COMMISSION STAFF WORKING DOCUMENT 2026 Country Report - Bulgaria Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Bulgaria
Date: 2026-06-03
Institutions: European Commission, Reform and Investment Task Force
Subjects: Bulgaria, budget policy, economic policy, economic recovery, economic reform, education policy, employment policy, energy transition, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.6.2026  SWD(2026) 202 final  COMMISSION STAFF WORKING DOCUMENT 2026 Country Report - Bulgaria Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Bulgaria {COM(2026) 202 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

Strong domestic demand supports 
robust growth despite negative net 
exports 

consumption  all 

Economic  growth  remained  robust 
in 
2025,  driven  by  a  strong  increase  in 
domestic demand. Real GDP growth reached 
3.1%  as  private  consumption,  investment  and 
large 
public 
increases  in  2025.  The  strong  increase  in 
private  consumption  was  mostly  driven  by 
rising real wages. The high level of investment 
reflected  both  higher  private  investment  and 
an  increased  absorption  of  Recovery  and 
Resilience Facility funds. 

recorded 

Graph 1.1: HICP and real GDP growth with 
contributions 

related  to  aircraft  deliveries.  Looking  at  the 
trade  balance  by  trade  partner,  exports  to  EU 
countries  recorded  a  larger  fall  than  those  to 
non-EU  countries.  Imports  from  both  EU  and 
significant 
non-EU 
increases.  External  demand  is  expected  to 
weaken further due to the crisis in the Middle 
East.  

countries 

recorded 

Investment recorded a strong increase in 
2025.  Gross  fixed  capital  formation  grew  by 
11.4%  in  2025,  driven  by  both  public  and 
private  investment.  Private  investment  was 
supported  by  high  volumes  of  credit,  while 
public  investment  reflected  the  impact  of  the 
use  of  EU  funds 
in  2025,  which  was 
significantly  higher  than  in  previous  years. 
Although  public  investment  is  expected  to 
remain robust in the coming years due to the 
continued use of EU funds, overall GDP growth 
is  expected  to  ease  due  to  an  expected 
slowdown 
in  wage  growth  and  private 
consumption.  

Graph 1.2: Decomposition of rate of change in 
Unit Labour Costs (ULCs) 

(1) Commission Spring 2026 Forecast 
Source: European Commission, 2026 

Net  exports  had  a  negative  contribution 
to  GDP  growth  in  2025.  This  was  mostly 
driven  by  a  further  decrease 
in  exports 
compared  with  previous  years,  which  is partly 
explained  by  one-off 
factors  such  as 
maintenance  works  carried  out  by  two  major 
exporters,  as  well  as  strong  import  growth 

(1) Commission Spring 2026 Forecast 
Source: European Commission, 2026 

2 

-6-4-20246810121418192021222324252627Net exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)HICP (y-o-y%)forecast (1)pps -10-5051015201415161718192021222324252627PpsInflation (HICP)Real Compensation/hr.Productivity/hr. (neg. contrib.)ULCULC in EU27forecast (1) 
 
   
  
 
The  labour  market  remains  tight,  and 
labour  shortages  are  observed  in  many 
economic  sectors.  The  unemployment  rate 
(15-74  years  old)  continued  its  downward 
trend, reaching 3.5% in 2025. Labour demand 
is  robust  in  many  industries,  and  labour 
market tightness (the ratio between vacancies 
and  unemployed  workers)  is  at  historically 
high  levels.  Labour  shortages  are  particularly 
acute  in  sectors  such  as  healthcare,  industry 
and  construction.  Labour  market  pressures, 
together  with  rising  public  sector  wages  and 
the  presence  of  indexation  schemes  affecting 
a  wide  range  of  workers,  contributed  to  the 
high growth in aggregate wages, which is still 
well  above  inflation  and  productivity  gains. 
Nominal  unit  labour  costs  rose  by  9.4%  in 
2025,  mostly  driven  by  increases  in  real 
wages (Graph 1.2). 

in  2025 
Inflation  slightly  rebounded 
compared  with  the  previous  year.  Annual 
HICP inflation (Harmonised Index of Consumer 
Prices)  stood  at  3.5%  in  2025,  up  from  2.6% 
food  and  services 
in  2024.  Processed 
contributed  the  most  to  higher 
inflation. 
Inflation was also partly driven by termination 
of  the  reduced  VAT  rates  on  bread  and 
restaurant  meals,  higher  excise  duties  on 
tobacco,  an  increase  in  administered  energy 
prices  and  a  rise 
in  the  price  of  key 
commodities.  Catering  and  accommodation 
were  the  primary  drivers  of  price  increases  in 
services,  reflecting  VAT  increases  and  higher 
costs  of  labour  and  other  inputs,  whose 
effects  were  partly  offset  by  lower  hospital 
fees.  The  recent  adoption  of  the  euro  is 
expected 
impact  on 
aggregate  inflation,  with  some  one-off  price 
effects  concentrated  in  a  few  specific  areas, 
many of them in services. 

to  have  a 

limited 

Bank  lending  continued  to  grow  in  2025, 
mostly  driven  by  higher  credit  flows  to 
households.  This  dynamic  was  underpinned 
by  ample  liquidity  in  the  banking  sector  and 
low  borrowing  interest  rates  compared  with 
the  EU  average.  Alongside  rising  household 
incomes,  sustained  credit  growth  contributed 
to  higher  nominal  house  prices.  At  the  same 
time,  the  borrower-based  macroprudential 
measures 
the 
countercyclical  capital  buffer,  maintained  at 

in  2024  and 

introduced 

2%  during  2025,  –  are  expected  to  improve 
the  resilience  of  banks’  balance  sheets.  The 
introduction of the euro in January 2026 could 
further  fuel  credit  growth,  given  the  lower 
reserve  requirements  for  commercial  banks; 
however, 
reserve 
the  previously  higher 
requirements  did  not  constrain  bank  lending, 
given  the  high  amount  of  liquidity  on  banks’ 
balance  sheets.  On  the  other  hand,  euro  area 
membership  will  also  broaden  Bulgarian 
banks’  access  to  EU-wide  capital  markets, 
expanding  the  range  of  available  investment 
opportunities,  which  could  divert  funds  away 
from domestic lending. 

in 
activity 

country 
and 

significant 
the 

Despite  a  good  overall  macroeconomic 
regional 
performance, 
remain. 
disparities 
Economic 
employment 
opportunities  are  heavily  concentrated  in  the 
main  urban  areas,  in  particular  the  capital, 
which  generates  about  half  of  the  national 
GDP.  Conversely,  the  north  of  the  country  – 
especially the north-west – remain structurally 
weak,  with  both  Severozapaden  and  Severen 
tsentralen  among  the  poorest  five  regions  in 
the  EU  in  2024.  Rural  and  peripheral  areas 
face  weaker  labour  market  outcomes,  more 
limited  access  to  quality  public  services,  and 
poor  transport  and  digital  infrastructures.  The 
concentration  of  economic  activity  and 
in  urban  areas  poses 
essential  services 
challenges  to  competitiveness,  economy-wide 
growth  and  innovation,  and  risks  deepening 
socio-economic  disparities  among  the  regions 
(see Annex 18). 

Structural challenges and resource 
dependence continue to limit 
growth potential 

Economic  convergence  with  EU  peers 
continued to progress, albeit slowly, while 
challenges  to  improve  productivity  and 
competitiveness remain. Bulgaria's GDP per 
capita  reached  68%  of  the  EU  average  in 
2025  (in  purchasing  power  standards),  up 
from  38.4%  in  2006,  the  year  before  the 
country  joined  the  European  Union.  Bulgaria’s 
accession  to  the  Schengen  area  in  2024  and 

3 

 
Box 1: 

UN Sustainable Development Goals (SDGs) 

Bulgaria  is  improving  on  SDGs  related  to  competitiveness  (SDGs  4,  8,  9)  and  social  fairness 
(SDGs 1, 3, 5, 7, 10) but still needs to catch up  with the  EU average on quality education and 
decent work and economic growth (SDGs 4 and 8), where sizeable gaps remain.  

While improvement is observed on several indicators related to sustainability (SDGs 7, 9, 11, 12, 
13, 14), performance often remains below the EU average, and trends for SDGs 2, 6 and 15 are 
mixed.  Bulgaria  continues  to  perform  well  on  SDG 17  (Partnerships  for  the  Goals),  while  it  is 
stalling on macroeconomic stability (SDG  8 and 16).  Out of the 17 indicators, 15 SDGs remain 
below the EU average (see Annex 17). 

the  adoption  of  the  euro  in  January  2026 
marked significant milestones in the country’s 
EU integration, supporting closer links with the 
rest  of  the  EU  and  removing  significant  trade 
barriers.  However,  challenges  to  Bulgaria's 
competitiveness remain. Labour productivity is 
persistently  low,  and  private  investment  and 
innovation face significant constraints. Labour 
market  shortages  constrain  firms’  production 
and prevent some businesses from expanding. 
Furthermore,  the  high  energy  intensity  of  the 
Bulgarian economy and its strong dependence 
on  fossil  fuels  makes  it  highly  exposed  to 
external shocks. 

progress 

has  made 

in 
Bulgaria 
modernising 
its  economy,  but  some 
crucial  challenges  persist.  The  country 
implemented  a  series  of  measures  and 
reforms,  both  as  part  of  its  recovery  and 
resilience plan and in preparation for adopting 
the  euro  in  January  2026.  The  benefits  of 
those  steps  should  become  apparent  in  the 
coming  years.  At  the  same  time,  several 
aspects  of 
the  country’s  socio-economic 
structure  still  need  improvement.  Effective 
measures  against  corruption,  especially  at 
levels,  are  absent.  Uncompetitive 
higher 
procurement  limits  quality  investments  and 
can  burden  public  finances.  Skills  shortages 
persist 
linked  to  poor 
educational  outcomes  and  a  shrinking  labour 
force. Economic development remains unequal 
with  vulnerable  groups  left  at  risk  of  poverty 
and  social  exclusion.  The  healthcare  system 
remains understaffed and struggles to deliver 
satisfactory  results,  with  low  life  expectancy 
and high out-of-pocket costs for patients.  

in  many  sectors, 

Dependency  on  imports  for  energy  and 
raw  materials  remains  high  and  impacts 

4 

is 

in  the  economy 

economic security. Practically all oil and gas 
used 
imported.  Until 
recently,  reliance  on  Russia  for  those  sources 
of energy was close to 100%. There has been 
considerable  progress  in  diversifying  supplies. 
However, the future of the Russia-owned local 
oil  refinery  is  still  unclear.  Investments  in 
renewable energy sources and battery storage 
go  in  the  right  direction.  However,  there  has 
been  no  significant  progress  in  improving  the 
energy  efficiency  of  industry  and  the  housing 
stock  or  in  providing  the  right  incentives  to 
reduce electricity consumption. Large industrial 
plants,  which  process  and  recycle  lead  and 
copper  and  are  among  Bulgaria’s  major 
exporters,  also  rely  on  imports  for  their  raw 
materials.  

Delayed budget adoption amid 
growing fiscal pressures 

The  adoption  of  a  regular  state  budget 
for  2026  has  been  delayed  considerably. 
Following  mass  protests  against  planned 
increases  in  social  contributions,  the  2026 
draft  budget  was  withdrawn  in  December 
2025. As a result, Bulgaria has been operating 
under an ‘extension budget’, which will remain 
in place until the regular budget is adopted. In 
linewith Article87of the Public  Finance Act. The 
extension budget  allows  the  state  to  continue 
collecting  revenue  and  spending  until  the 
regular  budget  is  adopted.  This  ensures  that 
basic obligations, such as paying public sector 
salaries,  pensions  and  social  payments,  are 
met.  As  a  rule,  the  extension  budget  keeps 
spending  in  line  with  the  previous  year’s 
budget,  but  some  exceptions  are  possible. 
Following  the  elections  in April,  the budgetary 

 
 
procedure started in late May and is yet to be 
finalised.  

The  general  government  deficit  stood  at 
3.5% of  GDP in  2025 and  is projected  to 
further increase and remain above 4% up 
to  2027,  also  on  account  of  planned 
defence  expenditure  under  the  national 
defence escape clause. After years of fiscal 
discipline, Bulgaria has been recording deficits 
since  2020,  with  debt  rising  at  a  faster  pace. 
In  2025,  the  general  government  deficit 
reached 3.5%, from 3% in 2024. Based on the 
Commission’s  2026  Spring  Forecast,  it  is 
projected  to  further  increase  to  4.1%  of  GDP 
in  2026  and  2027 
and  4.3%  of  GDP 
respectively.  In  recent  years,  Bulgaria  has 
taken  steps  to  improve  the  adequacy  of 
pensions  and  social  and  has 
increased 
salaries, often linked to automatic indexations 
and  minimum  wage  increases.  As  a  result, 
increases  in  spending  are  expected  up  until 
2027,  partly  due  to  deliveries  of  military 
equipment.  Defence  expenditure  will  also 
increase, reflecting Bulgaria’s recent efforts to 
increase  its  defence  capabilities,  including 
through  the  Security  Action  for  Europe  (SAFE) 
instrument.  On  top  of  this,  pressure  on 
spending 
increase  given 
medium-to-long-term trends. In particular, the 
ageing  population  will  have  implications  for 
long-term  care, 
pensions,  healthcare  and 
especially  in  efforts  to  further  improve  their 
adequacy,  access  and  quality.  This  is  in  line 
with  recent  developments  that  identify  social 
protection  and  health  as  the  fastest  growing 
areas of public expenditure (Annex 2).  

is  expected 

to 

without 

increases 
in 
Large  and  permanent 
compensatory 
expenditure 
structural 
financing  measures  have 
contributed  to  the  continued  deficits, 
despite  positive growth.  Bulgaria may  face 
challenges  meeting  its  commitments  under 
the  medium-term  fiscal-structural  plan  in  the 
absence  of 
robust  consolidation  efforts. 
Bulgaria  committed  to  a  structural  primary 
deficit target of 1.8% GDP by 2028, implying a 
yearly  adjustment  of  0.16  percentage  points. 
According to the fiscal strategy in the plan, the 
commitments  on  net  expenditure  will  be 
delivered  mainly 
discretionary 
revenue-increasing  measures  with  a  short-

through 

but 

further 

impact, 

permanent 
term 
expenditure  increases  are  planned.  Revenue 
measures continued to focus on strengthening 
collection,  mostly  by  fighting  tax  evasion  and 
avoidance  with  short-term  and  unpredictable 
impacts.  Overall,  to  preserve  robust  public 
finances,  there  is  scope  to  improve  the  tax 
system,  fight  the  shadow  economy  and 
increase  its  overall  fairness  (see  Section  2). 
Public  debt  is  expected  to  increase  from 
around 29.9% in 2025 to 32.3% in 2026 and 
to  35.5%  in  2027,  driven  by  to  the  structural 
deficit. 

of 

national 

Defence spending increased from 2024 to 
2025.  This  is  in  line  with  Bulgaria’s  recent 
efforts  to  strengthen  defence  capabilities  at 
national  and  at  EU  level,  including  by  making 
use of the flexibility provided by the activation 
the national escape clause for defence and of 
SAFE  loans.  Following  an  assessment  by  the 
Commission 
defence 
the 
investment  plan  of  Bulgaria  under  SAFE,  the 
Council  adopted  a  decision,  making  financial 
assistance available to Bulgaria for an amount 
of  up  to  EUR  3.262  billion.  The  spending 
increases come both from investment such as 
the  supply  of  aircrafts,  vessels  and  basic 
battlefield  equipment  and 
from  current 
expenditure including on salaries in the area of 
defence,  in  line  with  the  priorities  set  in  the 
Program  for  the  development  of  the  defence 
capabilities  of  the  Armed  Forces  of  the 
Republic  of  Bulgaria  until  2032  (Program 
2032)  and  the  Defence  Investment  Program 
until 2032. 

spending. 
breakdown, 

Looking  at 
social 

Bulgaria  does  not  focus  on  growth-
enhancing 
the 
protection 
spending 
accounts  for  the  largest  share  (around  35%) 
and  education,  health  and  economic  affairs 
each  account  for  around  10%.  Overall,  the 
share of growth-enhancing expenditure out of 
total  expenditure  is  below  15%,  a  very  slow 
increase compared with approximately 10% in 
2017. Significant increases can be observed in 
public  expenditure  on  social  protection  in 
2019,  with  healthcare  being  the  second-
largest  increase  (see  Graph  A2.3  in  Annex  2). 
More  modest  increases  or  even  decreases 
were  recorded  in  growth-friendly  categories, 
such  as  education,  R&D  and  communication, 

5 

 
with 
significantly.  

transport 

spending 

decreasing 

improve  the  taxation  system  (see  Section 
3) (1). 

increasing  pressure 

Bulgaria faces a significant financing gap 
to  provide 
and 
adequate  social  benefits.  The  country’s 
pension  system  deficit  is  financed  by  state 
transfers. For many years, the system has run 
a  structural  deficit, which  strains  the  budget 
and  may  crowd  out  more productive  growth-
friendly spending.  Population  ageing  will  add 
further  pressure to financing 
the  pension 
system,  adding  to  the  existing  challenge  of 
ensuring  adequate  pensions  in  the  future. 
Supplementary pension schemes can make the 
pension  system  more  resilient  by  diversifying 
retirement  income sources  (see  Annex  2). The 
Bulgarian pension system is organised around 
three  pillars:  (i)  a  mandatory  pay-as-you-go 
system 
(ii) a  privately 
managed  defined-contribution  fund  with  a 
compulsory and voluntary component; and (iii) 
a purely voluntary scheme. Participation in the 
second pillar used to be compulsory for people 
born after 1959. However, since 2015, people 
can  opt  out,  which  can  reduce  existing 
coverage.  In  February  2026,  Bulgaria  adopted 
a further reform of the second pillar to include 
a  multi-fund  model  that  adjusts  over  an 
individual’s  lifetime,  but  the  possibility  to  opt 
out remains in place. 

(defined  benefit); 

and 

government 

holds 
and 

A lack of autonomy and capacity in local 
back 
governments 
regional 
development 
competitiveness. 
Bulgarian  municipalities  are  key  players  in 
local 
administration, 
delivering  essential  public  services  such  as 
education,  healthcare  and  social  protection. 
However,  the  fiscal  system  remains  highly 
centralised.  Given 
limited  own-resources 
revenues,  most  municipal  spending  is  funded 
through  central  government  transfers,  over 
limited 
which  municipalities  have  very 
autonomy.  This  limited  financial  autonomy 
often leads to limited  capacity for investment 
and 
planning, 
and 
implementation, including the use of EU funds, 
regional  competitiveness. 
which  hampers 
Strengthening 
own 
tax  on 
resources,  such  as  a 
immovable  property  and  a  vehicle  tax,  may 
support  municipal  development  while  helping 

generation 

recurrent 

design 

policy 

the 

of 

the  EU, 

Bulgaria,  as  a  country  on  the  eastern 
faces 
external  border  of 
additional  challenges  hindering  economic 
and  social  development.  Russia’s  war  of 
aggression  against  Ukraine  has  exacerbated 
these  pressures  through  heightened  security 
risks, 
reduced  cross-border  activity  and 
disruptions  to  transport  and  shipping  routes. 
These  could  contribute  to  slower  growth  and 
higher inflation in Bulgaria and other Member 
States  on  at  the  eastern  border.  In  response, 
Bulgaria  is  repurposing  EU  cohesion  policy 
funds  to  support  strategic  sectors,  boost  its 
and 
industrial 
manufacture 
dual-use 
technologies. These measures address security 
economic 
create 
concerns 
opportunities,  but  they  also  increase  pressure 
on public finances and administrative capacity. 
In  this  context,  continued  and  targeted  EU 
support  remains  essential  to  strengthening 
tackling  demographic  decline, 
resilience, 
improving 
promoting 
connectivity, 
balanced  territorial  development  in  affected 
regions, including those along the Black Sea. 

capacity 

defence 

develop 

new 

and 

and 

and 

and 

funding 

instruments 

competitiveness, 

EU 
provide 
considerable  resources  to  Bulgaria.  They 
support investments and structural reforms to 
environmental 
increase 
sustainability,  skills,  social 
fairness  and 
security,  while  helping  to  address  challenges 
identified in the CSRs. Key instruments include 
the  Recovery  and  Resilience  Facility  (see  Box 
3)  and  Cohesion  policy  funds  (see  Box  2).  In 
addition, the Common Agricultural Policy (CAP) 
provides  Bulgaria  with  an  EU  contribution  of 
EUR 5.6 billion under the CAP strategic plan for 
2023-2027 (2). A further EUR 504.4 million are 

(1)  According  to  the  Act  on  Local  Taxes  and  Fees,  eight 
taxes  are  a  prerogative  of  local  governments:  (i) 
recurrent tax on immovable property; (ii) inheritance tax; 
(iii)  donations  tax; 
(iv)  tax  on  the  purchase  of 
immovable property; (v) vehicle tax; (vi) patent tax; (vii) 
tourist tax; and (viii) tax on taxi transport of passengers. 

(2)  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  

6 

 
 
Box 2: 

Contribution of cohesion policy funds 

EU cohesion policy funding is supporting Bulgaria’s efforts to boost competitiveness, 
environmental  sustainability,  skills  and  social  fairness.  In  the  2021-2027  programming 
period, EU cohesion policy funds(3) are providing EUR 10.7 billion (amounting to EUR 12.9 billion 
paired with national co-financing), or 12% of 2024 GDP, to Bulgaria. This makes cohesion policy 
one  of  the  main  sources  of  public  investment  in  the  country.  The  value  of  selected  projects 
corresponded  to  68.1%  of  the  total  allocation  as  of  March  2026,  with  additional  calls  for 
projects in the pipeline. 

• 

Innovation,  business  environment  and  productivity.  Nearly  EUR 4  billion  is 
allocated  to  research  and  innovation,  SMEs’  competitiveness  and  the  regions  most 
affected by the transition away from carbon-intensive activities. More than 2 000 firms, 
with more than 50% of them outside Sofia, have already had their projects approved.  

