  recommended  to 
activate the national  escape clause of the Stability and Growth Pact  in  a coordinated 
manner to support the EU efforts to achieve a rapid and significant increase in defence 
spending and this proposal was welcomed by the European Council of 6 March 2025. 
Following  the  request  of  Bulgaria  on  2 May  2025,  on  [date]  the  Council,  upon  the 
recommendation of the Commission, adopted a recommendation allowing Bulgaria to 
deviate  from,  and  exceed,  the  recommended  maximum  growth  rates  of  net 
expenditure10. 

(13)  Based on data validated by Eurostat11, Bulgaria’s general government deficit increased 
from 2.0% of GDP in 2023 to 3.0% in 2024, while the general government debt rose 
from 22.9% of GDP at the end of 2023 to 24.1% at the end of 2024. According to the 
Commission’s  calculations,  these  developments  correspond  to  a  net  expenditure 
growth rate of 10.4% in 2024. In the Annual Progress Report, Bulgaria estimates the 
net expenditure growth in 2024 at 12.3%. The lower net expenditure growth rate in the 
Commission’s  calculations  is  mainly  due  to  Commission’s  accounting  for  the 
recording of a one-off expenditure in 2024. Based on the Commission’s estimates, the 

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The  2025  Annual  Progress  Reports  are  available  on:  https://economy-finance.ec.europa.eu/economic-
and-fiscal-governance/stability-and-growth-pact/preventive-arm/annual-progress-reports_en 
Council  recommendation  allowing  Bulgaria  to  deviate  from,  and  exceed,  the  recommended  net 
expenditure path (Activation of the national escape clause), OJ (...) 
Eurostat-Euro Indicators, 22.4.2025. 

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fiscal  stance12,  which  includes  both  nationally  and  EU  financed  expenditure,  was 
broadly neutral in 2024. 

(14)  According to the Annual Progress Report, the macroeconomic scenario underpinning 
the budgetary projections by Bulgaria expects real GDP growth at 3.0% in 2025, while 
HICP  inflation  is  projected  at  3.6%  in  2025.  The  Commission  Spring  2025  Forecast 
projects real GDP to grow by 2.0% in 2025 and 2.1% in 2026, and HICP inflation to 
stand at 3.6% in 2025 and 1.8% in 2026.  

(15) 

In the Annual Progress Report, the general government deficit is expected to decrease 
to  2.9%  of  GDP  in  2025,  while  the  general  government  debt-to-GDP  ratio  is  set  to 
increase  to  28.9%  by  the  end  of  2025.  These  developments  correspond  to  net 
expenditure growth of 8.6% in 2025. The Commission Spring 2025 Forecast projects a 
government  deficit  of  2.8%  of  GDP  in  2025.  According  to  the  Commission’s 
calculations,  these  developments  correspond  to  net  expenditure  growth  of  9.2%  in 
2025. These higher projections of net expenditure growth than in the Annual Progress 
Report  are  due  to  a  lower  projected  EU  funded  expenditure  as  well  as  a  smaller 
anticipated  impact  of  discretionary  revenue  measures,  albeit  against  lower  total 
expenditure,  in  the  Commission  Spring  2025  Forecast  for  2025.  The  Commission’s 
recording  of  one-off  expenditure  for  2024  also  contributed  to  this  difference  by 
creating  a  lower  starting  base  for  2024.  Based  on  the  Commission’s  estimates,  the 
fiscal stance, which includes both nationally and EU financed expenditure, is projected 
to be expansionary, by 1.1% of GDP, in 2025. The general government debt-to-GDP 
ratio is set to increase to 25.1% by the end of 2025.  

(16)  General  government  expenditure  amounting  to  1.0%  of  GDP  is  expected  to  be 
financed  by  non-repayable  support  (“grants”)  from  the  Recovery  and  Resilience 
Facility  in  2025,  compared  to  0.4%  of  GDP  in  2024,  according  to  the  Commission 
Spring 2025 Forecast. Expenditure financed by Recovery and Resilience Facility non-
repayable support enables high-quality investment and productivity-enhancing reforms 
without a direct impact on the general government balance and debt of Bulgaria.  