•  Decarbonisation,  energy  affordability  and  sustainability.  EUR 1.2  billion  is 
dedicated  under  the  Just  Transition  Fund  to  support  clean  transition  projects, 
sustainable  energy  solutions,  social  measures  and  the  diversification  of  the  local 
economy.  Around  EUR 680  million  is  dedicated  to  drinking  water  and  wastewater 
treatment  projects,  which  are  expected  to  improve  facilities  for  more  than  400 000 
people. Another EUR 280 million in support is available for energy efficiency measures 
and the sustainable renovation of residential and public  buildings.  Over EUR 1.6 billion 
has  been  committed  to  sustainable  transport  infrastructure  and  better  regional 
connectivity. 

•  Skills,  quality  jobs  and  social  fairness.  More  than  EUR 924  million  has  been 
allocated  to  employment  and  measures  to  help  people  from  vulnerable  groups  find 
work, the modernisation of public employment services, improved labour market access 
and support for adaptation. In addition, over EUR 195 million is dedicated to supporting 
adult  learning.  Overall,  the  quality,  inclusiveness  and  labour  market  relevance  of 
education  is  supported  with  more  than  EUR 735  million,  benefiting  over  760 000 
children and students. EUR 700 million has been allocated to social inclusion measures, 
targeting  vulnerable  groups,  such  as  children,  Roma  and  older  people.  Furthermore, 
EUR 221  million  is  allocated  to  addressing  food  and  material  deprivation.  Measures 
supporting  the  European  Child  Guarantee  are  expected  to  benefit  more  than  200 000 
children. 

The  mid-term  review (4)  strengthened  cohesion  policy’s  contribution  to  emerging 
strategic  priorities,  reallocating  EUR 525  million.  One  third  of  reallocations  support 
defence  and  dual-use  priorities to  strengthen  the  national  industrial  base.  The  mid-term 
review  will  also  help  boost  water  resilience  and  strengthen  competitiveness  through 
Strategic  Technologies  for  Europe  Platform  (STEP)  priorities  facilitating  the  development, 
technologies 
commercialisation  and  strengthening  of  value  chains 
and Sovereignty  Seal projects.  EUR  77.5  million  has  been  reallocated  to  strengthen  the 
preparedness,  skills  and  resilience  of  students,  teachers  and  the  education  system  in 
response  to  crises.  In  addition  to  cohesion  policy  funding,  Bulgaria  will  be  allocated  up  to 
EUR 2.5 billion under the Social Climate Fund between 2026 and 2032 to help mitigate the 
social  impact  of  the  new  emissions  trading  system  (ETS2),  providing  targeted  support  to 
vulnerable households and small businesses. 

for  critical 

available  under  the  Asylum,  Migration  and 
Integration  Fund  (AMIF),  together  with  the 
Border  Management  and  Visa 
Instrument 
(BMVI)  and  the  Internal  Security  Fund  (ISF). 
Other 
support 
instance 
competitiveness 

also 
in  Bulgaria,  for 

programmes 

EU 

through  open  calls  under  Horizon  Europe  and 
the Connecting Europe Facility. 

7 

 
 
Box 3: 

Key achievements of the Recovery and Resilience Facility  

The recovery and resilience plan of Bulgaria represents a total investment envelope of EUR 6.17 
billion,  corresponding  to  6.52  %  of  GDP.  It  aims  to  support  the  green  and  digital  transitions, 
strengthen economic resilience and address long-standing structural challenges identified in the 
European Semester. 

As of 8 May 2026, EUR 3.27 billion (around 53 % of the total allocation) has been disbursed 
to Bulgaria following the satisfactory fulfilment of 128 milestones and targets. After a slow 
start, implementation accelerated significantly in 2025, with a growing number of reforms and 
investments already fulfilled and delivering tangible results on the ground. 

Highlights and impact of the plan 

•  Decarbonisation  and  energy.  Bulgaria  has  taken  steps  towards  liberalising  its 
electricity  market,  prohibiting  new  coal  and  lignite‑fired  power  plants,  capping  annual 
CO2  emissions  from  existing  coal  and  lignite  facilities,  and  expanding  renewable 
electricity generation and storage capacity. The rollout of nearly 5 GW of battery energy 
storage systems is set to place Bulgaria among the EU leaders in  this field, which will 
help  the  country  and  the  region  to  integrate  more  renewable  energy  installations  and 
ensure the grid’s stability. 

•  Education  reform  coupled  with  the  modernisation  and  digitalisation  of 
education  infrastructure.  Work  included:  (i)  the  construction  and  renovation  of 
science,  technology,  engineering  and  mathematics  (STEM)  laboratories  in  over  2 000 
schools;  (ii)  a  national  STEM  centre  and  3  regional  ones;  (iii)  116  kindergartens  and 
schools;  (iv)  24  vocational  schools;  (v)  23  school  dormitories  for  students;  (vi)  760 
digital clubs; and (vii) 18 youth centres. The investments are complemented by a reform 
of preschool and school education and lifelong learning. This reform includes updating 
STEM  core  curricula,  creating  additional  distance  learning  opportunities  and  extending 
the mandatory preschool programme to four-year-olds. 

• 

Improved minimum income support. This involved a reform of the minimum income 
scheme  that  put  in  place  a  mechanism  for  the  automatic  annual  update  of  the 
minimum income scheme (based on the at-risk-of-poverty threshold) and changed the 
minimum  income  scheme’s  eligibility  criteria.  This  has  resulted  in  better  social 
assistance and broader coverage. 

•  Modernisation  of  long-term  care.  This  included  renovating  73  existing  nursing 
homes  for  older  people  and  people  with  disabilities  and  creating  155  new  residential 
care  facilities  and  42  specialised  advisory  centres  across  the  country.  This  work 
complements a reform to improve social services.  

• 

Increased internet access in underserved areas. This involved expanding very high-
capacity  networks  to  reach  350 000  people  in  underserved  regions,  supported  by 
reforms  to  ensure  more  efficient  use  of  radio  frequency  spectrum for  5G  deployment 
and a favourable investment environment. 

(3)  The European Regional Development Fund, the 

European Social Fund Plus, cohesion policy funds and 
the Just Transition Fund 

It 

(4)  The mid-term review is carried out halfway through the 
is  a  formal 
2021-2027  programming  period. 
assessment  process  required  under  Article  18  of  the 
Common Provisions Regulation that aims to assess the 
implementation  of  programmes  and,  where  necessary, 
propose  adjustments  to  improve  their  performance, 
ensure  their  relevance  in  light  of  new  and  emerging 
needs and keep them aligned with other EU policies. 

8 

 
 
 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

below  the  EU  average  (1.49%  in  2024)  (see 
Annex  4).  Additionally,  R&D  expenditure  and 
innovation capacity are heavily concentrated in 
the  Yugozapaden  capital-region,  reflecting 
significant regional disparities(5) (Annex 18). 

limiting 

fragmented, 

Bulgaria’s  public  research  organisations 
and  higher  education  institutions  remain 
the 
overly 
effectiveness  of  R&D  funding.  The  2025 
CSR called on Bulgaria to increase the impact 
and  effectiveness  of  public  R&D  investments 
by  focusing  research  and  innovation  in  fewer 
institutions.  The  sector  suffers  both  from 
institutional  fragmentation  and  fragmentation 
in  its  governance:  overlapping  and  unclear 
roles  and  mandates  among  research  and 
innovation  ministries,  funding  bodies  and 
research  and  higher  education  organisations 
create barriers to effective policy coordination 
and  implementation.  The  2024  Law  on  the 
Promotion of Research and Innovation and the 
set-up of the Innovation and Research Council 
in  2025  (both  reforms  under  the  RRP)  have 
helped  bridge  governance  gaps,  particularly 
between academia and business. However, the 
fragmentation  of  the  research  and  innovation 
itself  persists.  Bulgaria  could 
ecosystem 
particularly benefit from the  swift operational 
implementation  of  the  Law  on  the  Promotion 
of Research and Innovation. The country could 
also  set  out  clear  institutional  missions  and 
mandates  for  public  research  organisations 
and  higher  education  institutions  as  part  of  a 
coherent national strategy (Annex 4). 

research  output 

is 
Commercialising 
hindered  by 
links  between 
limited 
academia  and  business  and  insufficient 
support  structures.  Cooperation  between 
the 
science  and  business,  measured  by 

(5)  European innovation scoreboard 2025 - Research and 

innovation. 

(CSR) 

recommendation 

In  2025,  Bulgaria  received  a  country-
specific 
to 
increase the impact and effectiveness of 
public  R&D  investment,  to  improve  the 
quality of public procurement, to increase 
the  capacity  of  the  public  administration 
and to increase the effectiveness of anti-
corruption measures. Steps have been taken 
to  improve  the  coordination  of  research  and 
innovation  governance  and  to  improve  the 
public 
functioning 
parts 
in 
administration.  However, 
public  procurement  procedures  and  anti-
insufficient. 
corruption  measures 
Additionally,  several  shortcomings 
the 
in 
taxation  system  limit  its  revenue-generation 
capacity and fairness.  

of 
the 
improvements 

remain 

of 

A fragmented R&D system and low 
investment continue to constrain 
innovation and growth 

and 

innovation 

in 
improving 

Bulgaria  received  a  CSR  in  2025  to 
increase the impact and effectiveness of 
public  R&D  investment  by  focusing  on 
fewer 
research  and 
institutions 
the 
commercialisation  of  research  output. 
Some  measures  have  been 
to 
strengthen  the  governance  framework  for 
coordinating  research  and  innovation  and  to 
improve  business  digitalisation.  However, 
these  measures  have  only  been  partially 
implemented.  

taken 

Bulgaria still has one of the lowest levels 
of  public  and  private  R&D  investment  in 
the EU. Public R&D spending remained low at 
only 0.27% of GDP in 2024, well below the EU 
average  of  0.72%.  Business  R&D  expenditure 
has  also  remained  broadly  stagnant  in  recent 
years  (0.50%  of  GDP  in  2024)  and  is  well 

9 

 
 
 
of 

public-private 

scientific 
percentage 
publications,  remained  low  at  5.45%  in  2024 
compared  with  the  EU  average  of  7.62%. 
Moreover,  the  technology  transfer  ecosystem 
a 
underdeveloped,  which 
remains 
longstanding  weakness  of  Bulgarian  research 
and  innovation.  With  support  from  cohesion 
policy  funding,  including  a  dedicated  financial 
transfer  and 
technology 
instrument 
targeted  technical  assistance,  Bulgaria 
is 
setting  up  a  central  coordination  hub  with 
regional  spokes.  The  goal  is  to  strengthen 
technology transfer(Annex 4). 

for 

is 

challenges 

Despite  some 
improvement,  Bulgarian 
companies’ uptake of digital technologies 
is  limited  and  uneven.  In  2025,  38.3%  of 
SMEs  had  reached  at  least  a  basic  level  of 
digital  intensity,  an  increase  compared  with 
2023  (28.4%)  but  still  significantly  below  the 
EU  average  (71.4%).  This  points  to  persistent 
structural 
digital 
transformation of SMEs, particularly in moving 
beyond  basic  digital  adoption.  The  use  of 
advanced 
has 
nevertheless  continued  to 
increase.  Public 
support in the form of digital voucher schemes 
and European Digital Innovation Hubs, as part 
of  the  RRF,  has  lifted  companies’  AI  adoption 
to  8.5%  in  2025  (compared  with  6.5%  in 
2024)  and  spurred  initiatives  like  Sofia  Tech 
Park’s AI Factory (see Annex 4). 

technologies 

digital 

the 

in 

Structural weaknesses in public 
procurement constrain 
competitiveness and limit 
investment 

of 

and 

the 

quality 

In  2025,  Bulgaria  received  a  CSR  to 
public 
improve 
procurement procedures. The country’s RRP 
includes  measures  intended  to  improve  the 
efficiency 
public 
Implementation 
procurement 
steps  have  been  taken  with  delays,  with 
positive  impacts  yet  to  materialise.  Structural 
governance and implementation issues persist, 
which  undermine  competition  in  Bulgaria’s 
public procurement processes. 

transparency 

procedures. 

of 

In  2025,  competition  in  Bulgaria’s  public 
procurement system remains limited. This 
is evident from the high share of procurement 
procedures with a single bidder, which rose to 
41% in 2025 (36% in 2024) and the share of 
direct  awards  without  prior  publication,  which 
increased to 27% in 2025 (20% in 2024), the 
highest  level  in  the  EU  (see  Annex  4)(6). 
Furthermore, a significant number of contracts 
were  unsuccessful  or cancelled  (27% in  2025 
and 2024). At the same time, the lowest-price 
award  criterion  is  predominant  in  75%  of 
competition  on 
procedures,  discouraging 
factors  such  as  quality  and  innovation.  In 
addition,  capacity  constraints  have  led  to 
slower  control  procedures,  causing  delays  in 
public procurement procedures. The high share 
of  procurement  responsibilities  at  municipal 
level, where expertise is often lacking, has led 
to  formal  errors  and  delays  in  the  use  of  EU 
funds (see Annex 5). Under the Bulgarian RRP, 
the  EU-wide  eForms  system  has  been 
implemented  and  the  public  procurement 
agency  has  strengthened  pre-procurement 
checks  using  a  new  methodology.  Although 
this  has  led  to  more  checks,  there  have  also 
been delays in procurement procedures due to 
constraints  in  administrative  capacity.  Beyond 
those  measures,  more  consolidation,  planning 
and  coordination  in  procurement  could  help 
public  bodies  secure  more  favourable  terms 
and better value for money.  

(6)  Data for 2024: Single Market and Competitiveness 
Scoreboard, data for 2025: Commission calculation 
based on TED data, accessible at the Public 
Procurement Data Space (PPDS). 

10 

 
 
and 

innovation 

reduces 
discourages 
productivity  growth  by  rewarding  political 
connections, creating a cycle where businesses 
invest  in  relationships  rather  than  efficiency 
(see Annex 5). 

Public administration has low 
productivity and limited capacity, 
especially at sub-national level 

In  2025,  Bulgaria  received  CSRs  to 
improve the functioning and the capacity 
of  the  public  administration,  including 
across  regions,  to  simplify  regulation, 
improve  regulatory  tools  and  reduce 
administrative  burden  to  create  a  level 
playing  field  for  businesses.  While  initial 
steps have been taken, their impact has yet to 
be seen, and further efforts seem necessary to 
meet  the  expectations  of  the  public  and 
businesses. 

capacity, 

The  public  administration  continues  to 
face  operational  and 
in 
particular at regional and municipal level. 
The  workforce  is  ageing,  with  the  share  of 
under  39 
government 
old 
employees 
decreasing  since  2019 
(see  Annex  7). 
Municipalities  face  significant  challenges  in 
attracting  and  retaining  talent  and  face 
significant turnover. Thus, the attractiveness of 
the public administration as an employer could 
be  improved  (see  Annex  7).  At  national  and 
local  level,  ensuring  that  civil  servants  have 
adequate skills is a critical challenge. While the 
share of civil servants with higher education is 
relatively high (66% vs EU: 55%), Bulgaria has 
the lowest share of civil servants’ participating 
in  adult  learning  (9%  vs  EU:  19%).  For 
municipalities,  the  National  Association  of 
Municipalities  in  the  Republic  of  Bulgaria  has 
identified  a  particular  need  for  more  focused 
upskilling  of  staff  and  capacity  building.  This 
includes central government support for policy 

Graph 2.1: Share of direct awards in public 
procurement contracts and the share of 
single bids in public procurement procedures 

Source: European Commission 

The  perception  among  businesses  that 
public  procurement  procedures  are  not 
conducted  in  an  open  and  fair  manner 
prevails  and  is  at  one  of  the  highest 
levels 
in  the  EU. In  Bulgaria,  77%  of 
companies  (EU  average:  58%)  consider  that 
public  procurement  procedures  include  tailor-
made  specifications  for  particular  companies, 
and  62%  (EU  average:  45%)  consider  that 
abuse  of  negotiated  procedures  is  a  'very'  or 
Among 
'fairly  widespread' 
in 
that 
companies 
experience 
and participated in 
a public procurement 
procedure,  35%  think  that  corruption  has 
prevented  them  from  winning  a  public  tender 
or a public procurement contract (EU average: 
25%) (see Annex 5). 

practice (7). 

have 

Political  influence  in  public  procurement 
harms  economic  growth  by  favouring 
well-connected  firms  over  more  capable 
competitors.  Analysis  shows  that  firms  with 
links  to  local  government  officials  are  41% 
more likely to win uncompetitive tenders, while 
those with links to central government figures 
have a 37% higher chance of success (8). This 

(7)  Flash Eurobarometer 557, p. 133. 

(8)  Fazekas, M. et al. (2025). Procuring Low Growth – The 
Impact of Political Favoritism on Public Procurement 
and Firm Performance in Bulgaria, World Bank Policy 
Research Paper 11085, Washington DC. 

11 

0%5%10%15%20%25%30%35%40%45%Share of directly awarded contracts without prior publicationShare of procurement procedures with a single bidder 
   
 
and  regulatory  implementation,  set  up  of 
shared(9). 

and 

difficulties 

responsibilities 

On the management of EU funds, 74% of 
in 
report 
municipalities 
attracting and retaining qualified experts 
to  implement  EU  projects.  The  main  reasons 
cited are the low basic pay and the mismatch 
pay (10). 
between 
Furthermore,  regional  governance  and  the 
regional  planning  process  are  fragmented, 
characterised 
municipal 
administrations  with  limited  powers  and  poor 
coordination.  This  poses  additional  challenges 
in aligning regional and local priorities within a 
broader  territorial  strategy  and  in  managing 
EU-funded  projects  effectively (11).  This 
is 
crucial  given 
the  substantial  amount  of 
funding from EU  programmes made  available 
to Bulgaria (12). 

265 

by 

Bulgaria’s  public  investment  landscape 
faces  challenges  in  scale  and  efficiency. 
Public  investment  has  reached  approximately 
3.1% of GDP, slightly below the EU average of 
3.7%,  but  remains  insufficient  to  bridge  the 
infrastructure  and  convergence 
substantial 
(see  Annex  4  and  Annex  5). 
gaps 
Implementation  of  projects  with  EU  support 
the  EU’s  2021-2027  multiannual 
under 
slower 
has 
financial 

framework 

been 

(9)  National Association of Municipalities in the Republic of 
Bulgaria, Analysis of the capacity of municipalities for 
preparation and implementation of projects with 
European funding, p. 23. 

(10)  National Association of Municipalities in the Republic of 
Bulgaria, Analysis of the capacity of municipalities for 
preparation and implementation of projects with 
European funding, p. 11. 

(11)  Council of Europe, Expert Centre for Good Governance, 

Comprehensive analysis of the current legal, 
administrative and operational framework of 
municipalities in Bulgaria, pp. 19-22.; OECD, 
Decentralisation and Regionalisation in Bulgaria, p. 79. 

(12)  European Commission: Directorate-General for 

Budget, The EU’s 2021-2027 long-term budget and 
NextGenerationEU – Facts and figures, Publications 
Office of the European Union, 
2021, https://data.europa.eu/doi/10.2761/808559, p. 
60 and following; European Commission: Directorate-
General for Budget, Europe’s budget – Member States 
allocation, Publications Office of the European Union, 
2025, https://data.europa.eu/doi/10.2761/5961524, 
p. 1. 

compared with the previous two programming 
periods.  This  underuse  is  partly  due  to  issues 
with  public  investment  management,  which  is 
tightly  linked  to  inadequate  administrative 
capacity.  This  creates  an  efficiency  gap  in 
public investment, where just 46% of spending 
is converted into productive capital, implying a 
sizeable  loss  of  resources (13).  Strengthening 
administrative  capacity  at  both  national  and 
regional 
improving 
level,  as  well  as 
procurement  practices,  project  appraisal  and 
multiannual capital planning could make public 
spending  more  efficient,  stimulate  private 
investment and boost GDP. 

More digital public services have become 
available,  but  further  improvements  are 
necessary.  The  number  of  digital  services 
available  for 
the  public  and  businesses 
continued  to  increase  in  2025 (14).  Under  the 
RRP,  efforts  are  under  way  to  digitalise  the 
construction  sector  by  introducing  building 
information  modelling  and  setting  up  a  new 
platform  for  providing  administrative  services 
for  spatial  planning,  investment  design  and 
building  permits.  Furthermore,  Bulgaria  took 
steps  to  digitalise  administrative  procedures 
and  administrative  judicial  proceedings  (see 
Annex  7).  Nevertheless,  procedural  rules  do 
not allow the use of digital tools in all civil and 
commercial  proceedings  yet,  and  the  current 
set of digital tools does not fully  enable staff 
to  work  and  communicate 
and 
judges 
securely (15). 
public 
The 
administration  services  is  perceived  as  low, 
with  higher  satisfaction  among  businesses 
than  the  general  public  (see  Annex  7).  A 
significant  share  of  Bulgarian  companies 
frequently  use  digital  services  (72%  vs  EU: 
that  digital  government 
68%)  and  find 
services  save  them  time  (62%  vs  EU:  73%). 
Nevertheless,  22%  of  companies 
report 
significant  delays  in  their  business  operations 
due  to  challenges  with  public  administration 

quality 

of 

(13)  Vahram S. and I. Vassileva (2025) ‘Scaling Up Quality 

Public Investment for Stronger Growth’, Washington DC: 
International Monetary Fund, Selected Issues Paper, 
SIP/2025/149. 

(14)  European  Commission,  2025,  State  of  the  Digital 

Decade report 2025. 

(15)  Figures 41, 42, and 43 of the 2025 EU Justice 

Scoreboard. 

12 

 
 
 
a 

remains 

inclusion 

services  (EU:  15%)(16).  The  proportion  of 
citizens  using  e-government  services  and  eID 
remains  very  low  (36%  vs  EU:  75%)(17),  and 
digital 
challenge, 
particularly for minorities and those in remote 
areas.  The  challenges  of  high  administrative 
complexity  and  low  user-friendliness  seem  to 
be  linked  to  a  limited  focus  on  simplifying 
processes,  administrative  fragmentation(18).  A 
better  use of the opportunities offered by the 
digital  government  infrastructure  could  help 
simplify  administrative  processes.  This  could 
by 
include: 
facilitating the exchange of data between key 
government 
the 
proportion  of  pre-filled  forms;  (iii)  advancing 
the  digitalisation  of  internal  workflows;  (iv) 
accelerating  the  integration  of  services  (life 
events);  and  (iv)  providing  an  end-to-end 
online delivery of services. Lastly, enabling the 
cross-border exchange of data and documents 
between  authorities  through  the  EU’s  Once-
Only  Technical  System  would  benefit  the 
public  and  businesses  in  their  cross-border 
transactions.  

fragmentation 

increasing 

registers; 

tackling 

(ii) 

(i) 

to 

are 

Efforts 
simplify 
ongoing 
regulation,  improve  regulatory  tools  and 
reduce  administrative  burden,  but  their 
impact  has  not  yet  yielded  tangible 
results.  Frequent  legislative  changes  are  still 
seen as a barrier to doing business (see Annex 
5). Supported by the RRP, the national system 
for  strategic  planning 
“Monitorstat”  was 
upgraded  to  monitor  the  progress  of  national 
strategies  and  to  support  evidence-informed 
policymaking,  and  a  new  methodology  for 
strategic planning was approved, updating the 
general rules on development, monitoring, and 
evaluation of strategic documents.  In 2025, a 
new  Public  Consultation  Portal  has  been 

(16)  European Commission. Flash Eurobarometer 567 / 568 
on satisfaction with administrative services (2026). 

(17)  European Commission, 2025, Digital Decade: 

eGovernment Benchmark. 

(18)  Republic of Bulgaria, Ministry of e-Governance, 2025, 

Отчет за състоянието и годишен план за развитие и 
обновяване на информационните ресурси в 
администрацията и информационните ресурси на 
единната електронна съобщителна мрежа на 
държавната администрация и за нуждите на 
националната сигурност за 2024 г. p.50. 

and 

deployed,  featuring  new  tools  for  tracking 
decision-making 
accessing  more 
information  about  public  feedback,  but  their 
practical  use  remains  to  be  assessed.  A  plan 
for  reducing  the  administrative  burden  has 
been  drawn  up,  focusing  on  a  range  of 
legislative amendments, but most of them are 
still under preparation. In 2025, an Action Plan 
for  the  implementation  of  life  event-based 
administrative  services  was  adopted,  covering 
a 
total  of  93  measures  with  ongoing 
implementation(19). 

Strengthening anti-corruption 
prosecution and the independence 
of regulators 

In  2025,  Bulgaria  received  a  CSR  to 
improve 
the  effectiveness  of  anti-
corruption measures, particularly in high-
level corruption cases, and to strengthen 
independence  and  functioning  of 
the 
regulators.  However, 
investigating  and 
prosecuting  corruption,  particularly  in  high-
level  corruption  cases,  has  not  improved. 
Bulgaria  took  some  steps  to  renew  the 
mandates of certain regulatory authorities, but 
concerns  about  their  independence  remain 
unaddressed. 

in 

prosecuting 

Bulgaria  has  yet  to  set  a  robust  track-
record 
high-level 
corruption  cases.  The  Council  of  Ministers 
has  adopted  a  draft  bill  expanding  the 
possibility  to  request 
judicial  reviews  of 
prosecutorial  acts  to  terminate  or  suspend 
investigations  in  April  2026,  but  its  adoption 
by  Parliament 
is  still  ongoing.  The  anti-
corruption  law  governing  an  anti-corruption 
commission did not ensure the body’s political 
independence (20). Bulgaria repealed this law in 
2026  before  the  anti-corruption  commission’s 

(19)  Action Plan for the implementation of life-event-based 
administrative services, Council of Ministers’ Decision 
No. 176 of 21 March 2025. 

(20)  Commission implementing decision of 3.11.2025 on the 
partial suspension of the disbursement of the second 
instalment of the non-repayable support for Bulgaria. 

13 

 
 
 
leadership  could  be  appointed.  The 
new 
Council  of  Ministers  adopted  a  draft  bill 
establishing  a  new  anti-corruption  body  in 
April  2026,  which  at  the  time  of  drafting  is 
under consideration by Parliament. 

about 

composition 

Although 
of  most 
the  mandates 
independent  and  regulatory  authorities 
have been renewed, limited resources and 
political  influence  continue  affecting  the 
quality of their work. The current 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 (21). 
Concerns 
and 
the 
functioning  of  the  Supreme  Judicial  Council 
persist.  On  the  Council’s  composition,  judges 
elected  by  their  peers  are  in  the  minority  (6 
out  of  14  members  in  the  Judges’  Chamber, 
and  6  out  of  25  members  overall). On  its 
functioning,  the  Supreme  Judicial  Council  has 
been operating with an expired mandate since 
2022,  which  compromises  its  legitimacy  and 
prevents 
its 
functions, such as appointing a new Prosecutor 
General.  This  undermines  the  stability  and 
predictability  of  the  business  environment 
based on the rule of law, as illustrated by the 
low 
judicial 
independence 
(in  2025,  only  27%  of 
companies considered judicial independence to 
be  fairly  or  very  good  (22).  Similarly,  the 
Inspectorate  to  the  Supreme  Judicial  Council 
continues to operate with restricted powers as 
its mandate expired in 2020.  

it  from  exercising  some  of 

companies 

trust 

of 

in 

Improving the tax system’s 
revenue potential and fairness 

The  tax  system  has  a  comparatively  low 
capacity  to  generate  revenue,  which 
could  quickly  prove  insufficient  given 

rising  spending  demands  (see  Section  1). 
In  2024,  overall  revenue  as  a  share  of  GDP 
stood at 36.1% compared with the EU average 
of  46%.  In  the  same  year,  total  tax  revenues 
(including  compulsory  social  contributions) 
amounted  to  30.5%  of  GDP,  remaining  well 
below the EU average of 39.4% of GDP (Annex 
3).  

for 

very 

allows 

There is significant  scope to  improve the 
fairness  of  the  tax  system,  which 
currently 
little 
redistribution.  The  tax  mix  is  characterised 
by  a  heavy  reliance  on  consumption  taxes. 
There  is  a  comparatively low  10%  flat  tax  on 
all taxable personal income with no basic tax-
free  allowance,  except  for  a  few  small 
exemptions  for  special  types  of  income  or 
persons  with  disabilities.  Bulgaria  is the only 
Member  State  where  high  earners  (167%  of 
the  average  wage) pay  a  slightly lower share 
of their income in tax than low earners (those 
making  50%  of 
the  average  wage). 
Furthermore,  in  2025,  the  effective  marginal 
tax  rate  was  much  higher  on  the  lowest 
quantile of income (27%) than on the  highest 
(15%). 

its 

tax  administration 

Bulgaria  has  a  large  shadow  economy, 
and 
faces 
challenges in collecting taxes. According to 
the  latest  estimates,  the  shadow  economy 
accounts  for  almost  35%  of  the  country’s 
GDP (23).  The  personal  income  tax  gap  of 
13.8%  and  a  social  security  contribution  gap 
of  16.5%  indicate  significant  under-reporting 
of  income.  The  high  effective  marginal  tax 
rates  on  low  incomes  can  encourage  under-
reporting of income or even not declaring it at 
all.  Tax  arrears  in  Bulgaria  increased  from 
2019  to  approximately  60%  of  total  revenue 
collected  at  the  end  of  2023,  more  than 
double the EU average (31%). 

Measures  in  recent  years  to  improve 
revenue  collection  and  fight  tax  evasion 
and  avoidance  are  not  expected  to 

(21)  Assessing the independence and effectiveness of 

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

(22)  Figure 52 of the 2025 EU Justice Scoreboard 

(23)  Schneider, F., Asllani, A. ’Taxation of the Informal 

Economy in the EU – Part 1: Latest Shadow Economy 
Estimates and Key Findings of Country Case Studies’, 
IPOL | Policy Department for Economic, Scientific and 
Quality of Life Policies (2022). 

14 

 
 
 
 
sufficiently increase revenue and improve 
fairness. In addition, measures were taken to 
increase revenue from excise duties and phase 
out  VAT  exemptions  and  reductions.  However, 
these measures have not kept pace with rising 
spending  (Section  1).  Tax  fairness  could  be 
improved  by,  for  example,  bringing  in  a  tax-
free  allowance  in  combination  with  a  higher 
flat  tax, increasing or removing the maximum 
insurable  income  capor  reducing  the  reliance 
on  cash  transactions  by  lowering  the  cap  on 
those  transactions  or  providing  incentives  for 
digital  transactions.  These  measures  could 
also help fight the shadow economy and boost 
revenues.  Additional  revenue  could  also  be 
raised  by  improving  the  collection  of  arrears. 
Other measures to  raise  revenue  are in  areas 
with  untapped  potential,  such  as  updating 
cadastral  values  to  strengthen  revenue  from 
recurrent property taxes and raising transport, 
pollution and resource taxes (Annex 3). 

Making better use of the Single 
Market 

on 

Regulatory and administrative barriers to 
the  single  market  persist  in  Bulgaria, 
affecting  trade  in  goods  and  services  as 
well  as  the  freedom  of  establishment.  In 
the  area  of  goods,  additional  border  controls 
on 
(particularly 
certain fruits and vegetables 
extra 
laboratory  testing  requirements  for  some 
imported food products create frictions. Easing 
requirements 
administrative 
posting 
workers 
regulatory 
reduce 
fragmentation  in  the  single  market,  facilitate 
cross-border 
foster 
competitiveness, 
undermining 
protections for workers  

pesticides) 
and 

mobility 

without 

could 

and 

for 

15 

 
 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

for: 

(CSRs) 

recommendations 

its  energy  system. 

In  2025,  Bulgaria  received  country-
specific 
to 
reduce  its  reliance  on  fossil  fuels  and 
strengthen 
The 
(i)  market 
calls 
recommendation 
liberalisation;  (ii)  the  accelerated  roll-out  of 
renewables and designation of areas for fast-
track  wind  permitting;  (iii)  phasing  out  fossil 
fuel  subsidies;  (iv)  increasing  the  flexibility  of 
the  electricity  system;  and  (v)  upgrading  grid 
infrastructure  at  distribution  level.  Bulgaria 
was  also  recommended  to  take  steps  to 
address  energy  poverty  and  improve  energy 
efficiency  in  industry.  Some  steps  have  been 
taken in response to the recommendations: (i) 
a  legislative  reform  of  the  wholesale  and 
balancing markets was adopted; (ii) renewable 
energy  capacity  was  expanded  significantly; 
and  (iii)  investment  commitments  for  battery 
storage under the recovery and resilience plan 
(RRP)  signal  future  progress  on  system 
flexibility. In 2025, renewables surpassed coal 
in Bulgaria’s electricity mix for the first time. 

However, 
remains 
implementation 
incomplete  in  several  areas.  Wholesale 
prices  were  among  the  highest  in  the  EU  in 
2025,  yet  households  pay  regulated  retail 
prices  unrelated  to  wholesale  price  signals.  In 
addition  to  these  prices  being  among  the 
lowest in the EU, they are fixed,  which makes 
household  demand  inflexible  and  removes 
energy  efficiency  incentives.  Tackling  these 
inefficiencies  in  the  market  requires  progress 
on  two  fronts:  (i)  lowering  wholesale  prices 
calls  for  continued  growth  in  wind-powered 
renewable  generation,  making  the  regulatory 
and  operational  framework  more  flexible,  and 
(ii) 
upgrading  the  distribution  grids;  and 
improving the retail market calls for a shift to 
more 
for  energy-poor 
households. 

targeted  support 

High wholesale prices reflect fossil 
fuel reliance, highlighting the need 
to speed up the shift to cleaner 
energy and improve market design 

the 

Bulgaria's  wholesale  electricity  prices 
remain  among  the  highest  in  the  EU, 
reflecting  a  generation  mix  that  has  not 
yet transitioned away from fossil fuels. In 
2025, Bulgaria received a recommendation to 
reduce its reliance on fossil fuels and promote 
market  liberalisation,  and  initial  steps  have 
been  taken.  Amendments  to  the  Energy  Act 
that entered into force in July 2025 as part of 
the  Bulgarian  RRP  removed  the  National 
Electricity  Company's  role  as  a  public  supplier 
regulated 
and  abolished  quotas  for 
market.  These  amendments  aimed  to  make  it 
easier  for  new  renewable  energy  sources  to 
enter  the  market,  including  flexible  assets, 
such as storage installations (see Annex 9). In 
addition, a further structural reform under the 
RRP  aims  to  separate  coal-related  companies 
from  the  Bulgarian  Energy  Holding  into  a 
newly  created  state-owned  holding  company. 
This should improve corporate governance and 
make  the  energy  sector  more  competitive. 
Further progress in Bulgaria's energy transition 
could  be  supported  by  making  full  use  of  the 
resources  available  under  the  Modernisation 
Fund  and  the  Just  Transition  Fund  to  finance 
investments  that  reduce  reliance  on  fossil 
fuels.  Fossil  fuels  continued  to  dominate 
marginal  price-setting,  accounting  for  around 
67%  of  hours  when  prices  were  determined. 
result,  wholesale  prices  averaged 
As  a 
EUR 107 per MWh in 2025, the fifth highest in 
the  EU  and  well  above  the  EU  average  of 
EUR 83.8 per MWh (see Annex 9). 

Regulated  retail  prices  keep  household 
electricity  bills  low  and  fixed  but  at  the 

16 

 
 
expense  of  broader  market  efficiency. 
Households continue to pay a single regulated 
retail  price,  with  the  difference  between 
procurement  costs  and 
retail  prices  are 
covered  by  the  Electricity  System  Security 
Fund,  which  is  financed  by,  among  other 
things,  inframarginal  revenue  caps  applied  to 
generators  (see  Annex  9).  As  retail  electricity 
prices remain regulated at fixed, relatively low 
levels, household electricity  demand is largely 
unresponsive 
to  wholesale  price  signals. 
Therefore,  suppliers  have  little  incentive  to 
fully  diversify  their  procurement,  for  instance, 
through long-term power contracts, and prefer 
relying  on  the  special  segment  on 
the 
independent Bulgarian energy exchange, which 
flexible  products. 
offers  high-priced  but 
Further  steps  to  promote  market  competition 
would  be  beneficial,  including  a  pathway  to 
more 
for 
households. 

support  measures 

targeted 

Renewables  overtook  coal  in  Bulgaria's 
electricity mix for the first time in 2025, 
driven largely by the continued expansion 
of  solar  capacity.  In  2025,  Bulgaria  further 
expanded  its  solar  energy  capacity,  increasing 
the  capacity  deployed  by  1.35  GW.  Wind 
energy, however, remains underdeveloped and 
has  yet  to  contribute  significantly  to  the 
electricity  mix.  To  facilitate  the  roll-out  of 
renewables,  Bulgaria  has  adopted  legislation 
to  streamline  permitting  procedures  and 
enable  the  set-up  of  energy  communities. 
Under  the  RRP,  it  has  also  committed  to 
designating  priority  zones  for  onshore  wind  – 
with  a  potential  of  at  least  2 GW  –  although 
this  reform  has  yet  to  be  fully  delivered. 
Further  deployment  of  renewable  energy,  in 
particular  by  tapping  into  the  still  largely 
unused potential of wind. This could contribute 
to lower electricity prices in the medium term 
by  diversifying 
the  generation  mix  and 
reducing  reliance  on  more  costly  fossil-based 
generation. In addition, the pace of renewable 
from 
energy  deployment  would  benefit 
for 
capacity 
administrative 
stronger 
permitting,  the  development  of  a  regulatory 
framework  for  offshore  wind  and  additional 
incentives for deploying onshore wind capacity 
include  using 
(see  Annex  9).  This  could 
contracts  for  difference  as  a  complementary 

support  instrument,  in  line  with  the  revised 
electricity market design. 

Storage deployment supports 
electricity system flexibility, but 
demand response remains largely 
absent 

storage 

(see  Annex  9).  The 

Bulgaria is making significant progress in 
deploying  battery  storage,  following  a 
recommendation  in  2025  to  increase  the 
flexibility  of  the  electricity  system  and  ensure 
capacity.  Under  RRP 
sufficient 
investments,  Bulgaria  has  signed  contracts  to 
deploy  1 120 MW  of  co-located  battery 
storage  paired  with 
renewable  energy 
production  and  close  to  14 000  MWh  of  grid-
scale  battery  energy  storage  systems,  with 
1 181 MW  of  battery  energy  storage  already 
operational 
timely 
completion  of  these  investments  is  crucial  to 
fully  reaping 
the  rapid 
expansion  of  solar  energy.  This  is  because 
additional  storage  capacity  supports  system 
integration  and  can  contribute  to  reducing 
short-term  pressure  on  electricity  prices.  In 
addition,  Bulgaria's 
system 
operator 
the  PICASSO  and  MARI 
balancing platforms, improving integration into 
EU-wide  balancing  markets.  However,  the 
flexibility  of  the  hydro-pump  storage  fleet 
remains  constrained  as  three  of  the  six 
turbines  at  the  Chaira  plant  are  still  out  of 
service, reducing available capacity to 410 MW 
against  a  full  capacity  of  800 MW.  Restoring 
full  operation  would  strengthen  flexibility  in 
using non-fossil options (see Annex 9). 

the  benefits  of 

transmission 

joined 

Bulgaria's  flexibility  framework  remains 
heavily  supply-side  oriented,  and  the 
near-absence  of  demand  response  and 
smart  metering  contributes  to  high  and 
volatile  wholesale  electricity  prices. 
Average  daily  price  spreads  in  the  wholesale 
market  reached  EUR 157  per  MWh,  driven  by 
severe  ramp-ups  of  thermal  plants  during 
evening  and  early-morning  peak  hours  when 
solar  output  falls  and  non-fossil  flexibility  is 
insufficient  to  bridge  the  supply-demand  gap. 
While  the  RRP  includes  a  commitment  by  the 

17 

 
Energy  and  Water  Regulatory  Commission  to 
prepare  a  report  on  facilitating  demand-
response  measures,  no  meaningful  flexibility 
framework  is  operational  yet.  Smart  meter 
roll-out  remains  below  5%,  which,  combined 
with  fully  regulated  household  retail  tariffs, 
prevents  dynamic  pricing  offers  and  effective 
consumer  participation  in  demand  response 
(see  Annex  9).  Useful  steps  to  address 
Bulgaria's  structural  price  volatility  could 
include  broadening  the  scope  for  aggregation 
and  demand  response,  accelerating  smart 
meter  deployment  in  line  with  the  EU  smart 
metering 
that 
balancing  market  design  provides  transparent 
and predictable signals. 

framework  and  ensuring 

Grid infrastructure: cross-border 
progress achieved, distribution 
upgrades still needed 

grid 

progress 

has  made 

infrastructure, 

Bulgaria 
in 
strengthening  transmission  and  cross-
border 
but 
distribution  upgrades  lag  behind.  One  of 
the 2025 CSRs was to upgrade electricity grid 
infrastructure,  with  a  particular  focus  on 
distribution-level  smart  grids, 
lines  and 
substations.  Bulgaria  has  already  achieved  its 
2030  interconnection  target,  reaching  19% 
against  the  15%  benchmark.  Under  the  RRP, 
Bulgaria  added  1 200 MW  of  additional  net 
interconnection  capacity  with  Romania  and 
Greece  in  2025  and  is  on  track  to  integrate 
4 500 MW  of  new 
renewable  production 
capacity  by  March  2026  (see  Annex  9).  These 
are  positive  developments  for  transmission 
infrastructure.  However,  the  distribution  grid, 
which  is  where  smart  meters,  prosumers, 
storage  and 
energy 
demand-response  assets 
connect,  needs 
further attention. Upgrades to distribution lines 
and  substations  are  needed  to  accommodate 
households, 
rising 
transport  and  SMEs.  These  upgrades  would 
prevent  grid  connection  bottlenecks  from 
constraining  the  deployment  of  renewables 
and  support  a  more  efficient  integration  of 
lower-cost  renewable  generation,  which  can 

electrification 

communities, 

across 

local 

contribute  to  reducing  electricity  prices  over 
time. 