(17)  General  government  defence  expenditure  in  Bulgaria  amounted  to  1.6%  of  GDP  in 
2021 and in 2022, and 1.5% of GDP in 202313. 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.  This  corresponds  to  an  increase  of  1.2  percentage  point  of  GDP 
compared  to  2024.  The  period  when  the  national  escape  clause  is  activated  (2025-
2028) allows Bulgaria to reprioritise government expenditure or increase government 
revenue  so  that  lastingly  higher  defence  expenditure  would  not  endanger  fiscal 
sustainability in the medium term. 

(18)  According  to  the  Commission  Spring  2025  Forecast,  net  expenditure  in  Bulgaria  is 
projected to grow by 9.2% in 2025. Based on the Commission Spring 2025 Forecast, 
the  net  expenditure  growth  of  Bulgaria  in  2025  is  projected  to  be  above  the 

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The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure net of discretionary revenue measures and including expenditure financed by non-repayable 
support (grants) from the Recovery and Resilience Facility and other Union funds. 
Eurostat, government expenditure by classification of functions of government (COFOG).  

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recommended maximum growth rate, corresponding to a deviation14 of 1.1% of GDP 
in  2025.  However,  the  projected  deviation  is  within  the  flexibility  of  the  national 
escape clause based on current projections for defence spending. 

(19)  The  Annual  Progress  Report  does  not  include  budgetary  projections  beyond  2025. 
Based on policy measures known at the cut-off date of the forecast, the Commission 
Spring 2025 Forecast projects a general government deficit of 2.8% of GDP in 2026. 
These developments correspond to net expenditure growth of 1.7% in 2026. Based on 
the Commission’s estimates, the fiscal stance, which includes both nationally and EU 
financed expenditure, is projected to be contractionary, by 0.8% of GDP, in 2026. The 
general government debt-to-GDP ratio is projected by the Commission to increase to 
27.1%  by  the  end  of  2026.  The  increase  of  the  debt-to-GDP  ratio  in  2026  mainly 
reflects a stable primary deficit above 2% and sustained disinflation over the forecast 
period, paired with increasing interest rates. 

(20) 

Key policy challenges 

In accordance with Article 19(3), point (b), of Regulation (EU) 2021/241 and criterion 
2.2  of  Annex  V  to  that  Regulation,  the  recovery  and  resilience  plan  includes  an 
extensive set  of mutually reinforcing  reforms and investments  to  be implemented by 
2026.  These  are  expected  to  help  effectively  address  all  or  a  significant  subset  of 
challenges  identified  in  the  relevant  country-specific  recommendations.  Within  this 
tight timeframe, finalising the effective implementation of the recovery and resilience 
plan, is essential to boost Bulgaria’s long-term competitiveness through the green and 
digital  transitions,  while  ensuring  social  fairness.  To  deliver  on  the  commitments  of 
the recovery and resilience plan by August 2026, it is essential for Bulgaria to urgently 
accelerate  the  implementation  of  reforms  and  investments  by  addressing  relevant 
challenges The rapid inclusion of a REPowerEU chapter in the recovery and resilience 
plan is essential for the financing of additional reforms and investments in support of 
Bulgaria’s  and  the  EU’s  strategic  objectives  in  the  field  of  energy  and  the  green 
transition.  In  particular,  those  relate  to  maintaining  a  consistent  policy  approach 
towards  implementing  the  envisaged  structural  reforms  as  well  as  ensuring 
competitive  and  effective  public  procurement  procedures  to  allow  the  timely 
realisation  of  the  planned  investments.  The  systematic  involvement  of  local  and 
regional  authorities,  social  partners,  civil  society  and  other  relevant  stakeholders 
the  successful 
in  order 
remains  essential 
implementation of the recovery and resilience plan.  