Energy poverty remains 
widespread, while fossil fuel 
subsidies continue to crowd out 
targeted support 

In 

2025, 

Bulgaria 

Energy  poverty  remains  a  structural 
challenge  in  Bulgaria,  with  few  support 
mechanisms  targeted  at  those  most  in 
need. 
received 
recommendations to tackle  energy poverty by 
developing  an  information  system  on  energy-
poor  households  and  supporting  them  with 
targeted  policy  measures and  to  take  specific 
steps  to  phase  out  fossil  fuel  subsidies, 
including those supporting district heating. The 
share  of  people  unable  to  keep  their  homes 
adequately  warm  remains  well  above  the  EU 
average  (see  Annex  12).  Support  is  largely 
delivered  through  universally  low  regulated 
retail  electricity  prices  and  feed-in  tariffs  for 
combined  heat  and  power  plants  supplying 
district  heating  networks,  rather  than  through 
targeted  assistance.  This  is  an  inefficient  use 
of 
leaves 
vulnerable households insufficiently protected. 
While steps have been taken to strengthen the 
governance  framework  for  energy  poverty, 
implementation  remains  at  an  early  stage. 
Bulgaria  adopted  a  legal  definition  of  energy 
poverty 
in  place  a 
coordination  mechanism  with  designated 
responsible  bodies  in  November  2025.  In 
addition,  it  is  in  the  process  of  developing  an 
information  system  expected 
to  become 
operational  by  mid-2026.  However,  targeted 
support  measures  remain  limited  (see  Annex 
12). 

in  2023  and  put 

resources  and 

limited 

fiscal 

Energy  efficiency  of  residential  buildings 
has  advanced  under  the  RRP,  but  the 
scale  of  the  needs  exceeds  the  plan’s 
capacity  to  address  them.  Measures 
included:  (i)  the  creation  of  the  National 
Decarbonisation  Fund  to  finance  renovations 
and renewable energy use in buildings; (ii) the 
designation of 21 regional one-stop shops for 
renovation  support;  (iii)  amendments  to  the 

18 

 
Condominium  Ownership  Management  Act  to 
facilitate  renovations  in  apartment  buildings; 
and  (iv)  changes  to  the  Energy  Act  enabling 
the  use  of  energy  service  company  (ESCO) 
models  to  finance  energy  efficiency  and 
renewable energy investments through energy 
bills.  In  addition,  the  RRP  provides  for  a 
subsidy  scheme  for  the  energy  efficiency 
renovation  of  residential  buildings  to  be 
managed by the Bulgarian Development Bank, 
complementing  the 
long-standing  national 
programme  for  energy  efficiency  of  multi-
family  residential  buildings.  Despite  progress 
under 
the  European  Regional 
Development  Fund  and  the  Just  Transition 
Fund, additional efforts will be needed to close 
remaining gaps in energy efficiency and scale 
up renovation activities.  

the  RRP, 

purchase 

electricity 

fuel  subsidies 

remain 
state 
required 

unaddressed. 
order 

Progress  has  been  made  in  phasing  out 
for  electricity 
fossil 
production,  but  subsidies  for  district 
The 
heating 
that 
emergency 
previously 
the  procurement  of 
electricity  from  the  coal-fired  Maritsa  East  II 
power  plant  is  no  longer  in  force,  and  the 
remaining  power  purchase  agreement  for 
coal-based 
production  was 
discontinued  in  the  first  half  of  2026  (see 
Annex  9).  However, 
for 
combined  heat  and  power  plants  supplying 
district  heating  networks  remain  in  place  and 
continue  to  provide  implicit  support  to  fossil 
fuel-based  heat  generation  (see  Annex  9). 
These  tariffs  act  as  an  indirect  subsidy  that 
extends  the  economic  viability  of  fossil  fuel-
based  district  heating  and  delays  the  shift  to 
low-carbon  heat  sources.  Bulgaria's  effective 
carbon rate averaged EUR 65 per tonne of CO₂ 
in  2023,  significantly  below  the  EU  mean  of 
EUR 84.80  (see  Annex  9).  Reforming  these 
tariffs and redirecting the savings to targeted 
support for vulnerable households and district 
heating decarbonisation would be beneficial. 

feed-in 

tariffs 

High emissions from 
manufacturing require broader 
industrial decarbonisation efforts 

gas 

emissions 

Bulgaria  has  made  limited  progress  on 
energy  efficiency  in  industry,  but  high 
from 
greenhouse 
manufacturing  mean  more  efforts  are 
needed  in  industrial  decarbonisation.  The 
2025  CSRs  called  on  Bulgaria  to  encourage 
industry  to  adopt  energy efficiency measures. 
The  RRP  includes  a  guarantee  instrument  for 
energy  efficiency  and 
renewable  energy 
investments  implemented  via  InvestEU  and 
the European Investment Fund. It also sets out 
a  grant  scheme  supporting  businesses  in  the 
transition  to  the  circular  economy,  which  also 
covers energy efficiency investments. Bulgaria 
is  preparing  a  national  strategy  for  raw 
materials,  industry  and  manufacturing.  The 
strategy  will  include  elements  on  reducing 
energy  consumption  in  industry  along  with 
measures  for  industrial  decarbonisation,  such 
as  the  reduction  of  carbon  intensity  and 
resource  efficiency  (see  Annex  8).  However, 
Bulgaria’s  manufacturing  sector  remains  the 
most greenhouse gas-intensive in the EU, with 
emissions  per  unit  of  value  added  more  than 
double  the  EU  average,  and 
its  energy 
intensity is among the four highest in the EU. 
Non-energy-related  industrial  emissions  also 
account  for  a  significantly  larger  share  of 
manufacturing emissions than the EU average 
(45% vs 35%), pointing to broader challenges 
for decarbonisation (see Annex 8). As a result, 
while  some  initial  support  measures  are  in 
place,  industrial  decarbonisation  remains  a 
major  challenge.  Financial 
incentives  and 
streamlined permitting procedures for net-zero 
technologies  would  help  to  reduce  high  levels 
consumption  and 
energy 
of 
emissions (see Annex 8). 

industrial 

19 

 
Sustainable transport challenges: 
underdeveloped infrastructure and 
high emissions 

increased 

Sustainable  transport  solutions  continue 
to  lag  behind  the  EU  average,  especially 
in  rural  areas  underserved  by  public 
transport.  The  2025  CSR  called  on  Bulgaria 
to  promote 
the  roll-out  and  uptake  of 
sustainable  urban,  public  and  rail  transport, 
including  by  accelerating  the  development  of 
the  required  infrastructure.  While  the  uptake 
of  electric  vehicles 
in  2024 
compared  with  2023,  the  market  share  of 
these  vehicles  is  significantly  below  the  EU 
average at 0.56%. At the same time, charging 
infrastructure expansion is slow, with less than 
15% of Bulgaria’s 2030 target completed (see 
Annex 8). This consistent underperformance on 
electric  vehicle  infrastructure  is  compounded 
by  poor  transport  connectivity,  especially  in 
northern regions, where many  remote villages 
lack adequate public transport (see Annex 18). 
The  RRF  and  cohesion  policy  programmes  are 
already  supporting  Bulgaria  with  funding  for 
electric  buses  and  charging  infrastructure  for 
municipalities. However, further investments in 
sustainable and electric transport are essential 
to  helping  reduce  emissions  from  the  sector, 
which  was  Bulgaria's  second-highest  emitting 
sector  in  2023.  Additionally,  a  lack  of  public 
transport also means that people, especially in 
rural  areas,  have  to  rely  more  on  individual 
means  of  transport  (see  Annex  12).  This  can 
have  implications  for  road  safety,  for  which, 
compared with the EU average, Bulgaria has a 
relatively  high  share  of  fatalities  occurring  on 
rural  roads 
is 
investing  in  renovating  its  rail  network.  The 
RRF  is  supporting  the  purchase  of  zero-
the 
emission 
renovation  of  railway  infrastructure  to  ease 
key  rail  bottlenecks.  It  would  be  beneficial  to 
continue investing  in infrastructure  renovation 
and the digitalisation of the railway networks, 
including the roll-out of the European Railway 
Traffic  Management  System.  Doing  so  would 
expand  capacity,  increase  economic  viability 

(see  Annex  19).  Bulgaria 

rolling  stock  and 

railway 

and  reduce  long  travel  times  between  major 
cities(24). 

Strengthening water and climate 
resilience 

in 

for 

water 

resilience 

long-standing  EU 

Bulgaria’s 
is 
compromised by not enough rehabilitated 
infrastructure  and 
regulatory  gaps, 
implying  significant  economic  risks  and 
threatening  public  health.  The  2025  CSR 
called 
improved  water  and  waste 
management by investing in infrastructure, yet 
progress  remains  limited.  Climate  change  is 
transport 
exacerbating 
vulnerabilities 
infrastructure,  with  floods, 
landslides  and 
shrinking  Danube  water 
levels  disrupting 
connectivity,  but  adaptation  measures  are 
fragmented  and  underfunded.  The  country 
faces 
infringements  for 
failing  to  comply  with  the  Urban  Wastewater 
ageing 
Treatment  Directive.  Meanwhile, 
losses 
infrastructure  has 
caused  water 
exceeding  60%  due 
leaking  pipes. 
Drought  management  plans  still  need  to  be 
developed, and only 36% of urban areas meet 
wastewater  treatment  standards.  The  impact 
of  climate  change  amplifies  droughts  and 
floods,  with  9.3%  of  Bulgaria's  ecosystems 
already  suffering  severe  drought,  double  the 
EU  average.  Fast-tracking 
the  Danube 
navigability project, enforcing the Polluter Pays 
Principle  and  aligning  agricultural  subsidies 
with  water  quality  targets  are  all  measures 
that  would  help  tackle  these  challenges  (see 
Annex 8 and Annex 10). 

to 

in 

climate 

resilience 

underinvestment 

Bulgaria’s 
is 
undermined  by  fragmented  governance 
and 
adaptive 
infrastructure.  The  2025  CSR  on  tackling 
institutional  weaknesses  have  not  been  acted 
upon.  While 
the  2019  national  climate 
adaptation  strategy  and  action  plan  and 
Climate Change Coordination Council provide a 
implementation 
strategic  foundation, 

their 

(24)  BTA: Transport Minister: Nearly All Repairs on Railway 

Tracks Will Be Finished by 2029. 

20 

 
 
suffers  from  weak  horizontal  and  vertical 
coordination,  outdated  risk  assessments  and 
ad  hoc  sectoral  responses.  The  European 
Central  Bank  has estimated  that  Bulgaria lost 
1%  of  its  GDP  in  2025  due  to  extreme 
weather  events.  This  exposed  systemic 
failures,  including  the  absence  of  mandatory 
climate  risk  assessments  for  infrastructure 
projects and water losses exceeding 60%, the 
highest 
the  EU.  Climate  adaptation 
implementation  lags  behind  due  to  limited 
subnational  capacity.  At  subnational  level, 
more  efforts  are  needed  to  boost  climate 
preparedness  mainstreaming 
regional 
planning  and  procurement.  Only  24%  of 
municipalities  participate  in  the  Covenant  of 
Mayors,  and  local  adaptation  plans  remain 
exceptions  rather  than  the  norm  (see  Annex 
10). 

in 

in 

is 

by 
gaps 
despite 

hampered 
funding 
inertia, 

The  uptake  of  nature-based  solutions  in 
legal 
Bulgaria 
and 
ambiguities, 
their 
institutional 
potential  to  mitigate  climate  risks  cost-
effectively. The 2025 CSR on the sustainable 
use of resources has not produced any results. 
Bulgaria’s  forest  cover  of  33%  and  extensive 
wetlands offer natural defences against floods 
and  droughts.  However,  only  12%  of  habitats 
meet  conservation  targets,  and  nature-based 
solutions  account  for  a  negligible  share  of 
investments 
in  climate  adaptation.  Key 
barriers  include  the  lack  of  a  legal  definition 
for  nature-based  solutions  in  national  law, 
limited  private  and  public  funding  and  little 
local  expertise  in  designing  and  maintaining 
these 
the  Programme 
“Environment”  2021-2027  includes  measures 
to  restore  ecosystems,  these  are  dwarfed  by 
grey  infrastructure  spending.  The  Programme 
'Environment' 2021–2027 has the potential to 
close  this  gap,  particularly  on  traditional 
infrastructure.  However,  closing  Bulgaria’s 
0.24% GDP investment shortfall in ecosystems 
–  the  largest  in  the  EU  –  needs  additional 
efforts (see Annex 10). 

solutions.  While 

The  near  absence  of  climate  insurance 
coverage  in  Bulgaria  exacerbates  fiscal 
leaving 
and 
households  and  businesses  exposed  to 
more  severe  extreme  weather  risks.  With 

vulnerabilities, 

social 

only  around  2%  of  climate-related  losses 
insured  in  2025  (EU:  25%),  public  finances 
bear  the  brunt  of  disaster  costs.  The  total 
economic  loss  due  to  climate  change  per 
capita  increased  in  Bulgaria  between  2010 
and  2024  by  98%  (vs  EU:  34%).  The  market 
has  failed  to  incentivise  risk  reduction,  and 
coverage  is  limited  to  mortgaged  properties, 
leaving  renters,  SMEs  and  farms  unprotected. 
The  Bulgarian  2019  national  climate  change 
adaptation strategy and action plan predicts a 
cumulative  anticipated  loss  in  real  GDP  of 
between  1%  and  3.5%  by  2050  (the  most 
optimistic  and  pessimistic  scenarios) 
(see 
Annex 8, Annex 10). 

21 

 
 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

social 

training; 

recommendations 

In  2025,  Bulgaria  received  country-
(CSRs)  on 
specific 
labour  market 
education  and  skills, 
participation, 
and 
inclusion 
healthcare.  Bulgaria  was  recommended 
to: (i) improve the quality, labour market 
relevance  and  inclusiveness  of  education 
and 
skills 
(ii) 
acquisition;  (iii)  strengthen  competence-
based learning and teaching; (iv) improve 
teaching  quality  with  initial,  continuous 
and  needs-based  teacher  training;  (v) 
labour  shortages;  (vi)  tackle 
address 
social  inclusion;  and  (vii)  improve  access 
to  health  services.  Several  measures  have 
been  carried  out  in  these  policy  areas,  with 
varying  impact,  highlighting  that  there 
is 
further room for improvement.  

reinforce 

lag  behind 

Despite  some  improvements,  particularly 
in the labour market and the social areas, 
Bulgaria  continues  to 
in 
education  and  skills  development,  the 
integration  of  vulnerable  groups,  access 
to  services  and  social  fairness.  Bulgaria 
continues  to  face  major  structural  challenges 
in  education 
that  hinder  human  capital 
development  and  competitiveness.  These 
challenges 
in  early 
include  few  children 
childhood  education  and  care,  weak  basic 
skills, persistent inequalities, teacher shortages 
and a mismatch with labour market needs. At 
the  same  time,  there  are  significant  social 
challenges,  with  high  poverty  or  social 
exclusion  risks  among  vulnerable  groups, 
income 
continued  energy  poverty,  high 
inequality 
social 
underfunded 
protection  system  with 
limited  adequacy. 
While the shift towards deinstitutionalisation is 
advancing  gradually,  overall  social  inclusion 
outcomes remain weak. 

and 

an 

The education system and adult 
learning require further efforts to 
align skills with employers’ needs 

and 

basic 

skills 

reveals 

Bulgaria’s consistently weak performance 
in 
structural 
challenges  that  constrain  human  capital 
development 
competitiveness. 
Improving  the  quality  and  inclusiveness  of 
education  as  well  as 
reinforcing  skills 
acquisition to boost competitiveness is one of 
the 2025 CSRs Bulgaria received. Participation 
in early childhood education and care remains 
low  and  uneven,  limiting  early  learning  and 
exacerbating  inequalities.  Those  particularly 
affected  are  disadvantaged  groups,  including 
Roma  children.  The  problem  persists  despite 
measures adopted under the RRP, such as the 
in 
mandatory 
preschool  education,  which  are  leading  to 
gradual 
improvements.  Around  half  of 
Bulgarian 15-year-olds do not reach minimum 
proficiency in basic skills (about double the EU 
average),  with  an  even  wider  gap  in  rural 
areas, 
skills 
development  later  in  life  (see  Annex  19).  The 
share  of  top-performing  students  is  also  low, 
limiting the pool for innovation and excellence. 
Weak  levels  of  basic  skills  point  to  major 
shortcomings  and  challenges  in  the  school 
curriculum and in teaching quality.  

inclusion  of  four-year-olds 

undermining 

severely 

are 

particularly 

The  curriculum  remains  heavily  content-
focused  rather  than  skills-focused,  and 
teaching  quality  is  low;  disadvantaged 
students 
affected. 
Curricula still focus mostly on content, despite 
early-stage  national  programmes  supporting 
basic skills measures and science, technology, 
engineering 
(STEM) 
education, complemented by funding from the 
ESF+  and  RRF-funding  (see  Annex  13).  The 
government  has  announced  reforms  through 
the  revision  of  the  Pre-school  and  School 

and  mathematic 

22 

 
 
and 

schools; 

Education  Act  and  a  proposal  for  changes  to 
the  curriculum.  These  initiatives  aim  to  tackle 
these imbalances, but they have not yet been 
adopted. The challenges in improving teaching 
quality  continue  to  derive  from:  (i)  shortages 
of  teachers,  especially  in  STEM,  amid  an 
ageing  workforce  and  difficulties  in  recruiting 
and  retaining  novice  teachers,  particularly  in 
(ii) 
disadvantaged 
rural 
insufficient  and  non-targeted  professional 
development  opportunities;  and 
(iii)  weak 
assessment practices and a weak link between 
performance  and  pay.  Bulgaria  seeks  to 
improve  the  attractiveness  of  the  teaching 
profession  through  salary  increases,  STEM-
focused training programmes, and recruitment 
(see  Annex  13).  Strengthening 
incentives 
teacher  education 
robust  needs 
assessment and quality control  is essential  to 
improving 
learning 
teaching  quality  and 
outcomes.   

through 

learning 

outcomes 

disparities 

further 
Socio-economic 
of 
undermine 
disadvantaged students. School segregation 
increasingly 
persists,  with  Roma  children 
attending  segregated  schools,  while 
low 
educational  attainment  among  young  Roma 
remains  a  critical  barrier  to  inclusion.  Early 
school  leaving  has  declined  but  remains  high 
among  Roma  students  and  in  rural  areas. 
Strengthening  inclusive  learning  environments 
is  crucial  to improving  learning  outcomes  and 
reducing 
inequalities,  which  can  support 
building a more skilled workforce.  

transitions. 

reinforce  skills  acquisition 

Bulgaria’s  higher  education  continues  to 
face  significant  challenges  in  developing 
high-skilled  talent,  particularly  in  STEM, 
with  implications  for  productivity  and 
innovation. This is reflected in the 2025 CSR 
to 
to  boost 
competitiveness  and  support  the  green  and 
digital 
educational 
attainment has increased significantly over the 
past  decade,  but  remains  comparatively  low, 
particularly among men, disadvantaged groups 
and  rural  populations,  and  is  insufficient  to 
meet  growing  demand  for  higher  education 
graduates.  This  is  compounded  by  regional 
disparities,  demographic  decline  and  high 
outward student mobility. Bulgaria has one of 
the EU’s lowest shares of STEM graduates, and 

Tertiary 

23 

enrolment  in  STEM  programmes  in  higher 
education  continues  to  decline.  The  ongoing 
implementation  of  the  Higher  Education  Map, 
included in Bulgaria’s RRP, aims to better align 
tertiary  education  with  labour  market  and 
regional  needs, 
its  effectiveness 
though 
remains to be assessed. The Higher Education 
Map 
from 
therefore 
strengthened  collaboration  among  institutions 
and  businesses,  improved  data  collection  and 
incentives 
teaching  and 
making curricula more innovative.  

for  high-quality 

benefit 

could 

in 

Further  efforts  are  needed  to  align 
vocational  education  and  training  (VET) 
with  employers'  needs.  This  was  already 
the  2025  CSRs.  Although 
reflected 
participation in medium-level VET is above the 
EU  average  and  there  is  a  strong  focus  on 
STEM  programmes,  skills  mismatches  persist. 
The  employment  rate  of  VET  graduates 
remains below the EU average, while in some 
regions many graduates struggle to find work 
due to insufficient demand. Measures such as 
links  between  VET 
further  strengthening 
schools  and  employers, 
improving  staff 
specialisation  and  equipment,  and  making 
labour 
programmes  more 
market  demand  could  help  address  these 
mismatches.  The  VET  Act  was  amended,  the 
list  of  professions  is  being  updated,  and  new 
cooperation  structures  between  education 
institutions  and businesses  are  emerging  with 
RRF and ESF+ support. However, these reforms 
will  only  improve  alignment  with  employers' 
needs once fully implemented.  

responsive 

to 

in 

shortages  persist,  with 

Skill 
slow 
progress 
skills 
development 
regional  disparities. 
exacerbated  by 
Employers  continue  to  report  persistent  skill 
mismatches that constrain business expansion, 
particularly  in  the  north-east,  pointing  to 
marked  regional  disparities.  With  support 
under 
Instrument, 
Bulgaria  developed  an  action  plan  for  skills 
with  a  comprehensive  set  of  policy measures, 
but  it  has  not  been  adopted  or  implemented. 
Training  opportunities  remain  heavily  reliant 
on  EU  funding,  raising  concerns  about  their 
coverage. 
long-term 
Bulgaria  has  one  of  the  lowest  rates  of 
participation  in  adult  learning  in  the  EU, 

the  Technical  Support 

sustainability 

and 

 
and 

earners 

including for those in employment. This leaves 
people with low levels of skills with limited job 
opportunities, contributing to the high share of 
low-wage 
undermining 
opportunities  from  the  twin  transitions.  Low 
digital  skills  continue to  be  a  major  barrier  to 
upskilling as only 38.3% of individuals had at 
least basic digital skills in 2025, far below the 
EU  average  of  60.4%.  Adult  participation  in 
learning  is  also  very  weak  (at  9.5%  in  2022), 
well below the 2030 national target of 35.4%. 
Progress  is  further  hampered  by  delays  in 
including 
implementing 
individual 
the 
qualifications  database,  and  difficulties  in 
scaling  up  digital  training  and  ensuring  the 
involvement of employers. 

key  measures, 

accounts 

learning 

and 

Rising employment has not yet led 
to a more inclusive labour market 
or quality jobs 

by 

EU 

largely 

to  boost 

Measures 
labour  market 
participation  of  vulnerable  groups  has 
brought  limited  improvements.  The  2025 
CSRs  indicated  that  labour  shortages  should 
be addressed by increasing employment rates 
for  vulnerable  groups  and  inactive  people. 
funding, 
Supported 
implementation of measures targeting persons 
with disabilities has expanded in recent years. 
However,  despite  narrowing 
in  2025,  the 
disability  employment  gap  remains  relatively 
high compared with the rest of the EU, and the 
share  of  persons  with  disabilities,  who  were 
neither  in  employment  nor  in  education  and 
training  (NEETs)  was  86.6%  in  2024,  one  of 
the highest in the EU. Despite the tight labour 
market,  young  people  struggle 
find 
employment. The share of NEETs fell in 2024 
but rose again in 2025, staying above the EU 
average. Although public employment services 
have brought in some support measures, such 
as  activation  experts  and  mobile  offices,  they 
continue  to  struggle  to  reach  NEETs  as  many 
of them are not registered as unemployed. To 
improve  outreach,  the  public  employment 
services  are  launching  a  register  of  inactive 
people,  which 
to  become 
in  2026.  Employment  among 
operational 

is  expected 

to 

Roma  increased  considerably  between  2021 
and  2024,  but 
it  was  still  almost  15 
percentage  points  lower  than  the  country’s 
overall employment rate. Active labour market 
policies  still  fall  short  in  addressing  labour 
shortages,  even  with  new  measures,  such  as 
the development of a virtual labour office and 
an  IT  application  to  help  jobseekers  find 
training.  Engaging  employers  and  developing 
more  effective  measures  targeting  vulnerable 
groups remains a challenge. At the same time, 
measures to facilitate hiring non-EU  nationals 
led  to  the  number  of  work  permits  issued 
increasing  by  42%  in  2025,  mainly  for  low-
skilled  jobs  in  tourism,  construction  transport 
and industry.  