to  ensure  broad  ownership  for 

(21)  The implementation  of cohesion  policy programmes,  which encompass support from 
the  European  Regional  Development  Fund  (ERDF),  the  Just  Transition  Fund  (JTF), 
the European Social Fund Plus (ESF+) and the Cohesion Fund (CF), has accelerated in 
Bulgaria. It is important to continue efforts to ensure the swift implementation of these 
programmes, while maximising their impact on the ground. Bulgaria is already taking 
action under its cohesion policy programmes to boost competitiveness and growth. At 
the  same  time,  Bulgaria  continues  to  face  challenges,  including  those  relating  to 
(energy)  poverty  and  social  inclusion,  quality  and  inclusiveness  of  education,  skills 
development,  labour  market  integration  of  vulnerable  groups  and  energy  transition, 
which remains  key to  long-term  resilience,  and competitiveness,  where further focus 
on  development  of  strategic  technologies  could  provide  new  opportunities.  In 

14 

From  2026  these  figures  will  appear  in  the  control  account  that  is  established  in  Article  22  of  the 
Regulation (EU) 2024/1263. 

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accordance  with  Article  18  of  Regulation  (EU)  2021/1060,  Bulgaria  is  required  –  as 
part of the mid-term review of the cohesion policy funds – to review each programme 
taking into account, among other things, the challenges identified in the 2024 country-
specific  recommendations.  The  Commission  proposals  adopted  on  1  April  202515 
extend  the  deadline  for  submitting  an  assessment  –  for  each  programme  –  of  the 
outcome of the mid-term review beyond 31 March 2025. It also provides flexibilities 
to  help  speed  up  programme  implementation  and  incentives  for  Member  States  to 
allocate cohesion policy resources to five strategic priority areas of the Union, namely 
competitiveness  in  strategic  technologies,  defence,  housing,  water  resilience  and 
energy transition. 

(22)  The  Strategic  Technologies  for  Europe  Platform  (STEP)  provides  the  opportunity  to 
invest in a key EU strategic priority by strengthening the EU’s competitiveness. STEP 
is channelled through 11 existing EU funds. Member States can also contribute to the 
InvestEU  Programme  supporting  investments  in  priority  areas.  Bulgaria  could  use 
these initiatives to support the development or manufacturing of critical technologies, 
including clean and resource-efficient technologies. 

(23)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan  and  other  EU  funds,  Bulgaria  faces  several  additional  challenges  related  to  the 
quality  of  education  and  skills,  healthcare,  long-term  care  and  social  inclusion. 
Additional 
and 
competitiveness,  include  the  functioning  of  the  public  administration,  including  the 
independence of regulators, the effectiveness of public procurement procedures and of 
the  steering  of  research  and  innovation.  Further  challenges  relate  to  the  still  high 
degree  of  reliance  on  fossil  fuels,  persistent  energy  poverty,  underdeveloped 
sustainable transport infrastructure and poor waste and water management. 

challenges,  which  undermine 

the  business 

environment 

(24)  As  set  in  the  Competitiveness  Compass,  all  the  EU,  national,  and  local  institutions 
must  make  a  major  effort  to  produce  simpler  rules  and  to  accelerate  the  speed  of 
administrative  procedures.  The  Commission  has  set  ambitious  goals  for  reducing 
administrative burden: by at least 25% and by at least 35% for SMEs; and has created 
new  tools  to  achieve  these  goals,  including  systematic  stress  test  of  the  stock  of  EU 
legislation and enhanced stakeholders’ dialogue. To match this ambition, Bulgaria also 
needs  to  take  action.  66%  of  businesses  consider  the  complexity  of  administrative 
procedures to be a problem for their company when doing business in Bulgaria16. The 
quality  of  services  provided  by  the  public  administration  remains  insufficient,  with 
significant regional disparities. The vast majority of businesses perceive corruption to 
be widespread and a problem when doing business. The other main challenges to the 
business  environment  include the high  administrative burden and regulatory barriers. 
These  issues  could  be  tackled  by  further  digitalising  administrative  services  and 
reducing  the  cost  of  starting  a  business.  Public  procurement  procedures  often  lack 
competition  or  quality,  often  leading  to  lack  of  bidders  or  to  successful  appeals. 
Corruption  risks  in  public  procurement  remain  high,  deterring  businesses  from 
participating  due  to  perceived  bias  in  conditions  and  evaluations.  Regulatory  bodies 
face resource limitations and are often subject to political influence, which undermines 

15 

16 

Proposal  for  a  REGULATION  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE  COUNCIL 
amending  Regulations  (EU)  2021/1058  and  (EU)  2021/1056  as  regards  specific  measures  to  address 
strategic challenges in the context of the mid-term review - COM(2025) 123 final.   
‘Businesses' attitudes towards corruption in the EU’ Flash Report, Eurobarometer Report (April 2024). 

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their independence  and the quality  of their work.  Wide differences in  salaries across 
and between some regulators limit the scope to attract quality experts. . 

(25)  The  level  of  R&D  investment  in  Bulgaria  is  very  low  and  not  efficiently  allocated, 
leading  to  low  impact  and  effectiveness,  notably  for  public  R&D.  In  2023,  public 
R&D spending was 0.28% of GDP against the EU average of 0.72%. In addition, links 
between  academia  and  business  remain  limited.  The  low  level  of  R&D  spending  is 
exacerbated  by  public  funds  spread  across  many  higher  education  institutions  and 
research organisations. These weaknesses result in low innovation output as evidenced 
by  the  low  patent  intensity  rate  and  the  below-EU-average  number  of  scientific 
publications, citations and public-private scientific co-publications. 

(26)  Accessing  clean  and  affordable  energy  and  reducing  the  reliance  on  fossil  fuels 
continue  to  be  priority  issues  for  Bulgaria.  The  country  had  the  fourth-highest 
wholesale electricity prices in 2024, partially due to continued reliance on fossil fuels, 
accounting for approximately 25% of electricity generation, the limited availability of 
non-fossil flexibility technologies, as well as limited interconnectivity between South-
Eastern  and  Central  Europe.  The  postponed  reform  of  the  retail  electricity  market 
liberalisation  impedes  the  transition  to  clean  and  affordable  energy  as  the  lack  of 
exposure to price signals drives demand up, in particular in peak hours, where it is met 
by  marginal  fossil  fuel  power  plants.  Bulgaria  records  sizeable  fossil-fuel  subsidies, 
representing approximately 0.82% of its GDP, with no phase-out planned before 2030. 
In particular, fossil-fuel subsidies that neither tackle energy poverty in a targeted way 
nor address genuine energy security concerns could be considered a phase-out priority. 
In Bulgaria, fossil fuel subsidies, such as feed-in-tariffs for combined heat and power 
plants, as well as the new State order to purchase electricity from the ‘Maritsa East II’ 
thermal  power  plant  are  economically  inefficient,  perpetuate  reliance  on  fossil  fuels 
and disincentivise the decarbonisation of the power and heating sectors. 

(27)  The  uptake  of  renewable  energy  has  slowed  down  in  Bulgaria.  In  2024,  the  country 
added  1  GW  of  new  renewable  energy  capacity  (mostly  solar  photovoltaics),  down 
from  1.2  GW  the  previous  year.  Complex  and  lengthy  permitting  procedures  create 
obstacles  to  installing  new  onshore  wind  capacity,  evidenced  by  the  lack  of  new 
capacities  in  recent  years.  The  potential  of  offshore  wind  installations  remains 
untapped  due  to  the  lack  of  a  regulatory  framework,  in  particular  to  designate  go-to 
areas and provide a grid development plan for coastal areas. Although Bulgaria created 
a  legal  basis  for  designating  go-to  areas  for  wind  installations  in  2023  as  part  of  a 
reform under the RRP, it still has not designated these areas. 