The  labour  market  continued  to  perform 
strongly,  but  regional  disparities  persist. 
The employment rate (20-64 years old) edged 
above the EU average, reaching 77% in 2025, 
bringing Bulgaria closer to the 2030 target of 
79%.  The  shrinking  workforce  is  still  a  major 
limited  positive 
challenge  despite  some 
demographic  developments,  such  as 
the 
reversal  of  net  outward  migration.  Regional 
unemployment  disparities  have  narrowed,  but 
Severozapaden’s  rate  was  still  almost  four 
times  higher  than  the  best-performing  area, 
indicating  that  sizeable  gaps 
in  regional 
performance  persist.  Demand  remained  high 
mostly  for  middle-skilled  jobs  and  increased 
for  low-skilled  labour,  while  shortages  of 
doctors,  nurses  and  teachers  were  highest 
among professions requiring higher education. 

to 

lead 

quality 

With  social  dialogue  taking  a 
less 
prominent  role,  robust  wage  growth  did 
not 
jobs,  with 
skills  development, 
shortcomings 
collective  representation,  health  and 
safety (25). Wage growth has been well above 
the  EU  average  for  the  last  four  years, 
standing  at  10.4%  in  2025  (lower  than  the  

in 

(25)  According to the Opinion of the Employment Committee 
of June 2025, the dimensions of job quality encompass 
adequate  earnings  and  fair  wages,  job  and  career 
security,  skills  development  and  career  progression, 
employability,  safety  and  health  at  work,  workplace 
well-being,  working  time,  autonomy,  collective  interest 
representation  and  organisation,  work-life  balance, 
gender  equality  and  equal  opportunities,  social 
protection, and no undeclared or underdeclared work. 

24 

 
 
14.1% in 2024), outpacing inflation and labour 
productivity  growth.  At  the  same  time,  unit 
labour costs have remained among the lowest 
in  the  EU.  Moreover,  although  the  minimum 
wage  also  increased  substantially,  there  was 
no meaningful reduction in the high shares of 
in-work  poverty  or  low-wage  earners.  Low 
levels  of  engagement  in  social  dialogue  and 
collective  bargaining  coverage  contribute  to 
the  lack  of  progress  on  non-wage  aspects  of 
job  quality.  Workplace  safety  showed  no 
improvement 
the 
country's poor track record. On a positive note, 
the labour market has contributed to relatively 
high job security with low levels of involuntary 
temporary employment. 

in  2025,  exacerbating 

High poverty and income 
inequality, compounded by limited 
access to services and healthcare, 
hamper social fairness 

for 

higher 

income 

reform,  which 
adjustments. 
inflation 

Bulgaria  has  made  steady  progress  in 
reducing  overall  poverty  and  inequality, 
but  structural  challenges  persist.  Higher 
incomes  have  lowered  general  poverty  rates. 
This  has  been  the  result  of  more  generous 
social  assistance,  achieved  through  the  RRP’s 
included 
minimum 
However, 
inflation-linked 
relatively 
basic 
commodities, such as food, still contributes to 
eroding the adequacy of minimum income. The 
Roma population continues to experience very 
high  rates  of  poverty  and  social  exclusion 
(77.8%  in  2025).  The  2025  CSR  to  address 
social 
through  more  effective 
minimum  income  support  has  underlined  the 
potential  to  further  strengthen  the  social 
system, given the high share of the population 
still  at  risk  of  poverty  or  social  exclusion, 
particularly children. Energy poverty is another 
challenge,  as  discussed 
in  Section  3. 
Implementation  of  the  Child  Guarantee  could 
be  further  strengthened  by  focusing  on  low-
performing  areas,  such  as  early  childhood 
education  and  care,  healthy  nutrition  and 
school  meals.  The  limited  capacity  of  the 
social protection system is evident in the weak 
transfers  on  poverty 
impact  of  social 

inclusion 

that 

income 

reduction.  Pensions  are  no  exception,  with 
concerns  about  their  adequacy  and  long-term 
sustainability.  Despite  recent  increases,  the 
pension replacement rate (the percentage of a 
is 
worker’s  pre-retirement 
replaced  by  their  pension  after  they  stop 
working)  is  projected  to  decrease  in  the  long 
run (26).  On  a  positive  note,  measures  have 
been  taken,  such  as  the  introduction  of  the 
multi-fund  model,  which  will  kick  in  as  of 
produce  a 
2027.  However, 
plans 
comprehensive 
reform 
pension 
roadmap  have  stalled.  These  gaps  in  social 
protection  contribute  to  one  of  the  highest 
rates of income inequality in the EU. 

to 
system 

Graph 4.1: At-risk-of-poverty rate (AROPE) by 
level of education (% of population 18+) 

Source: European Commission  

Housing  has  become  an 
increasingly 
important  factor  for  social  fairness.  The 
rapidly  rising  prices  of  housing  have  mostly 
been  offset  by  higher  incomes;  however,  the 
poorest  households  and  rural  communities 
have  been  affected:  approximately  7%  of  the 
of  households  and  9.1%  of  rural  residents 
face  housing  cost  overburden(27).  Home 
ownership  is  high,  however,  housing  quality is 
poor  and  there  is  a  high  rate  of  vacant 
properties.  Social  housing  is  limited  and  of 
poor  quality.  A  national  housing  strategy  with 
to 
long-term  scope  could  be  useful 
a 

(26)  OECD Economic Surveys: Bulgaria 2026, February 2026, 

Volume 2026/5. 

(27)  This indicator should be read together with the tenure 
structure (homeowner, tenants), that may differ across 
country and regions. 

25 

0.010.020.030.040.050.060.070.080.020152016201720182019202020212022202320242025TotalED0-2: less then primary, primary and lower secondaryED3-4: secondary, post-secondary/non-teritaryED5-8: teritary education 
  
 
 
effectively  consolidate  support  for  vulnerable 
groups and homeless people. 

thanks 

institutional  to 
Bulgaria's  shift  from 
social 
community-  and  home-based 
services  is  advancing,  but  a  sustained 
approach will be needed to carry out the 
planned  reform  by  2035.  The  accessibility, 
affordability  and  quality  of  social  services 
have  been 
to 
improving,  partly 
measures  in  the  RRP  such  as  the  adoption  of 
the  Ordinance  on  the  Quality  of  Social 
Services,  a  mapping  of  social  services,  and 
investments  in  new  and  renovated  social 
service  facilities.  Nevertheless,  the  number  of 
people  in  need  of  long-term  care  who  go 
without professional homecare services due to 
financial reasons is 29.4% (three times the EU 
average).  The  number  of 
long-term  care 
workers per 100 people aged 65 and above is 
2.4  vs  3.2  in  the  EU,  and  staffing  shortages 
can  only  be  expected  to  exacerbate  amid  a 
rapidly  ageing  society  and  rising  demand. 
these 
Measures 
challenges  are  a  post-2027  action  plan  on 
deinstitutionalisation, 
planned 
closures  and  the  restructuring  of  institutions, 
and  further  action  to  strengthen  home  care 
and expand the long-term care workforce.  

that  could  help 

alongside 

tackle 

Limited access to health services remains 
a  major  hurdle  for  Bulgaria,  contributing 
to  low  life  expectancy  and  high  rates  of 
preventable  and  treatable  deaths.  The 
country has one of the lowest life expectancies 
in  the  EU,  while  its preventable mortality  rate 
was 50% more than the EU  average in 2023, 
having only slightly declined over the previous 
decade.  Bulgaria’s  health  system  remains 
strongly  hospital-centric,  with  less  than  20% 
of 
to 
total  health  expenditure  allocated 
outpatient  care  (one  of  the  lowest  in  the  EU). 
At  the  same  time,  Bulgaria  has  one  of  the 
highest  numbers  of  hospital  discharges  per 
1 000  inhabitants  in  the  EU,  and  hospital 
occupancy  rates  and  average  lengths  of  stay 
are among the lowest. This points to a possible 
mismatch between hospital activity and actual 
care  needs.  This  pattern  may  be  partly  linked 
to  the  payment  model,  under  which  hospitals 
clinical 
are 
pathways  with  fixed  treatments  that  are  not 
tailored  to  a  patient's  medical  history  and 

reimbursed 

completed 

for 

specific  needs.  Meanwhile,  spending  on 
prevention  remains  among  the  lowest  in  the 
EU. 
Increasing  the  share  of  expenditure 
dedicated  to  primary  and  preventive  care 
would support earlier diagnosis, more effective 
chronic disease management, and lower long-
term costs. It would also reduce patients being 
pushed to private care due to waiting times or 
limits on referral quotas.  

Access to health services continues to be 
hampered  by  staff  shortages,  an  uneven 
distribution  of  healthcare  professionals, 
high  out-of-pocket  payments  and  limited 
outpatient  care.  Improving  access  to  health 
services  was  one  of  the  2025  CSRs  for 
Bulgaria.  The  challenges  are  linked  to  the 
ageing  population  and  are  compounded  by 
severe  and  growing  shortages  in  the  number 
in  particular 
of  healthcare  professionals, 
nurses,  who  are  unevenly  distributed  across 
the  country.  An  ageing  health  workforce  adds 
further  pressure:  20%  of  nurses  were  still 
in  2023. 
working  beyond  retirement  age 
Access  to  healthcare  is  further  restricted  for 
11-12% of the population who have no health 
insurance (28).  Among  the  Roma  community, 
two out of five people lack health insurance or 
additional  cover (29).  Bulgaria  has  the  highest 
share of out-of-pocket healthcare spending in 
the  EU,  at  35.5%  in  2023,  which  is  2.5  times 
the EU average. The share of private spending 
on  outpatient  services  stands  at  43%,  almost 
twice  the  EU  average.  The  government  has 
taken  measures 
reduce  workforce 
to 
shortages,  such  as  adopting  a  national 
strategy  aiming  to  invest  in  outpatient  care 
facilities  and  creating  incentives  to  attract 
health  professionals.  The  ESF+  is  supporting 
the  specialisation  of  doctors,  and  RRF-funded 
measures include: (i) setting up outpatient care 
units  in  remote  and  hard-to-reach  areas;  (ii) 
adopting  a  methodology  to  determine  the 
in  different  types  of 
number  of  nurses 
healthcare  facilities;  and  (iii)  linking  health 
professionals’  pay  to  their  qualifications.  The 

(28)  European Observatory on Health Systems and Policies 
(2024), Bulgaria: Health System Summary 2024. 

(29)  European Union Agency for Fundamental Rights (2024), 

Roma Survey 2024, dataset. 

26 

 
 
 
impact of some of these measures have yet to 
be  assessed,  but  more  structural  reforms  are 
needed  to  shift  resources  from  hospital  to 
outpatient,  primary  and  preventive  care  and 
reduce out-of-pocket payments to improve the 
health 
and 
accessibility. 

effectiveness 

system's 

boost 

upward 

Addressing  these  challenges  will  help 
Bulgaria 
social 
convergence.  The  second-stage  analysis  in 
line  with  the  Social  Convergence  Framework 
points  to  challenges  for  Bulgaria  that  may 
affect  social  convergence 
to 
relation 
education and skills and social situation(30). 

in 

(30) European Commission, SWD(2026) 122. The analysis 
relies on all the available quantitative and qualitative 
evidence and the policy response undertaken and 
planned. 

27 

 
 
KEY FINDINGS 

In  areas  covered  by  existing  country-
specific recommendations (CSRs), Bulgaria 
would benefit from: 

•  strengthening 

research 

and 
its 
innovation  system  by  increasing  public 
and  private  R&D  investment;  setting  out 
clear 
and 
institutional  mandates 
research 
responsibilities 
organisations 
education 
institutions  within  a  coherent  national 
strategy; 
academia-
business  links  and  technology  transfer  to 
support the commercialisation of research; 

public 
higher 

for 
and 

reinforcing 

and 

• 

improving  public  procurement 
by 
reviewing  public  procurement  governance 
in  Bulgaria;  further  strengthening 
the 
safeguards  so  that  tendering  procedures 
encourage  participation  by  bidders;  and 
ensuring  efficient  follow-up  via  regular 
quality  checks  and  taking  action  based  on 
the findings; 

•  strengthening 

capacity 

and 
the 
functioning of public administration by 
improving its attractiveness as an employer 
and  ensuring  civil  servants  have  adequate 
skills,  especially  in  regional  and  municipal 
administrations;  strengthening  coordination 
at  regional  levels;  and  simplifying  and 
reduce 
procedures 
digitalising 
administrative  burden  and  improve  the 
userfriendliness  of  services  for  the  public 
and businesses; 

to 

•  making 

regulatory 

independence 

bodies  more 
effective  by  improving  safeguards  for 
their 
from  market 
participants  and  from  political  institutions; 
ensuring they have sufficient expertise and 
resources; and renewing mandates to boost 
their legitimacy in the eyes of investors;  

fuel 

including 

•  advancing  energy  market  reforms  and 
renewable  energy  deployment  by 
finalising market liberalisation and reducing 
fossil 
by 
reliance, 
modernising  district  heating  and  by 
continuing phasing out fossil fuel subsidies; 
accelerating  wind  energy  deployment 
through 
in 
designated  priority  zones;  and  upgrading 
distribution  grids  and  scaling  storage  to 
integrate  a  higher  proportion  of  renewable 
energy into the system;   

streamlined 

permitting 

•  stepping  up  industrial  decarbonisation 
efforts  by  promoting  measures  and 
investment  in  clean  technologies,  energy 
efficiency and renewable energy generation 
by  businesses, 
regions 
transitioning out of coal; 

including 

in 

• 

in 

clean 
investments 
increasing 
transport  infrastructure,  including  for 
public 
the 
infrastructure  and 
renovation  of 
connectivity 
remote 
regions; 

transport,  and  accelerating 

in  northern  and 

rail 

•  strengthening 

the 

anti-corruption 
framework,  particularly 
for  high-level 
corruption  cases,  as  well  as  ensuring  the 
independence  and  effective  functioning  of 
the Supreme Judicial Council as the judicial 
self-governance  body,  essential  for  the 
proper  functioning  of  both  the  courts  and 
the prosecutor’s office, thereby contributing 
to  a  stable  and  predictable  economic 
environment based on the rule of law; 

•  strengthening  water  and 
climate 
resilience  by  accelerating 
in 
water  infrastructure  and  improving  climate 
governance 
risk 
assessments; 

through  mandatory 

investing 

•  accelerating  social  convergence  by 
strengthening 
capital 
development  and  building  up  a  skilled 
labour  force  by  strengthening  basic  skills 
learning  and 
with 

competence-based 

human 

28 

 
 
teaching,  and  by  increasing  participation  in 
higher 
for 
disadvantaged students and in STEM fields; 

education, 

especially 

•  making 

the 

labour  market  more 
inclusive  and  promoting  job  quality  by 
boosting  job  opportunities  for  vulnerable 
groups,  including  Roma  and  persons  with 
disabilities,  and  putting  in  place  active 
labour  market  policies 
low-wage 
earners; 

for 

assistance 

•  tackling  poverty  and  social  exclusion 
by  developing  an  information  system  to 
identify energy-poor households; shifting to 
targeted 
vulnerable 
households; improving access to integrated 
employment  and  social  services,  including 
community-based 
long-term  care;  and 
improving  the  effectiveness  of  minimum 
income support; 

for 

resources 

•  strengthening  the  effectiveness  and 
accessibility  of  the  health  system  by 
shifting 
to 
outpatient,  primary  and  preventive  care; 
tackling 
the  uneven 
distribution  of  health  professionals  across 
the  country;  and  reducing  the  amount  of 
out-of-pocket payments. 

shortages  and 

from  hospital 

In other areas, Bulgaria would benefit from: 

•  strengthening  the  revenue  capacity 
and  fairness  of  the  tax  system  by,  for 
example,  introducing  a  tax-free  allowance 
combined  with  a  higher  flat  tax  rate; 
lowering the cap on cash transactions; and 
raising  revenues  in  areas  with  untapped 
transport, 
potential,  such  as  property, 
pollution and resource taxes; 

•  eliminating 

regulatory 

and 
administrative  barriers  to  the  single 
market 
of 
movement  of  goods  and  provision  of 
services,  as  well  as  the  freedom  of 
establishment. 

affecting 

freedom 

the 

29 

 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

A1.  CSR implementation 

Fiscal 

A2.  Fiscal developments and debt sustainability 

A3.  Taxation 

Productivity 

A4. 

Innovation to business 

A5.  Single market and industry 

A6.  Savings, investment and access to finance 

A7.  Effective institutional framework 

Sustainability 

A8. 

Industry decarbonisation, circularity and climate mitigation 

A9.  Affordable energy transition 

A10.  Climate adaptation, preparedness and environment 

Fairness 

A11.  Labour market 

A12.  Social policies 

A13.  Education and skills 

A14.  Social scoreboard 

A15.  Health and health systems 

A16.  Housing 

Horizontal 

A17.  Sustainable development goals 

A18.  Competitive regions 

A19.  Transport 

LIST OF TABLES 

A1.1. 
A2.1. 
A2.2. 
A2.3. 
A3.1. 
A4.1. 

2025 CSR Implementation and Commission assessment 
Supplementary pension schemes - scope for expansion 
Projected change in ageing-related expenditure in 2025-2040 and 2025-2070 
Fiscal governance database indicator and public accounting maturity 
Taxation Indicators 
Key innovation indicators 

33 

35 

42 

42 

47 

50 

50 

56 

66 

74 

80 

80 

88 

94 

102 

102 

106 

110 

116 

117 

122 

128 

128 

131 

139 

35 
44 
44 
46 
48 
55 

 
 
 
Single Market and Industry 
Savings and Investments Union summary diagnostic 
Financial sector indicators 
Bulgaria. Selected indicators on better regulation practices for primary legislation 
Digital Decade key performance indicators: availability of digital public services 
Key clean industry and climate mitigation indicators: Bulgaria 

A5.1. 
A6.1. 
A6.2. 
A7.1. 
A7.2. 
A8.1. 
A10.1.  Key Adaptation Indicators 
A14.1.  Social Scoreboard for Bulgaria 
A15.1.  Key health indicators 
A18.1.  Main development trends, challenges and the concentration of resources 
A18.2.  Key regional indicators (at NUTS 2 level) for Bulgaria 
A18.3.  European Quality of Government index (2024) 
A18.4.  Renewable energy production in Bulgaria and the EU by degree of urbanisation (MWh per head), 2023 
A19.1.  ERTMS deployment in Bulgaria. 

LIST OF GRAPHS 

Composition of non-financial corporations’ funding 
Capital markets and financial intermediaries 
Composition of households’ financial assets 
Trust in the justice system, regional / local authorities and in government 

Greenhouse gas emissions in the effort sharing sectors, 2005, 2023, and 2024 
Electricity and gas prices for household and non-household consumers, first half of 2025 
Low-carbon electricity generation vs. electricity wholesale prices, 2025 
Bulgaria’s installed renewable capacity vs electricity generation mix 

Contributions to the change in the general government balance (% of GDP) 
Public investment decomposition (% of GDP) 
Primary spending evolution and composition 
Tax revenue by economic function in 2024, BG (outer ring) and EU-27 (inner ring) 
Tax wedge for single and second earners as a % of total labour costs, 2025 
R&D investment as % of GDP, 2013-2023 

A2.1. 
A2.2. 
A2.3. 
A3.1. 
A3.2. 
A4.1. 
A5.1.  Manufacturing industry production: total and selected sector, index (2021=100), 2015-2024 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2.  Most time-consuming aspects of service delivery 
A8.1. 
A9.1. 
A9.2. 
A9.3. 
A11.1.  Key labour market indicators 
A12.1.  Components of AROPE rate, 2015-2025 
A13.1.  Share of students enrolled in STEM and ICT in BG vs EU and total tertiary enrolments in BG in 2015, 2018, 2023 
A13.2.  Skills development in Bulgaria 
A15.1.  Treatable mortality 
A15.2.  Potential gains in working-life years from prevention, between 2022 and 2040 
A16.1.  House prices, rents and price-to-income evolution in BG and EU27 since 2005 
A16.2.  House supply indicators in BG since 2005 
A16.3.  Housing affordability selected indicators 
A17.1.  Progress towards the SDGs in Bulgaria 
A18.1.  Labour productivity growth (2013-2023) and labour productivity (2023), Bulgaria (NUTS 2 regions) 
A18.2.  Share of population with a hospital within 10 minutes by car in Bulgaria, 2023, (NUTS 2 regions) 
A19.1.  Bulgaria's road fatalities per million, 2024 

LIST OF MAPS 

A18.1.  GDP per head compared with the EU average. 
A18.2.  Competitiveness in Bulgarian regions, 2022 
A18.3.  Percentage of GDP loss by 2050 due to climate change under the +2°C scenario in Bulgaria (NUTS 3 regions) 
A19.1.  TEN-T Cross-Border & National Priority Sections in Bulgaria. 
A19.2.  Bulgaria's road safety map 

34 

65 
66 
73 
75 
76 
87 
101 
116 
119 
132 
133 
135 
137 
140 

42 
43 
43 
47 
48 
50 
63 
67 
67 
69 
74 
75 
82 
88 
89 
91 
102 
106 
113 
114 
117 
118 
123 
123 
127 
128 
133 
137 
141 

131 
133 
138 
140 
141 

 
 
 
 
ANNEX 1: CSR IMPLEMENTATION  

Table A1.1:  2025 CSR Implementation and Commission assessment 

(Continued on the next page) 