(28)  District heating systems in Bulgaria are often in poor technical condition and most run 

predominantly on natural gas or coal. 

(29)  The  insufficient  short-term  storage  capacity  and  the  need  to  rely  on  fossil-fuel 
generators result in one of the highest wholesale price swings in the EU with a daily 
average wholesale price variation of EUR 185/MWh in 2024. Limited liquidity on the 
wholesale  market  due  to  the  partial  liberalisation  and  the  compensation  scheme  for 
business  users  have  long  impeded  aggregation  and  demand-response  potentials, 
decreasing the flexibility of the electricity system. Furthermore, the lack of full retail 
market  liberalisation  will  continue  to  undermine  the  flexibility  of  the  electricity 
system. 

(30)  Bulgaria’s grid connection capacity for renewable energy installations is  increasingly 
limited, especially at distribution level, requiring additional investment in the network 
to manage the continuous integration of renewables. 

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(31)  Energy poverty remains a structural challenge, with the proportion of people unable to 
keep  their  homes  adequately  warm  still  above  the  EU  average.  Although  Bulgaria 
adopted  a  legal  definition  of  energy  poverty  in  2023  as  part  of  a  reform  under  the 
RRP,  it  still  needs  to  identify  the  affected  population  and  to  design  effective  and 
targeted support schemes. 

(32)  The  energy 

intensity  and 

the  energy-related  greenhouse  gas  emissions  of 
manufacturing in Bulgaria remain among the highest in the EU. The energy intensity 
of manufacturing fell between 2017 and 2022 to 2.45 GWh/EUR of gross value added 
(GVA)  but  remains  significantly  higher  than  the  EU  average  (1.05  GWh/EUR  of 
GVA).  Promoting  energy  efficiency  in  manufacturing  –  particularly  in  energy-
intensive sectors – and cutting industrial energy use would contribute to productivity 
and competitiveness gains for the economy. 

(33)  Transport is the sector that generates the most emissions in Bulgaria with greenhouse 
gas  emissions  from  road  transport  significantly  increasing  between  2005  and  2023, 
while  they  decreased  in  the  EU  overall.  Further  action  is  needed  to  incentivise  the 
uptake of clean transport in Bulgaria, such as greater promotion of public transport, for 
instance by rolling out the single ticket service for public transport, by modernising the 
railway infrastructure  and electrifying  the remaining railway lines,  developing  cross-
border  rail  connectivity,  installing  electric  vehicle  charging  infrastructure  and 
implementing low-emission zones in urbanised areas. 

(34)  Sustainable water and waste management remains a challenge in Bulgaria. It still has 
limited  institutional  capacity  to  tackle  these  challenges.  More  action  is  needed  to 
strengthen  coordination  between 
the  competent  national  authorities,  develop 
monitoring  and  modelling  tools,  and  improve  reporting  and  planning  at  subnational 
level. The investment gap in water management to meet the requirements of the Water 
Framework  Directive  and  the  Floods  Directive  is  estimated  at  EUR 439  million  per 
year. 

rates  among  students 

(35)  A  high  share  of  high  school  students  lacks  basic  skills  in  mathematics,  reading  and 
science,  which  poses  a  significant  barrier  for  later  skills  development.  In  the  2022 
OECD  Programme  for  International  Student  Assessment  (PISA),  about  half  of 
Bulgarian  15-year-olds  underperformed  in  mathematics,  in  reading  and  in  science, 
with  even  higher 
from  disadvantaged  backgrounds. 
Underperformance  is  also  linked  to  the  school  curricula,  which  are  still  heavily 
knowledge-based.  There  is  an  insufficient  use  of  competence-based,  learner-centred 
approaches,  with  too  little  focus  on  basic  skills  development  and  on  STEM 
competences.  Teaching  quality  suffers  from  the  inability  to  attract  talent  to  the 
profession,  partly  due  to  a  lack  of  continuous  professional  development  and  training 
tailored to teachers’ needs. Major inequalities based on socio-economic factors persist 
with  a  high  degree  of  social  segregation  affecting  schools  and  exacerbating  learning 
inequalities. 