35 

Bulgaria faces challenges in a wide range of policy areas, as identified in the country-specific recommendations (CSRs). Bulgaria was recommended, among other things, to improving the functioning of public administration, improve the effectiveness of anti-corruption measures, increase the effectiveness of public R&D investment, upgrade the electricity grid infrastructure, phase out fossil fuel subsidies, strengthen competence based teaching, address labour shortages and social inclusion and improve access to healthcare services.  The Commission has assessed the degree of implementation of the 2025 CSRs considering the policy action taken by Bulgaria to date*. To do so, the Commission has taken into account the information provided by Bulgaria in its Annual Progress Report as well as other information sources. This annex provides summary information on the policy actions taken or planned by Bulgaria for each CSR. More detailed information on these actions is included in the relevant chapters and other annexes of the report. *CSR 2 is not assessed in CeSaR. 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, 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. Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  1.1 Reinforce overall defence and security spending and readiness while ensuring debt sustainability in line with the European Council conclusions of 6 March 2025. Total general government defence expenditure in 2026 is projected at 1.9% of GDP, corresponding to an increase of 0.6 ppt. compared to 2024.  Total general government defence expenditure in 2027 is projected at 2.2% of GDP, corresponding to an increase of 0.9 ppt. compared to 2024. Substantial progress 1.2 Adhere to the maximum growth rates of net expenditure recommended by the Council on 20 June 2025, while making use of the allowance under the national escape clause for higher defence expenditure. Cumulated deviation in 2025 amounted to 2.1% of GDP and is only partially explained by the NEC flexibility (0.6pps. of GDP).  Cumulated deviation in 2026 projected at 2.2% of GDP and is only partially explained by the NEC flexibility (0.6pps. of GDP). No progress 3.1: 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.  Amendment of the Administrative procedure code to allow for the further digitalisation of administrative proceedings and (ongoing) expansion of information systems, enabling administrations to obtain data electronically.  On reduction of administrative burden, adoption of Concept for the Development of Regulatory Policy of the Republic of Bulgaria for the period 2025-2027 and implementation (ongoing) of a Plan for Reducing Administrative Burden.  Some Progress 3.2: Improve the effectiveness of anti-corruption measures, particularly in high-level corruption cases.  No progress on establishing an anti-corruption body. Bulgaria has taken preparatory steps in relation to a revised anti-corruption law and adoption by Parliament is ongoing. In relation to the Anti-corruption Strategy, no meeting of the National Council for Anti-Corruption Policies took place in  No Progress  
 
 
 
     
 
Table (continued) 

(Continued on the next page) 

36 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  2025. Bulgaria has taken preparatory steps in relation to the Code of Ethical Conduct and corruption risk management in SOEs and in relation to integrity of civil servants but adoption is still pending.   3.3: Improve the quality of public procurement procedures and strengthen the independence and functioning of regulators. Trainings for authorities involved in public procurement.  Publication of list of letters to buyers with highest shares of single bids and direct awards.  Regarding regulators: Bulgaria renewed the mandates of most independent/regulatory authorities requiring a simple parliamentary majority (e.g. Commission for Protection of Competition). Authorities requiring a qualified majority (i.e. cooperation with the opposition) continue to operate with expired mandates. Appointment procedures remain in essence unchanged, with no major reforms to improve political independence.    Limited Progress 3.4 Increase the impact and effectiveness of public R&D investment by focusing research and innovation in fewer institutions and improve the commercialisation of research output. The Law on Promotion of Research and Innovation (as a reform of the RRP, adopted in April 2024 and entered into force in May 2024) introduced a legal framework to develop the scientific and innovation ecosystem. It introduces policies and instruments for strategic planning and funding efficiency. It establishes the cross-sectoral Innovation and Research Council as a permanent advisory and coordinating body to the Ministry of Education and Science and the Ministry of Innovation and Growth. A positive example for public – private partnership in the area of innovation and research is the INSAIT Institute.     Limited Progress  
 
 
     
 
Table (continued) 

(Continued on the next page) 

37 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  4.1. 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. Bulgaria reduced fossil fuels, adopted a decarbonisation law and amendments to the Energy Act entered into force in July 2025 to liberalise the wholesale electricity market, representing progress in market reform. The Bulgarian RRP contains a target requiring a reduction in GHG emission from coal-fired power plants, which has not been assessed yet.  Bulgaria has taken measures to liberalise its balancing market for electricity and joined the PICASSO balancing platform in February 2025. Renewable deployment continued, with expanding solar generation and renewables accounting for around 28% of installed capacity. However, fossil fuels generation assets remain the price-setting technology in a significant number of hours.  Even if satisfactorily met, the emission limit on coal-fired power plants does not imply full closure.  The retail electricity market remains regulated for households, with fixed prices that do not reflect wholesale procurement costs.  Designation of priority zones for onshore wind by mid 2026 Some Progress  4.2. Take specific steps to phase out fossil-fuel subsidies including by removing the subsidies supporting coal-based electricity production and district heating. Bulgaria discontinued PPAs/PSO-type arrangements supporting coal-fired electricity generation, representing a step towards reducing direct support to coal-based generation. Emergency order is no longer in force for electricity.  Some Progress 4.3. 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. Bulgaria has taken some steps to improve electricity system flexibility, notably by strengthening market integration and cross-border cooperation. Bulgaria joined the PICASSO balancing platform in February 2025. In addition, investments in BESS under the RRP are progressing, although the roll-out and commissioning of these projects are still pending. These measures contribute to system RESTORE completion by August 2026 (c. 6GW of installed capacity)  Some Progress  
 
 
     
 
Table (continued) 

(Continued on the next page) 

38 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  integration and future flexibility, even if they do not yet address the main structural bottlenecks affecting the electricity market. 4.4. Upgrade the electricity grid infrastructure at distribution level by rolling out smart grid infrastructure and by upgrading lines and substations. Bulgaria expanded the net interconnection capacity with Romania and Greece by an additional 1200 MW in 2025. Bulgaria has also reached a 19% interconnection level, exceeding the EU’s 15% target for 2030. The RRP includes an investment in the upgrade and digitalisation of the transmission network. (electricity transmission system to integrate a cumulative new 4 500 MW of production capacity from renewable sources by June 2026) Implementation of the CEF awarded Project of Common Interest Carmen Smart Grid between Bulgaria and Romania will reinforce cross-border TSO-TSO cooperation and data-sharing; enhance TSO-DSO cooperation; invest in grid expansion; increase capacity for integration of new renewables; and improve grid stability, security and flexibility. On distribution specifically, there are 8 investments under the Modernisation Fund in Bulgaria with a total disbursement of EUR 261.8 million. The projects are for modernisation, digital transformation and development of the information systems and physical infrastructure of the electricity distribution grid in Bulgaria to enable smart grids for accelerated electrification of transport, storage deployment, de-carbonisation and decentralization of energy consumption, and production in distribution grids. This goes in the right direction, however projects are at an early stage of implementation and will only materialise by 2030.   Limited Progress 4.5. 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. Bulgaria has taken steps to strengthen its governance framework on energy poverty. A legal definition was adopted in November 2023, followed by the establishment of a coordination mechanism in November 2025, An information system to identify energy-poor households and vulnerable customers is under development and is expected to become operational by mid-2026. Limited Progress  
 
 
     
 
Table (continued) 

(Continued on the next page) 

39 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  including the designation of responsible bodies.  4.6. Encourage energy efficiency measures in industry. RRP investment in a Guarantee instrument for energy efficiency and renewable energy: Contribution to InvestEU with the EIF as implementing partner. RRP investment in a Grant scheme for the support of businesses in the transition to a circular economy (includes energy efficiency investments) Bulgaria is preparing a national industrial strategy, expected to be published in the second half of 2026. The strategy will outline the country's industrial development priorities until 2030 and cover areas including mining and manufacturing, modern industrial infrastructure, faster permitting, access to critical raw materials and labour, zero-emission technologies, and the creation of an investment portal. The strategy is not expected to include actionable energy efficiency measures targeted at industry. Limited Progress 4.7: Promote the roll-out and uptake of sustainable  urban, public and rail transport, including by accelerating the development of the necessary infrastructure Bulgaria has taken steps to accelerate the development of necessary infrastructure, in particular with regard to the Sofia Metro extension, that is financed partially under the RRP. Bulgaria has concluded tender procedures for new rail rolling stock and new public service contracts for railway service. Bulgaria has introduced low emission zones in Sofia and Plovdiv and adopted a Public Transport Act, that provides for the introduction of a single ticket system. The delivery of equipment for maintenance of railway infrastructure is expected to be completed by June 2026    Some Progress 4.8. Improve water and waste management by tackling institutional weaknesses and investing in infrastructure to ensure the sustainable use of resources Adoption of the National Waste Management Plan for 2021–2028, the operation of the first recycling plants in major cities, and €100 million in EU funds allocated for landfill closures. €2.7 billion investment plan for 2025–2032 and pilot leak-reduction projects in Sofia and Plovdiv. Adoption of Priority 7 "Water Sustainability" under the Environment Programme (PE) 2021–2027 (Council of Ministers Decision № 931/29.12.2025), with a total budget of €219.86 million,  Limited Progress  
 
 
     
 
Table (continued) 

(Continued on the next page) 

40 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  including: • Measure 1: Legally adopted redirect of 7 agglomerations (5,000–10,000 p.e.) from the National Recovery and Resilience Plan (NRRP) for wastewater treatment and water supply infrastructure. • Measure 3: Pre-investment studies (design phase) for water infrastructure in agglomerations (5,000–10,000 p.e.) (only if studies were completed/contracted by 30 April 2026).  Adoption of the Programme for Priority Strategic Investment Projects with National Financing for the Period 2025–2028, comprising 176 priority projects across key sectors (including water supply and sewerage), with a total budget of BGN 2 924.9 million.  Launch (September 2025) of the Technical Support Instrument (TSI) project “Improving the efficiency and quality of public investments in Bulgaria” (25BG11), implemented in cooperation with the OECD to strengthen public investment planning, prioritisation and governance. 5.1 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. In 2025, the Ministry of Education has proposed two complementary approaches to increase basic skills teaching hours and revise the curriculum prioritising skills and literacy. Further, there is investment in STEM competences through national programs and EU-funded initiatives, such as STEM laboratories and a national STEM centre. An ESF+ funded program for digital upskilling of students and teachers was launched in 2025. A TSI 2025 multi-country project will help Bulgaria to design and deliver their curriculum reform for primary, lower secondary and upper secondary education (with a focus on 5th to 7th grades in Bulgaria).  By Decision No. 294 of the Council of Ministers of 9 May 2025, 25 national programs were approved with the aim to support key policies in the field of education until 2027. Three of them - "Future for Talents", "Skills in Focus" and "Security", are entirely new. Some Progress  
 
 
     
 
Table (continued) 

Source: Bulgaria’s reporting and Commission assessment  

41 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  5.2: 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. RRP Investment to improve digital services of employment agency (ongoing).   Limited Progress 5.3 Reinforce skills acquisition to boost competitiveness and support the green and digital transition. RRP investment to improve digital skills of the population ongoing, ESF+ funded upskilling programs ongoing as well. Digital training platform expected to be launched before Q3 2026. JTF investment for reskilling and upskilling workers in transition regions to be launched in 2026 Some Progress 5.4: Address social inclusion by improving access to integrated employment and social services, and by providing more effective minimum income support. Ordinance on Social Services adopted.  Map of Social Services adopted. Minimum income support strengthened. RRP investment to create new and/or renovate existing social service facilities and elderly homes (ongoing).  Some Progress 5.5 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. Financial incentives for staff taking up duties in remote areas as well as linking remuneration of healthcare professionals to their qualification introduced.  Limited Progress    
 
   
 
FISCAL 
ANNEX 2: FISCAL DEVELOPMENTS AND DEBT SUSTAINABILITY 

Graph A2.1: Contributions to the change in the 
general government balance (% of GDP) 

recommendations 

This  annex  discusses  selected  topics  in  public 
in  fiscal-structural 
finance  and  developments 
country-specific 
(CSRs) 
addressed  to  Bulgaria  in  July  2025.  These  CSRs 
include a call to strengthen defence spending and 
readiness  while  implementing  a  fiscal  strategy  in 
line  with 
the  Council  Recommendation  of 
20 June 2025.  On  that  date,  the  Council  of  the 
European  Union  adopted  the  Recommendation 
endorsing 
fiscal-
structural  plan(31).  On  8  July,  the  Council  also 
activated  the  national  escape  clause  for  Bulgaria 
to  facilitate  the  country’s  transition  to  higher 
levels of defence spending (32)(33). 

Bulgaria’s  medium-term 

Developments in the government 
balance, debt and public 
expenditure (34) 

Bulgaria’s  general  government  deficit  is  not 
expected  to  decline.  Based  on  the  Commission 
Spring  2026  Forecast,  Bulgaria’s  government 
deficit is  projected  to increase  from  3.5%  of GDP 
in 2025 to 4.1% of GDP in 2026 and 4.3% of GDP 
in  2027.  The  projected  increase  in  the  deficit  is 
largely  set  to  be  driven  by  social  spending, 
increases  in  public  sector salaries,  and  as  well  as 
by  the  evolution  of  defence  spending.  Despite 
growth  in  GDP,  debt  is  expected  to  increase  from 
29.9%  in  2025  to  32.3%  in  2026  and  35.5%  in 
2027, driven by the primary balance.   

Source: European Commission Spring Forecast 2026 

Higher  public  investment  is  improving  the 
quality  of  expenditure  in  Bulgaria  but  the 
nationally  financed  component  of  public 
investment 
is  decreasing.  Overall  public 
investment  in  Bulgaria  is  now  higher  than  pre-
pandemic levels, and is expected to reach 4.3% of 
GDP  in  2026,  up  from  3.4%  in  2019  (see  Graph 
A2.2). However, its level is overall set to decrease 
despite  the  contribution  of  planned  deliveries  of 
military  equipment  and  investments  under  the 
recovery  and  resilience  plan  (RRP)  and  other  EU 
funds.  When 
looking  at  nationally  financed 
investment,  it  remained  relatively  stable  since 
2023,  corresponding  to  the  final  year  of  the 
implementation  window  of  the  2014-2020  EU 
funds,  and  close  to  its  level  in  2019.  Nationally 
is  however  expected  to 
financed 
decline  between  now  and  2027,  partly  due  to 
crowding  out 
linked  to  spending  under  the 
Recovery and Resilience Facility (RRF) and other EU 
funds.  

investment 

(31)  OJ C, C/2025/3700, ELI: https://eur-
lex.europa.eu/eli/C/2025/3700/oj  

(32)  OJ C, C/2025/3961, ELI: https://eur-
lex.europa.eu/eli/C/2025/3961/oj 

(33)  Compliance by Bulgaria with the maximum growth rates of 
net expenditure recommended by the Council is assessed in 
COM(2026)200. 

(34)  Figures underpinning fiscal surveillance (net expenditure 
growth) are provided in the Fiscal Statistical Tables 
(SWD(2026)200) providing background data relevant for the 
assessment of the budgetary policies of the Member States. 

42 

-3-2-101232021202220232024202520262027RevenueExpenditureChange in budget balance% of GDP 
 
 
 
     
 
 
Graph A2.2: Public investment decomposition (% of 
GDP) 

By  contrast,  spending  on  R&D,  defence  and 
communication has remained broadly stable up to 
2024,  while  transport  expenditure  has  declined 
significantly.    This  trend  deserves  attention,  as 
these  categories 
(R&D,  communication  and 
transport)  are  generally  considered  growth-
friendly  spending  categories  (although  growth-
friendly spending overall has increased in Bulgaria 
since 2019, see Graph A2.3). 

Graph A2.3: Primary spending evolution and 
composition 

Source: European Commission Spring Forecast 2026 

The  type  of  expenditure  that  has  a  greater 
impact  on  GDP  had  remained  broadly  stable 
over 
three  decades,  but  has  slightly 
increased  since  2019.  This  may  be  related  to 
the impact of the RRF, which possibly facilitated a 
more quality-based fiscal strategy. Zooming in on 
the  composition  of  spending,  social  protection 
accounts for the largest share of total expenditure 
(above 35%)  while education and health  (35) each 
account  for  at  least  10%  of  total  spending  in 
2024.  Since  2019,  public  expenditure  on  social 
protection  and  health  has  increased  significantly 
(see Graph A2.3).  Spending on education has also 
risen,  although  more  modestly.  In  the  case  of 
education,  however,  despite  recent  increases  in 
spending,  Bulgaria  remains  among  the  lowest 
spenders in the EU as a percentage of GDP. This is 
particularly  concerning  given  the  decline  in  basic 
skills among Bulgarian young people, which points 
to  skills 
to  deep-rooted  structural  barriers 
development,  and  underscores 
to 
prioritise  both 
level  and  efficiency  of 
investment  in  education  (See  Annex  13  for  more 
details). 

the  need 

the 

(35)  This  refers  to  the  set of  government  activities,  policies,  and 
expenditures aimed at regulating, supporting, and developing 
economic  activity  across  major  sectors,  including  general 
economic  and 
labour  policies,  agriculture  and  natural 
resources, energy, industry, construction, and other economic 
functions  not  elsewhere  classified.  Although  transport  and 
communication,  as  well  as  research  and  development 
activities, are normally considered part of this function, they 
are treated separately in the graph presented. 

Source: Eurostat 
Note: Based on economic literature, the categories considered 
to have the higher growth impact include education, R&D, 
health, transport and communication (See Barbiero and 
Cournede (2013), Gemmel et al. (2016), Lupu et al (2018), 
Cepparulo and Mourre (2020) and OECD (2025)).  

Bulgaria has relatively low tax revenues as a 
share  of  GDP  and 
relies  heavily  on 
consumption  taxes. In  2025 Bulgaria’s  total  tax 
revenues  as  a  percentage  of  GDP  (including 
compulsory  social  contributions)  amounted  to 
EU 
30.6%, 
compared 
average of 39.9%. Total 
are 
projected  to  increase  to  31.7%  of  GDP  in  2026 
and  31.9 %  of  GDP  in  2027  according  to  the 
Spring  2026  Forecast  (36). The  tax  mix  in Bulgaria 
relies heavily on consumption taxes (42.8% of tax 

revenues 

with 

tax 

an 

(36)  AMECO 

database, 

https://economy-

finance.ec.europa.eu/economic-research-and-
databases/economic-databases/ameco-database_en  

43 

0.00.51.01.52.02.53.03.54.04.55.0201920202021202220232024202520262027% of GDPDefenceRRF grants and other EU fundsOther nationally-financed51015202530354045200720082009201020112012201320142015201620172018201920202021202220232024a) Evolution (% of GDP)Primary expenditureSpending with higher impact on GDP (rhs)-2.40-1.60-0.800.000.801.602.403.204.004.805.606.40Other economicGeneralservicesHousingTransportEnvironmentInterestspendingPublicorderCultureCommunicationR&DDefenceEducationHealthSocialprotectionb) Compositional change 2019-2024 (% total spending) 
   
 
   
 
Table A2.1:  Supplementary pension schemes - scope for expansion 

Source: Source: European Commission. 

Table A2.2:  Projected change in ageing-related expenditure in 2025-2040 and 2025-2070 

Source: Source: 2024 Ageing Report (EC/EPC). 

from 

revenue 

revenues  vs  an  EU  average  of  26.8%).  The  flat-
rate personal income tax in Bulgaria risks reducing 
the 
tax 
limits 
redistributive  power  of 
tax-and-benefit 
system. 
revenue  from  property 
taxation,  including  recurrent  taxation,  is  also  well 
below the EU average (see Annex 3). 

labour,  and 
the 

In  addition, 

The costs of ageing 

level 

Total  ageing-related  spending  in  Bulgaria  is 
projected  to  decline  by  1.5 pps  of  GDP 
between  now  and  2040  to  around  18%  of 
GDP,  and  remain  around  this 
in 
subsequent  decades  (see  Table  A2.2).  This 
overall  decline  is  mainly  the  result  of  a  projected 
fall 
spending,  with  pension, 
healthcare  and  long-term  care  spending  expected 
to  remain  close  to  current  levels.  The  projected 
decline in ageing-related spending would result in 
Bulgaria having one of the lowest levels of ageing-
related expenditure in the EU by 2070. 

in  education 

Supplementary  pension  schemes  can  make 
the  pension  system  more  resilient  by 
diversifying  retirement  income  sources.  In 
Bulgaria,  the  uptake  of  these  supplementary 
schemes  remains  modest.  By  the  end  of  2024, 
private  pension  assets  amounted  to  around  13% 

44 

of  GDP  and  participation  covered  the  entirety  of 
the working-age population (37). This coincides with 
declining  medium-term  spending  pressures  and  a 
projected  decline  in  the  replacement  rate  by 
4.2 pps between 2025 and 2040 (Tables A2.2 and 
A2.3) (38).  

Public healthcare expenditure is projected to 
be  4.5%  of  GDP  in  2025  (well  below  the  EU 
average of 6.6%) and is expected to increase 
by  0.3  pps  between  now  and  2040  but  then 
reverse  and  decrease  by  0.1  pps  between 
2040  and  2070.  Although  the  initial  overall 
increase 
is  set  to  be  driven  by  an  ageing 
population, it is projected to be constrained in the 
long-term  by  a  significant  decline  in  the  overall 
population(39).  

Public  expenditure  on  long-term  care  is 
projected  to  be  0.5%  of  GDP  in  2025  (well 
below  the  EU  average  of  1.7%)  and  is 
expected  to  increase  by  0.1  pps  of  GDP 

(37)  Source: OECD Pension Market in Focus 2025. The highest 

participation rate in at least one supplementary pension plan 
is reported.   

(38)  The (gross) replacement rate refers, depending on data 

availability, to both public and private pensions. It is based 
on projections from the 2024 Ageing Report.  

(39)  Key performance characteristics, recent reforms and 
investments of the Bulgarian healthcare system are 
discussed in Annex 15.  

Assets in 2024 (% GDP)Participation in 2024 (% working-age population)BG13.1-4.299.9BGEU32.4-2.855.9EUGross replacement rate at retirement: (pps change 2025-2040) BG19.6-1.50.30.1-0.2##18.4BGEU24.30.50.30.4-0.30.925.2EUBG19.6-1.20.20.20.0##18.8BGEU24.30.20.60.8-0.31.325.6EUageing-related expenditure change in 2025-2040 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotalageing-related expenditure change in 2025-2070 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotal 
 
 
     
 
 
     
 
efficiency and effectiveness in specific areas, such 
as public investment.  

of 

room 

there 

public 

reform 

remains 

The 
investment 
management  continues  rapidly  in  Bulgaria, 
for 
although 
improvement  in  this  area.  The  2024  State 
Budget  Law  centralised  capital  expenditures  from 
national sources into a dedicated fund to improve 
planning, 
transparency,  and  efficiency,  while 
Bulgaria’s  medium-term  budgeting  framework 
included indicative capital spending ceilings for the 
budget  year  and  the  subsequent  two  years. 
Reforms are underway to ensure that large state-
spending projects are assessed and selected based 
on  objective  value-for  money  indicators  (41).  After 
sufficient time since a project in Bulgaria has been 
completed, a comprehensive ex post review can in 
to  assess  strategic 
theory  be  carried  out 
performance.  These 
require  careful 
planning  and  are  resource  intensive.  However,  ex 
post reviews of this sort are neither systematically 
required nor frequently conducted in Bulgaria. 

reviews 

between now and 2040 and by a further 0.1 
pps  of  GDP  between  2040  and  2070.  The 
projected  increase  is  due  to  forecasts  for  an 
ageing  population  but  is  set  to  be  relatively  low 
due  to  the  underdeveloped  nature  of  long-term 
care services in Bulgaria (40). 

National fiscal framework 

of 

the 

reformed 

The  Fiscal  Council  of  Bulgaria  (FCB)  has  so 
far had a relatively narrow mandate. Up until 
now, it has monitored compliance with fiscal rules 
and  assessed  the  government’s  macroeconomic 
and  budgetary  forecasts.  However,  the  FCB’s  role 
is  about  to  be  broadened  following  both:  (i) 
Bulgaria’s entry into the euro in January 2026; and 
(ii) the introduction into national legislation of the 
economic 
requirements 
governance framework. The FCB does not produce 
its own forecasts or conduct policy costing. Despite 
having  a  legal  right  to  access  information  and 
benefiting  from  a  (non-public)  memorandum  of 
understanding  with  the  country’s  Ministry  of 
Finance, the FCB has experienced some issues with 
the 
the 
information  it  has  received.  The  ability  to  recruit 
and  retain  experts  may  improve  in  the  future 
thanks to recent improvements in the FCB’s ability 
to  offer  competitive  salaries  for  its  experts.  The 
FCB’s  policy  dialogue  with  the  government  is  not 
fully  developed  and  the  FCB  reports  that  the 
comply-or-explain 
fully 
respected/applied.  Despite  being  attached  to  the 
Bulgarian Parliament, the FCB reports only limited 
interaction  with  Bulgaria’s  National  Assembly. 
Some 
external 
improvements 
communication have been achieved. 

completeness  of 

timeliness  and 

requirement 

is  not 

recent 

in 

The  FCB’s  limited  institutional  capacity  and 
limited  drive  to  perform  efficiency  analysis 
and spending reviews is a missing element in 
public  financial  management  in  Bulgaria.  In 
addition,  external  analyses  show  that  Bulgaria’s 
spending  on  public 
investment,  healthcare, 
education  and  social  protection  could  all  be  more 
efficient  (IMF,  2022;  World  Bank,  2023).  Projects 
under  the  EU’s  technical  support  instrument  (TSI) 
have  supported  Bulgaria’s  efforts  to  improve 

(40)  The adequacy and quality of the Bulgarian long-term care 

system are covered in Annex 12.    

45 

(41)  For example, reforms supported by the Technical Support 
Instrument from the European Commission, such as TSI 
Project 21BG04 continued by 25BG11. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
Table A2.3:  Fiscal governance database indicator and public accounting maturity 

(1) 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. 
The score for public accounting reflects the degree of maturity in relation to the International Public Sector Accounting Standards 
(IPSAS). Countries with an accounting maturity of 70% or more in relation to IPSAS are deemed to apply accrual accounting. For 
more information, see the report on public accounting in the EU (COM(2025)746 and accompanying Staff Working Document 
SWD(2025)396). 
Source: Fiscal Governance Database, European Commission 

46 

2024BulgariaEU AverageCountry Fiscal Rule Strength Index (C-FRSI)22.2614.81Medium-Term Budgetary Framework Index (MTBFI)0.730.722025 Public accounting maturity of general government74%65% 
 
 
 
 
 
 
  
 
ANNEX 3: TAXATION 

This  annex  provides  an 
indicator-based 
overview of Bulgaria’s tax system. It includes 
information  on  the  tax  mix,  on  competitiveness 
and fairness aspects of the tax system, and on tax 
collection  and  compliance.  The  2025  CSRs  for 
Bulgaria suggest taking specific steps to phase out 
fossil-fuel  subsidies  including  by  removing  the 
subsidies 
electricity 
production and district heating. 

coal-based 

supporting 

Bulgaria’s  tax  revenue  is  relatively  low  in 
relation  to  its  GDP,  with  continued  strong 
reliance  on  consumption  taxes.  In  2024,  total 
tax revenues (including compulsory social  security 
contributions)  amounted 
to  30.5%  of  GDP, 
remaining  well  below  the  EU-27  average  (39.4% 
of  GDP).  Compared  with  2023,  tax  revenues 
increased moderately, reflecting nominal growth in 
consumption  and 
income  bases.  Consumption 
taxes  represented  42.8%  of  total  tax  revenues  in 
2024, significantly above the EU average (26.8%), 
while taxes on labour accounted for 37.3% of total 
tax revenues, well below the EU  average (51.5%). 
As  a  share  of  GDP,  labour  taxes  stood  at  around 
11.3%, roughly a half of the EU average (20.3%). 

Graph A3.1: Tax revenue by economic function in 
2024, BG (outer ring) and EU-27 (inner ring) 

Source: Taxation Trends Data, DG TAXUD 

property 

Taxes  on  capital  represented  around  21.3% 
of total tax revenues, broadly in line with the EU 
average.  Revenues  from  property  taxation  remain 
low.  Recurrent 
taxes 
immovable 
amounted  to  around  0.2%  of  GDP  in  2024, 
compared  with  an  EU  average  close  to  0.9%  of 
GDP. This limits the role of property taxation as a 
stable  and  growth-friendly  revenue  source  and 
suggests  scope  for  increasing  revenues  from  this 
tax  base  over  the  medium  term.  Environmental 
taxes accounted for 9.7% of total tax revenues in 
2024,  the  highest  shares  in  the  EU,  largely 
reflecting  energy  taxation.  However,  revenues 

47 

from  pollution  and  resource  taxes  remain  very 
limited. 

Bulgaria  continues  to  apply  a  low  level  of 
corporate  taxation,  which  may  support 
investment,  while  structural  features  of  the 
system  limit  the  use  of  targeted  incentives. 
These  structural  features  reflect  in  particular  the 
flat single-rate design of the corporate income tax, 
the broad tax base, and the limited use of targeted 
tax  expenditures,  which  reduce the  scope  to  steer 
investment through  the  tax  system.  The  statutory 
corporate income tax rate remained unchanged at 
10%  in  2025,  among  the  lowest  in  the  EU.  In 
the  forward-looking  effective  average 
2024, 
rate  stood  at  around  9.4%, 
corporate 
(18.9%). 
significantly  below  the  EU  average 
Corporate losses can be carried forward for up to 
five  years,  and  targeted  incentives  continue  to 
apply for investments in less-developed regions. At 
the same time, Bulgaria makes limited use of tax 
incentives  for  research  and  development  and  the 
green  transition  compared  with  many  other 
Member  States.  Uncertainty  surrounding  the  tax 
treatment  of  employee  stock  options  persists, 
which  may  affect  the  attractiveness  of  equity-
based  remuneration,  particularly  for  innovative 
firms and start-ups. 

tax 

low-income  earners 

The  flat-rate  personal  income  tax  system 
limits the redistributive capacity of taxation. 
Bulgaria applies a flat personal income tax rate of 
10%, with no basic tax allowance. As a result, the 
tax  wedge  for 
remains 
relatively  high  compared  with  the  EU  average, 
while  the  tax  wedge  for  high-income  earners  is 
relatively  low  (see  Graph A3.2) (42).  In  2025,  the 
difference in the tax wedge between high-income 
earners  (167%  of  the  average  wage)  and  low-
income  earners  (67%  of  the  average  wage) 
remained  among  the  smallest in  the  EU.  The  tax-

(42)  The  tax  wedge  is  an  indicator  of  the  tax  burden  on  labour 
that  can  be  assessed  at  various  levels  of  earnings.  It  is 
defined as the sum of personal income taxes, employee and 
employer  social-security  contributions  and  other  mandatory 
contributions,  expressed  as  a  percentage  of  total  labour 
costs  (composed  of  the  net  wage, personal  income  tax, 
social 
contributions,  and  other  mandatory 
contributions).  Tax  wedge  data  in  the  2026  country  reports 
are calculated by the Joint Research Centre of the European 
Commission and based on the EUROMOD model, while in the 
past  country  reports  they  were  based  on  the  OECD  tax  and 
benefit  model.  While  the  underlying  methodology  is  very 
similar, differences in the assumptions can lead to  different 
results between both models.   

security 

51.526.821.637.342.820.0Taxes on labourTaxes on consumptionTaxes on capital 
 
     
 
 
 
Table A3.1:  Taxation Indicators 

(1) (1) Forward-looking effective tax rate (KPMG). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2024. EU-27 refers to the median value. For more data on tax revenues as well as the methodology 
applied, see the Data on Taxation Trends webpage. 
Source: European Commission, OECD, ISORA. 

and-benefit  system  reduced  income  inequality,  as 
measured by the change in the Gini coefficient, by 
3.8  points  in  2024,  well  below  the  EU  average 
(7.8 points) (43). 
limited 
progressivity  of  labour  taxation  and  the  modest 
redistributive  role  of  cash  transfers.  No  major 
reforms to personal income taxation were adopted 
in 2024–2025. 

reflects 

This 

the 

Graph A3.2: Tax wedge for single and second 
earners as a % of total labour costs, 2025 

taxation 

Environmental 
remains  heavily 
concentrated  on  energy  products,  with 
relatively  limited  use  of  tax  instruments  to 
incentivise  emissions  reduction  or  resource 
efficiency  at  firm  level.  Consistent  with  2025 
country-specific recommendations for Bulgaria, EU 
policy  guidance  on  the  green  transition  continues 
to  encourage  the  recalibration  of  energy  taxation 
and  the  phase  out  of  fossil-fuel  subsidies.  In  this 
context, Bulgaria has so far taken limited steps to 
diversify  environmental  taxation  beyond  energy 
products, indicating scope for further progress. 

(43)  The Gini  coefficient measures  the  extent  to  which  the 
distribution  of  income  within  a  country  deviates  from  a 
perfectly  equal  distribution.  A  coefficient  of  0  expresses 
perfect equality where everyone has the same income, while 
a coefficient of 100 expresses full inequality where only one 
person has all the income. 

Note: The second earner tax wedge shows a household’s tax 
wedge resulting from the wage that a second earner taking 
up a job at 67% of the average wage receives. It does not 
show the total tax wedge of the household. The household is 
assumed to have a first earner at 100% of the average wage 
and no children. For the methodology of the tax wedge for 
second earners, see OECD (2024), Taxing Wages 2024. 
Source: European Commission 

Tax  expenditures  remain  moderate  relative 
to  GDP.  Bulgaria’s  VAT  policy  gap  is  consistently 
relatively low compared with most Member States. 
National estimates project forgone revenues from 
tax  expenditures at around 0.8% of GDP in 2025. 
The largest proportion of these related to personal 
income tax, followed by corporate income tax and 
VAT.  While  annual  reporting  on  tax  expenditures 

48 

34.934.934.932.934.92025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - BGSingle earner - EU averageSecond earner -  BGSecond earner -  EU average2019202220232024202520192022202320242025Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)30.531.130.030.539.939.739.039.4Taxes on labour (% of GDP)11.110.410.911.320.620.119.920.3of which, social security contributions (SSC, % of GDP)8.98.38.58.813.012.712.713.0Taxes on consumption (% of GDP)14.412.912.713.011.210.910.510.6of which, value added taxes (VAT, % of GDP)9.29.08.89.37.17.47.17.1Taxes on capital (% of GDP)5.07.86.46.18.18.78.58.5Personal income taxes (PIT, % of GDP)3.43.13.33.49.69.49.39.6Corporate income taxes (CIT, % of GDP)2.32.92.92.92.63.23.23.1Total property taxes (% of GDP)0.80.70.60.62.22.11.91.8Recurrent taxes on immovable property (% of GDP)0.30.20.20.21.21.00.90.9Environmental taxes (% of GDP)3.04.83.43.02.62.12.12.1Effective carbon rate in EUR per tonne of CO2 equivalentsnana65.0nanana84.8naTax wedge at 50% of average wage (single person) (*)34.934.934.934.934.932.431.631.531.531.6Tax wedge at 100% of average wage (single person) (*)34.934.934.934.934.940.139.739.939.940.0Corporate income tax - effective average tax rates (1) (*)9.49.49.49.420.019.219.019.3Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)3.84.44.23.87.88.07.97.8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)20.267.759.8na31.832.630.7naVAT gap (% of VAT total tax liability, VTTL) (**)9.36.38.6na10.57.38.2naProgressivity & fairnessTax administration & complianceBy tax baseSome tax typesEU-27Bulgaria 
 
 
     
 
     
 
years. Only a limited share of arrears is considered 
collectable. 

Bulgaria  has  adopted  the  legal  framework 
introducing the SAF-T standard audit file for 
tax.  Implementation  is  scheduled  to  start  in 
January 2026 for large enterprises and be phased 
in for other firms later on. This reform is expected 
to  strengthen  risk  analysis,  improve  compliance, 
and  streamline  compliance  process  for  compliant 
taxpayers for compliant taxpayers. Progress in tax 
administration  reforms  continues  to  depend  on 
institutional  capacity  and  effective 
broader 
implementation  of  reforms  supported  under  the 
Recovery and Resilience Plan. 

exists, 
their 
the  analytical  assessment  of 
effectiveness  remains  limited,  and  systematic 
evaluation  practices  are  not  yet  fully  developed. 
The  Global  Tax  Expenditures  Database  (GTED) 
reports that revenue forgone in 2024 were 5.75% 
of tax revenue, which represents a minor increase 
compared  to  2023  (5.58%  of  tax  revenue). 
Conversely,  it  also  shows  a  slight  decrease  in 
revenue  forgone  as  a  percentage  of  GDP,  from 
1.21% to 1.18% (44). 

Tax  compliance  gaps  remain  a  challenge, 
despite  recent  improvements  in  some  areas. 
The  VAT  compliance  gap  in  Bulgaria  stood  at 
around 7-8% of the VAT total tax liability in 2022–
2023,  close  to  the  EU  average.  The  VAT  gap 
declined  markedly  in  2021,  but  increased  again 
later,  partly  reflecting  structural  factors  like  the 
composition of consumption and the prevalence of 
small  firms.  Estimates  based  on  recent  analytical 
work suggest a personal income tax gap of around 
13–14%  of 
indicating 
significant  under-reporting  of  income,  particularly 
among  the  self-employed  and  in  certain  sectors. 
Available  estimates  point  to  a  comparatively  low 
corporate  income  tax  compliance  gap.  Bulgaria 
publishes  regular  VAT  gap  estimates  and  has 
strengthened  analytical  capacity  in  this  area, 
instruments. 
including  with  support  from  EU 
Monitoring  of  compliance  gaps 
in  other  tax 
categories remains more limited (45). 

revenues, 

potential 

Bulgaria  has  continued  to  digitalise  its  tax 
administration,  but  efficiency  challenges 
remain.  Electronic  filing  rates  for  VAT  and 
corporate income tax remained at 100% in 2024, 
while the electronic filing rate for personal income 
tax  increased  to  around  81%,  still  below  the  EU 
average. Pre-filled tax returns are widely used for 
personal  income  tax,  while  prefilling  for  VAT  and 
corporate income tax is not yet available. 

Outstanding  tax  arrears  remained  high.  They 
amounted  to  around  60%  of  total  tax  revenues 
collected  in  2023,  compared  with  an  EU  average 
of approximately 31%, although this represents a 
significant  improvement  compared  with  earlier 

(44)  GTED takes into account the expenditures incurred while the 
national authority estimates refer to the expenditures 
included in the budget. 

(45)  See Mind the Gap Report - Taxation and Customs Union - 

European Commission 

49 

 
 
 
PRODUCTIVITY 
ANNEX 4: INNOVATION TO BUSINESS  

In 

is 

by 

public 

addition 

R&D (48) 

‘emerging 

its  efforts,  Bulgaria 

still 
Despite 
categorised  as  an 
innovator’, 
primarily  due  to  underinvestment  and  slow 
reforms  tackling  fragmentation.  The  2025 
European Innovation Scoreboard (46) indicates that 
Bulgaria's  innovation  performance  is  stagnating 
and stands at 45.8% of the EU average. Total R&D 
intensity (47)  increased  from  0.43%  in  2007  to 
0.79%  in  2023  but  declined  slightly  to  0.77%  in 
2024.  Both  public  and  private  R&D  investments 
are  still  among  the  lowest  in  the  EU  and  do  not 
meet Bulgaria's target of allocating 2% of its GDP 
to 
to 
2025. 
underinvestment,  Bulgaria’s 
research 
organisations  and  higher  education  institutions 
the 
continue 
effectiveness 
funding. 
Strengthening  Bulgaria’s  innovation  capacity  and 
links 
competitiveness  will 
between the public science base and business, and 
increased  private  R&D 
through 
stronger,  well-designed 
incentives.  The  2025 
for 
country-specific 
increasing  the  impact  and  effectiveness  of  public 
R&D 
research  and 
innovation  in  fewer  institutions  and improving  the 
commercialisation  of  research  output.  Bulgaria  is 
making gradual progress in business digitalisation, 
supported  by  strong  connectivity  and  public 
investment.  However,  overall  uptake  –  especially 
among  SMEs  –  remains  below  the  EU  average, 
despite growing AI adoption.  

fragmented, 
public 

to  be 
of 

recommendation 

investment  by 

investment 

improved 

focusing 

limiting 

require 

called 

R&D 

(46)  European 

European 

Commission, 

Innovation 
2025, 
Scoreboard,  country  profile:  Bulgaria:  2025  European 
Innovation Scoreboard – Bulgaria. The scoreboard provides a 
comparative  analysis  of  innovation  performance  in  EU 
countries, including the relative strengths and weaknesses of 
their  national  innovation  systems  (also  compared  with  the 
EU average). 

(47)  R&D expenditure as % of GDP. 

(48)  As set out in the National Strategy for the Development of 

Scientific Research 2017-2030. 

50 

Graph A4.1: R&D investment as % of GDP, 2013-
2023 

Source: Eurostat 

Excellent science 

and 

scientific 

Bulgaria's 
technological 
capabilities are underused due to insufficient 
funding  and  a  fragmented  public  research 
system. In the past decade, the country has faced 
challenges  in  boosting  public  R&D  investment, 
which  is  stagnating  significantly.  In  2024,  the 
figure was below the EU average at 0.27% of GDP 
(EU  average:  0.72%).  The  consequences  of  low 
spending are exacerbated by the fact that limited 
public  R&D  funds  are  distributed  over  a  high 
number of higher education institutions and public 
research  organisations (49).  Each  of  these  bodies 
enjoys  considerable  academic  and  institutional 
autonomy, limiting collaboration and consolidation 
efforts (50).  Underinvestment  and  fragmentation 
have  contributed  to  a  very  weak  performance  in 
terms  of  high-quality  research  outputs (51).  These 
problems  persist  despite  gradual  reform  efforts 
such  as  the  introduction  of  performance-based 

(49)  According to Eurydice, as of November 2023, there are 51 

higher education institutions under the Higher Education Act 
and 91 public research organisations. 

(50)  European Commission: Directorate-General for Research and 
Innovation, 2024, Support to Bulgaria on its policy to address 
the fragmentation on its public research system – 
Background report, Publications Office of the European 
Union. 

(51)  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: 4.16 (2022) 
in Bulgaria vs 9.44 (2022) in the EU. 

00.20.40.60.811.21.41.6201320142015201620172018201920202021202220232024BG public R&D expenditure as % of GDPBG business expenditure on R&D as % of GDPEU average public R&D expenditure as % of GDPEU average business R&D expenditure as % of GDP 
 
 
 
  
 
 
 
to 

recommendations 

funding  in  higher  research  institutions (52)  and 
increased  salaries  for  early-career  researchers, 
pointing  to  further  reform  needs (53).  The  Horizon 
Europe  Policy  Support  Facility  report (54)  recently 
outlined 
reduce 
fragmentation, improve the efficiency of Bulgarian 
public  research  institutions,  and  boost  the  quality 
of  research  and  innovation  outputs.  To  swiftly 
implement 
these 
follow 
recommendations,  Bulgaria  could  particularly 
institutional 
benefit 
missions  and  mandates  for  public 
research 
organisations  and  higher  education  institutions, 
embedded in a coherent national strategy (55).  

from  establishing  clear 

and 

up 

on 

links 

academia 

since  November  2025 (58), 

the 
operational 
to 
Innovation  and  Research  Council  aims 
strengthen 
and 
between 
business (59).  Accelerating  clear  and  consistent 
implementation  of  the  adopted  law  will  require 
modernising and streamlining R&I governance and 
putting  the  legal  framework  fully  into  practical 
operation.  This  will  include:  (i)  fostering  shared 
governance;  (ii)  reducing  legal  and  administrative 
(iii)  strengthening  accountability (60) 
overlaps; 
through  regular  performance  reviews  to  ensure 
consolidation;  and  (iv)  follow-up  on  a  focused 
Innovation and Research Council work programme. 

and 

thorough 

Swift 
operational 
implementation of the Law on the promotion 
of  research  and  innovation  is  needed  to 
strengthen coordination and effectiveness of 
research  and 
(R&I)  policies. 
innovation 
Fragmented and overlapping roles across R&I and 
sectoral  ministries,  funding  bodies,  and  research 
organisations  remain  a  key  challenge  for  policy 
coordination  in  implementing  the  newly  adopted 
research  and 
Law  on 
innovation (56)  under  the  Recovery  and  Resilience 
Facility.  The  new 
includes 
regulations  on  developing  the  scientific  and 
innovation  ecosystem  and  introduces  policies  and 
tools for strategic and operational planning. It also 
establishes an Innovation and Research Council (57) 
as a permanent advisory and coordinating body to 
the  Minister  of  Education  and  Science  and  the 
Innovation  and  Growth.  Formally 
Minister  of 

the  promotion  of 

legal  framework 

(52)  Performance-based research funding was introduced in the 

2014-2020 strategy for the development of higher 
education in Bulgaria, with the aim of concentrating 
resources and consolidating research competencies. 
According to the strategy, around 10% of direct institutional 
funding to public research institutions should be 
performance-based, while the remaining 90% is still based 
on the number of enrolled students. 