(36)  The Bulgarian labour market remains tight with a low unemployment rate at 4.2% in 
2024 and employers reporting a total need of over 260 000 additional workers, which 
is  roughly  9% of the persons  currently in  employment. Although  the share of young 
people  (15-29)  neither  in  employment  nor  in  education  and  training  fell,  it  is  still 
1.7 pps  above  the  EU  average.  Despite  slight  improvements  in  2024,  the  gap  in  the 
employment  of  people  with  and  without  disability  remains  one  of  the  highest  in  the 
EU at 35.4 pps in 2024. The employment rate for people with no more than a lower-
secondary  education  is  42 pps  lower  than  for  people  with  a  tertiary  education,  a 

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significantly  higher  gap  than  on  average  in  the  EU.  Furthermore,  the  Roma  face 
substantial challenges in finding work with only 47% in employment. Recent positive 
net migration flows are insufficient to offset the declining labour force and emigration 
of  high-skilled  young  workers.  These  labour  market  challenges  are  exacerbated  by 
workforce  skills  shortages  and  mismatches.  Digital  skills  among  the  working 
population  remain  significantly  low  with  40.1%  of  workers  (aged  25-64)  having  at 
least basic digital skills. Moreover, skills shortages are exacerbated by the low degree 
to which VET and tertiary education meets the needs of the labour market, especially 
in  sectors  relevant  to  the  green  and  digital  transition.  Furthermore,  Bulgaria  has 
reported one of the lowest  levels  of adult participation  in  learning in  the Union over 
the last decade, standing at 9.5% in 2022 compared to an EU average of 39.5%. 

(37)  The risk of social exclusion and poverty remains high in particular for children, older 
people, persons with disabilities, and Roma. Expenditure on social protection benefits 
in Bulgaria is among the lowest in the EU (18.3% against the EU average of 26.8% of 
GDP  in  2023),  particularly  for  social  assistance,  family  and  unemployment  benefits. 
The adequacy of minimum income is well below the EU average (19.1% vs. 56.3% of 
the  poverty  threshold  in  2023).  Only  25.1%  of  short-term  unemployed  received 
benefits in 2024. The system’s limited capacity to reduce poverty highlights the need 
to improve efficiency, coverage and effectiveness. In 2024, social transfers (excluding 
pensions) reduced poverty by just 27.7%, below the EU average of 34.4%. Addressing 
these  challenges  would  also  contribute  to  supporting  upward  social  convergence,  in 
line  with  the  Commission  services’  second-stage  country  analysis  of  the  Social 
Convergence Framework17. 

(38)  Despite  increases  in  healthcare  spending  since  2019,  mortality  from  treatable  causes 
has not decreased in Bulgaria, and remained more than twice the EU average, which 
indicates  inefficiencies  in  the  healthcare  system.  Despite  a  recent  decrease  of  the 
proportion of out-of-pocket payments for healthcare, it remains the highest in the EU. 
The number of nurses and general practitioners in Bulgaria fell again in 2023. There is 
now an average of less than one nurse per doctor and the share of practising nurses per 
1 000  population  remains  among  the  lowest  in  the  EU,  which  undermines  access  to 
and the quality of medical services. In 2023, over 40% of nurses and 50% of doctors 
were  aged  55  and  over,  which  combined  with  the  concentration  of  workforce  and 
facilities in urban areas, undermines access to health services in the long-term. 

HEREBY RECOMMENDS that Bulgaria take action in 2025 and 2026 to: 

1. 

2. 

Reinforce overall defence spending and readiness in line with the European Council 
conclusions  of  6 March  2025.  Adhere  to  the  maximum  growth  rates  of  net 
expenditure  recommended  by  the  Council  on  [date],  while  making  use  of  the 
allowance under the national escape clause for higher defence expenditure.  

In  view  of  the  applicable  deadlines  for  the  timely  completion  of  reforms  and 
the 
investments  under  Regulation 
implementation of the recovery and resilience plan. Accelerate the implementation of 
cohesion policy programmes (ERDF, JTF, ESF+, CF), building, where appropriate, 
on  the  opportunities  offered  by  the  mid-term  review.  Make  optimal  use  of  EU 
instruments,  including  the  scope  provided  by  the  InvestEU  and  the  Strategic 
Technologies for Europe Platform, to improve competitiveness. 

(EU)  2021/241,  urgently 

accelerate 

17 

SWD(2025)  95  –  Second-stage  country  analysis  on  social  convergence  in  line  with  the  Social 
Convergence Framework (SCF), 2025. 

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3. 

4. 

5. 

Create  the  enabling  conditions  to  boost  competitiveness  by  improving  the 
functioning and the capacity of the public administration, including at regional level. 
Simplify  regulation,  improve  regulatory  tools  and  reduce  administrative  burden  to 
create a level playing field for business. Improve the effectiveness of anti-corruption 
measures,  particularly  in  high-level  corruption  cases.  Improve  the  quality  of  public 
procurement  procedures  and  strengthen  the  independence  and  functioning  of 
regulators.  Increase  the  impact  and  effectiveness  of  public  R&D  investment  by 
focusing 
the 
innovation 
research  and 
commercialisation of research output. 

institutions  and 

improve 

fewer 

in 

Reduce  reliance  on  fossil  fuels,  including  by  promoting  market  liberalisation, 
accelerating  the  roll-out  of  renewables,  particularly  by  designating  areas  with  fast-
track  permitting  for  wind  installations.  Take  specific  steps  to  phase  out  fossil-fuel 
subsidies  including  by  removing  the  subsidies  supporting  coal-based  electricity 
production  and  district  heating.  Increase  the  flexibility  of  the  electricity  system  to 
reduce  wholesale  price  volatility,  in  particular  by  broadening  the  scope  for 
aggregation  and  demand-response  and  by  ensuring  sufficient  storage  capacities. 
Upgrade  the  electricity  grid  infrastructure  at  distribution  level  by  rolling  out  smart 
grid infrastructure and by upgrading lines and substations. Tackle energy poverty by 
developing an up-to-date information system on energy-poor and energy-vulnerable 
households  and  supporting  them  with  targeted  policy  measures.  Encourage  energy 
efficiency  measures  in  industry.  Promote  the  roll-out  and  uptake  of  sustainable 
urban,  public  and  rail  transport,  including  by  accelerating  the  development  of  the 
necessary  infrastructure.  Improve  water  and  waste  management  by  tackling 
institutional weaknesses and investing in infrastructure to ensure the sustainable use 
of resources. 

Strengthen  competence-based  teaching  and  learning.  Improve  teaching  quality  with 
initial,  continuous  and  needs-based  teacher  training.  Improve  the  quality,  labour 
market  relevance  and  inclusiveness  of  education  and  training,  including  for  Roma 
and  other  disadvantaged  groups.  Address 
labour  shortages,  by  effectively 
implementing measures to increase the employment level of persons with disabilities, 
people with a lower level of education, Roma and inactive persons. Reinforce skills 
acquisition  to  boost  competitiveness  and  support  the  green  and  digital  transition. 
Address  social  inclusion  by  improving  access  to  integrated  employment  and  social 
services, and by providing more effective minimum income support. Improve access 
to  health  services,  including  by  reducing  out-of-pocket  payments  and  tackling  the 
shortages and uneven distribution of health professionals with a view to boosting the 
effectiveness, accessibility and capacity of the health system. 

Done at Brussels, 

For the Council 
The President 

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