(53)  Bulgaria Overview – STIP Compass 2024. 

(54)  European Commission: Directorate-General for Research and 

Innovation, 2025, Unlocking Bulgaria's research and 
innovation potential – A roadmap for the system’s 
consolidation – Final report, Publications Office of the 
European Union. 

(55)  Including institutions such as the Bulgarian Academy of 

Sciences and the Agricultural Academy. 

(56)  New law on research and innovation promotion in the 

Republic of Bulgaria (25 April 2024). 

(57)  Rules of Organisation and Operation of the Innovation and 

Research Council (in Bulgarian). 

51 

Business innovation  

Bulgaria’s  low  and  stagnant  level  of  R&D 
investment  from  the  private  sector  leads  to 
modest 
innovation  output.  Business  R&D 
expenditure as a percentage of GDP has remained 
broadly stagnant over recent years, at a level well 
below  the  EU  average  (0.50%  vs  1.49%  in 
2024) (61).  Many  businesses 
in  Bulgaria  face 
significant challenges in innovation and technology 
adoption  due  to  their  low-tech  nature (62).  This  is 
also  reflected  in  a  weak  and  decreasing  level  of 
innovation  output,  as  measured  in  patents (63). 
to  business  enterprise 
Total  public  support 
expenditure  on  R&D 
remains  marginal  and 
insufficient  to  stimulate  private  R&D  efforts.  In 
2021  the  figure  stood  at  0.01%  of  GDP,  well 
(2021). 
the  EU  average  of  0.20% 
below 

(58)  Published order of the Innovation and Research Council. 

(59)  European Commission: Directorate-General for Research and 
Innovation, 2024, Support to Bulgaria on its policy to address 
the fragmentation on its public research system – 
Background report, Publications Office of the European 
Union. 

(60)  European Commission: Directorate-General for Research and 

Innovation, 2025, Unlocking Bulgaria's research and 
innovation potential – A roadmap for the system’s 
consolidation – Final report, Publications Office of the 
European Union.  

(61)  By way of comparison, in 2021 business R&D expenditure as 
% of GDP in Bulgaria stood at 0.51%, and in 2016 at 0.56%. 

(62)  See for instance Innovation.bg 2024: Innovation and 

Sustainability for Future Growth, Applied Research and 
Communications Fund 2024. 

(63)  Patent applications filed under the Patent Cooperation Treaty 
per billion of GDP (in purchasing power standards): 0.55 in 
Bulgaria (2022) vs 2.81 (2022) in the EU. 

 
 
 
to 
further 

Additionally,  the  mix  of  instruments  in  support  of 
business  innovation  lack  consistency,  within  a 
complex  policy  framework  of  different  ministries, 
agencies  and  governing  levels (64).  Bulgaria  is 
using  both  European  Structural  and  Investment 
Funds  (ESIFs) (65)  and  the  national  recovery  and 
support  business 
resilience  plan 
(RRP) 
innovation.  However, 
improvements 
depend  on:  (i)  continuity;  (ii)  further  increases  in 
through  national 
relevant 
sources, especially after 2026 (post-RRP); and (iii) 
thorough  monitoring (66).  Bulgaria  could  also 
benefit  from  improving  the  effectiveness  and 
accessibility  of  funding  by  clear  and  consistent 
regulatory  frameworks. 
it  could 
consider  introducing  indirect  support  like  R&D  tax 
incentives  to  stimulate  business-related  R&D  and 
innovation output (67).  

investments,  also 

In  addition, 

Limited 
links  between  academia  and 
business,  along  with  insufficient  support 
structures,  hinder  the  commercialisation  of 
research  results.  Cooperation  between  science 
and business, shown by  the percentage of public-
private  scientific  publications,  remained  low  at 
5.45% in 2024 (EU average: 7.62%). Furthermore, 
public  R&D  spending  funded  by  businesses  is 
stagnating  and  stands  significantly  below  the  EU 
average (68). 
that  Bulgarian 
businesses and researchers lack the capacity (see 
paragraphs  above)  and  incentives  to  collaborate 
innovation  and 
with  each  other, 
commercialisation  of  research  output.  Moreover, 
the 
remains 
underdeveloped:  not  all  research  institutions  have 
technology  transfer  offices,  and  those  that  do 
generally  lack  resources,  expertise,  capacity  and 

transfer  ecosystem 

technology 

indicates 

limiting 

This 

(64)  European Commission: Directorate-General for Research and 
Innovation, 2024, Support to Bulgaria on its policy to address 
the fragmentation on its public research system – 
Background report, Publications Office of the European 
Union. 

(65)  See for instance the Innovation in Enterprises Equity Fund 
within the 2021-2027 competitiveness and innovation in 
enterprises programme. 

clear provisions (69). Based on the adopted Law on 
the promotion of research and innovation, Bulgaria 
is making an effort towards building an integrated 
and  effective  technology  transfer  ecosystem.  The 
country  is  in  the  process  of  setting  up  a  central 
coordination  hub  for  technology  transfer,  as 
recommended  in  relevant reports (70),  and  has  re-
established  a  relevant  funding  instrument  for 
collaborative  research (71).  In  line  with  the  2025 
country-specific  recommendation,  improving  the 
commercialisation of research outputs will require 
continued 
implementation  of  a  coordinated 
technology transfer system together with relevant 
instruments,  supported 
through  stable  and 
sufficient funding. 

The  uptake  of  digital  technologies  by 
Bulgarian  businesses  remains  limited  and 
uneven. In 2025, 38.33% of SMEs had reached at 
least  a  basic  level  of  digital  intensity,  a  marked 
decline of almost 10 percentage points compared 
with  the  previous  year  (49.93%)  and  significantly 
below  the  EU  average  of  71.39%.  This  points  to 
persistent  structural  challenges  in  the  digital 
transformation  of  SMEs,  particularly  on  moving 
beyond basic digital adoption. The use of advanced 
digital technologies has nevertheless continued to 
increase. In 2025, 8.55% of enterprises used AI, up 
from  6.47%  in  2024.  This  indicates  gradual 
progress, although uptake remains well below the 
EU  average  (19.95%).  Cloud  computing  adoption 
reached  15.74%  and  27.06%  of  enterprises  used 
data  analytics.  Both  figures  showed  improvement 
on  earlier  years but  remained  substantially  below 
EU  levels  (46.69%  and  39.85%  respectively). 
These  patterns  highlight  a  slow  but  ongoing 
diffusion of advanced digital tools across firms.  

Public  support  continues  to  play  a  central 
in  fostering  business  digitalisation. 
role 
Bulgaria  is  implementing  several  measures  to 
support  innovation  and  digital  transformation  of 
enterprises  under  the  national  RRP,  the  ERDF 
programme  Competitiveness  and  Innovation  in 
Enterprises,  and  the  European  Social  Fund+ 

(66)  European Commission, 2024, Strategic evaluation of the 

(69)  European Commission, 2024, Strategic evaluation of the 

technology transfer and IPR protection systems of Bulgaria, 
Croatia and Romania and recommendations for their 
enhancement.  

technology transfer and IPR protection systems of Bulgaria, 
Croatia and Romania and recommendations for their 
enhancement. 

(67)  Ibid. 

(70)  Ibid. 

(68)  Public expenditure on R&D financed by business enterprise 
as % of GDP stood at 0.03% in Bulgaria (2020) vs 0.06% in 
the EU (2020). 

(71)  The National Innovation Fund was re-established in 2025, 
with stronger emphasis on market-driven innovation, start-
ups and SMEs (as part of a milestone in the Bulgarian RRP). 

52 

 
 
 
programme.  Such  measures 
include  voucher 
schemes for digital skills development, support for 
the  adoption  of  digital  solutions,  and  investments 
aimed at boosting competitiveness through smart 
transformation.  European  Digital  Innovation  Hubs 
provide  advisory  services,  testing  facilities  and 
training  to  SMEs,  contributing  to  improved  access 
to digital technologies. 

in 

advanced 

Bulgaria  is  also  strengthening  its  innovation 
ecosystem 
technologies. 
Initiatives  linked  to  the  European  semiconductor 
ecosystem and the establishment of an AI Factory 
at  Sofia  Tech  Park  aim  to  improve  research  and 
innovation  capacities  and  facilitate  technology 
uptake by businesses. These measures support the 
gradual  integration  of  Bulgarian  enterprises  into 
European value chains and contribute to improving 
conditions for innovation-driven growth. 

Entrepreneurial dynamism 

start-up 

The  availability  of  risk  capital  has  improved 
over  the  years  and  supports  the  growth  of 
Bulgaria’s 
ecosystem,  which 
nevertheless  remains  small  compared  with 
other  countries.  Venture  capital  investment  has 
grown  significantly  (0.02%  of  GDP  in  2024  vs 
0.01%  in  2019)  but  is  still  below  the  EU  average 
of 0.06%. The growth in venture capital, particular 
for  software-related  firms,  has  contributed  to 
Bulgaria’s emergence as an entrepreneurial hub in 
south-east  Europe,  with  over  EUR  1  billion  in 
investments  in  the  last  five  years  (2020-2025) 
and the highest number (489) of funded start-ups 
per  capita  in the  region  in  this period (72).  Despite 
this positive development, further effort is needed 
to  overcome 
in 
creating  STEM-based  start-ups (73).  Early-stage 
innovative  firms  in  Bulgaria  continue  to  face  a 
persistent financing gap throughout their lifecycle. 
This highlights the need to further develop private 
equity  and  venture  capital  markets  in  order  to 
support  growth 
start-up 
the 
ecosystem (74). Additionally, regulatory barriers for 

longer  standing  weaknesses 

country’s 

in 

(72)  Private Investment in Bulgaria & SEE 2025. 

start-ups in Bulgaria remain high, with fragmented 
frameworks (75)  and  burdensome 
regulatory 
processes  for  licensing  and  judicial  matters  when 
setting up a company (76).  

in 

low 

research  and 

level  of  human 
A  comparatively 
resources 
innovation 
presents  challenges  for  Bulgaria’s  transition 
towards  a  knowledge-based  economy.  The 
number  of  new  graduates 
in  science  and 
engineering  (77)  has  increased  again  since  2020 
(from  9.10%  in  2020  to  10.34%  in  2023)  but 
remains  significantly  below  the  EU  average 
(16.82%  in  2023).  Additionally,  Bulgaria  has  one 
of  the  lowest  shares  of  people  aged  25-34  with 
tertiary  education,  although  this  number  is  slowly 
increasing (78).  There  is  also  a  low  number  of 
researchers employed in the public sector: Bulgaria 
has only 2.7 full-time researchers employed by the 
public sector per thousand of the active population 
in  2024  (EU  average:  4.3).  This  is  caused  by  low 
salaries 
opportunities, 
contributing  significantly  to  brain  drain  towards 
other  EU  economies.  In  2024,  the  government 
lowest 
raised 
academic  position 
in  33  state  universities. 
However,  current  support  mechanisms  remain 
insufficient, as Bulgaria is facing crucial structural 
in  science, 
deficiencies  for  human  resources 
technology and innovation. Attracting and retaining 
talent  will 
require  modernised  employment 
conditions  and  increased  public  investment  in 
developing skills (79).  

the  minimum  salary  for 

limited 

career 

and 

the 

Entrepreneurship education  is part of  school 
curricula,  but  lacks  a  comprehensive  policy 
framework 
innovation.  The 
improve 
national  strategy  for  lifelong  learning  (2008-
2013)  previously  emphasised  entrepreneurship, 

to 

(75)  See also Annex 5. 

(76)  OECD Economic Survey Bulgaria 2026. 

(77)  Measured as new graduates in science and engineering per 

thousand of population (%). 

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

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

(73)  European Commission, 2024, Strategic evaluation of the 

(79)  European Commission: Directorate-General for Research and 

technology transfer and IPR protection systems of Bulgaria, 
Croatia and Romania and recommendations for their 
enhancement. 

(74)  See also Annex 6. 

Innovation, 2025, Unlocking Bulgaria's research and 
innovation potential – A roadmap for the system’s 
consolidation – Final report, Publications Office of the 
European Union. 

53 

 
 
 
but  there  is  currently  no  supporting  policy (80). 
Entrepreneurship  subjects  like  ‘Technology  and 
in  primary  and  secondary 
Entrepreneurship’ 
education  and 
‘Entrepreneurship  and  Market 
Economy’ in vocational schools are included in the 
2015  Preschool  and  School  Education  Act. 
However,  such  subjects  are  economically  focused, 
account  for  minimal  hours  in  the  timetable,  and 
are optional in general upper-secondary education. 
The  teacher  competence  framework  does  not 
specifically  address  entrepreneurship,  although 
training  programmes  like  ‘First  steps  in  the  world 
of  personal  finance’  under  the  ‘Education  5.0 
Foundation’  offer  skill-building  opportunities (81). 
Under  the  European  Social  Fund+  programme 
Education  2021-2027,  entrepreneurial  skills  are 
supported through projects such as ‘Modernisation 
of  Vocational  Education  and  Training’  (approx. 
EUR 47  million)  and  ‘Development  of  the  Dual 
System of Training in VET’ (approx. EUR 5 million). 
These projects strengthen core and entrepreneurial 
skills,  work-based  learning  and  cooperation  with 
employers.  Extracurricular  activities  such  as 
student  companies,  financial  literacy  competitions 
improving 
and 
entrepreneurial  learning.  Additionally,  under  the 
same  ESF+  programme,  financial 
instruments 
totalling  approximately  EUR 16.7  million  support 
student-  and  PhD-led  companies  through  equity 
and  microfinance  schemes,  improving  access  to 
finance  for  academic  entrepreneurship.  Both 
instruments  are  currently  selecting 
financial 
some 
intermediaries. 
universities  have  adapted  curricula  and  created 
entrepreneurship  centres,  but  more  development 
would  be  needed  in  strategic  prioritisation,  active 
teaching  methods  and  business  development, 
especially  for  STEM  students.  Despite  these 
efforts,  a  national  strategy  is  lacking, limiting  the 
in 
cultivation  of  an  entrepreneurial  culture 
Bulgaria. 

laboratories (82)  are 

In  higher 

innovation 

education, 

(80)  European Commission, 2025, Eurydice report – 

Entrepreneurship education at school in Europe – 2025. 

(81)  Ibid. + Register of approved professional development 

programmes for pedagogical specialists. 

(82)  Ibid. + Ministry of Education and Science (2024) on the set-

up of an innovation laboratory for entrepreneurship. 

54 

 
 
Table A4.1:  Key innovation indicators 

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

55 

R&D intensity (gross domestic expenditure on R&D as % of GDP)0.560.950.850.750.790.77:2.243.44Public expenditure on R&D as % of GDP0.280.250.270.240.280.27:0.720.64Scientific publications of the country within the top 10% most-cited publications worldwide as % of total publications of the country 3.612.973.324.16:::9.4412.31Researchers (FTEs) employed by public sector (Gov+HEI) per thousand active population2.82.72.82.82.72.7:4.3:International co-publications as % of total number of publications46.0847.1437.3337.6436.1736.3:57.24:Business enterprise expenditure on R&D (BERD) as % of GDP0.280.70.570.510.510.5:1.492.69Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0.250.280.250.240.2::0.470.30Researchers employed by business per thousand active population0.51.72.83.12.73.2:5.9:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)0.791.20.920.55:::2.812.20Employment share of high-growth enterprises measured in employment (%):::1.221.28::0.87:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::28.41:38.3371.39:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%)::::21.86:27.0639.85:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%)::::14.22:15.7446.69:Artificial intelligence adoption % enterprises (EU Digital Decade target by 2030: 75%)::::3.626.478.5519.95:Public-private scientific co-publications as % of total number of publications4.385.994.255.255.475.45:7.62:Public expenditure on R&D financed by business enterprises (national) as % of GDP0.020.010.030.020.02::0.060.02Total public-sector support for BERD as % of GDP::0.02::::0.21:R&D tax incentives: foregone revenues as % of GDP000000:0.100.16BERD financed by the public sector (national and abroad) as % of GDP ::0.02::::0.11:Venture capital (market statistics) as % of GDP (calculated as a 3-year moving average)0.020.010.010.020.020.02:0.06:Seed stage funding share (% of GDP)0000.010.010:0.01:Start-up stage funding share (% of GDP)0.010.0100.010.010.01:0.03:Later stage funding share (as % of GDP)0.0100000.01:0.03:New graduates in science & engineering per thousand population aged 25-3410.512.139.110.2210.34::16.8:Graduates in the field of computing per thousand population aged 25-341.312.142.833.393.33::3.84:Science and innovative ecosystemsBulgaria2010201520202022202320242025EU average (1)USHeadline indicatorInnovative talentR&D investment & researchers employed in businessesInnovation outputsDigitalisation of businessesAcademia-business collaboration Public support for business innovationFinancing innovation 
 
 
 
 
 
 
 
 
 
  
 
ANNEX 5: SINGLE MARKET AND INDUSTRY 

to 

and 

tools 

Bulgarian  businesses  continue 
face 
multiple  challenges  related  to  political 
uncertainty,  administrative  and  regulatory 
burdens  and  (skilled)  staff  shortages,  which 
reduces  their  competitiveness.  The  2025 
(CSR3)(83) 
Country  Specific  Recommendations 
called for measures to further simplify regulation, 
improve 
reduce 
regulatory 
is  making 
administrative  burdens.  Bulgaria 
progress  on  implementing  different  action  plans 
related to directly reducing administrative burdens, 
improving  public  services  and  streamlining  the 
is 
far, 
insolvency 
advancing  slowly  and  businesses  are  not  yet 
seeing any improvements. Under its Recovery and 
Resilience  Plan  (RRP),  Bulgaria  is  improving  the 
reliability  and  transparency  of public  procurement 
procedures  by  executing  upstream  controls, 
providing  clear  guidelines  to  public  buyers and 
offering 
training  opportunities.  Nevertheless, 
Bulgaria  should  aim  to  improve  the  quality  of 
public  procurement  procedures (CSR3).  Challenges 
persist  in  terms  of  limited  competition  via  high 
single-bid  rates  and  continued  reliance  on  direct 
awards in certain sectors. 

implementation 

law.  So 

Business dynamics 

Bulgarian  SMEs  across  most  sectors  grew  in 
employment and production. SMEs are a major 
component  of  Bulgaria’s  economy:  they  represent 
75.4% of the persons employed and 65.5% of the 
value added by Bulgarian firms (84), against 65.1% 
and  53.6%  in  the  EU,  respectively.  Most  of  these 
firms (91.9%) are micro firms and employ up to 9 
persons.  In  2024,  inflation-adjusted  value  added 
of  SMEs  increased  significantly  by  5.6%,  and 
employment  by  2.3%,  significantly  surpassing  the 
EU performance of respectively +1.1% and -0.2%. 
All  size  classes  experienced  growth 
in  both 
indicators, with the highest growth seen in micro-
enterprises,  with  7.3%  and  2.0%,  respectively 
(1.6%  and  1.9%  in  the  EU).  Accommodation  and 
food services showed the highest growth in terms 
of  employment  (7.3%)  and  value  added  (11.9%). 

(83)  Council Recommendation on the economic, social, 

employment, structural and budgetary policies of Bulgaria, 
1/7/2025. 

(84)  European Commission, 2025 SME Country Factsheet 

declined 

employment 

in 
While 
(-0.9%),  value  added  dropped 
manufacturing 
significantly 
sector  
in 
the 
(-22.5%)  and  the  utility  sector  related  to  water 
and waste management (-12.2%).  

slightly 

mining 

Productivity performance by size of business 
depends  on  the  sector.  The  overall  labour 
productivity  of  Bulgaria’s  businesses  was  the 
lowest  within  the  EU  (2023)  (85).  Financial  and 
insurance services are by far the most productive 
sectors,  followed by  the  utilities  sector  as  well  as 
mining  and  quarrying.  There  are  significant 
productivity  differences  between  large  and  small 
factor 
firms.  Generally, 
productivity 
large 
manufacturing  firms  are  more  productive  than 
their service-sector peers. Concerning small  firms, 
apart  from  the  utilities  sector  and  financial 
services  where  micro  and  small  firms  lead  in 
lag 
productivity,  small  manufacturing 
behind(86). 

(TFP)  across 

firm  sizes, 

comparing 

firms 

total 

goal 

Bulgaria’s  2021-2027  national  strategy  for 
small  and  medium-sized  enterprises  was 
updated  and  extended  to  2030.  The  updated 
strategy  includes  119  measures,  in  line  with  the 
long-term 
higher 
of 
competitiveness,  developing  sectors  of  higher 
added  value  and  succeeding  balanced  regional 
development.  Annual  programmes,  an  action  plan 
and  improved  indicators  for  following-up  have 
been  set  up  by  the  Ministry  of  Economy  and 
Industry. 

achieving 

Business dynamism shows a mixed picture in 
Bulgaria. A high churn rate (87), with active entry 
and  exit  of  firms,  indicates  dynamic  business 
activities and help allocate resources efficiently. At 
27.2%,  this  rate  was  above  the  EU  average  of 
19% in 2023 (88). The sectors with enterprise high 
birth  rates  since  2021  were  energy,  construction, 
accommodation  and  food,  as  well  as  information 
and  communication.  However,  the  creation  rate 

(85)  Eurostat, sbs_sc_ovw 

(86)https://www.oecd.org/content/dam/oecd/en/publications/report

s/2026/02/oecd-economic-surveys-bulgaria-
2026_4dccf790/08af497f-en.pdf  

(87)  Sum of births and deaths of firms as percentage of all active 
firms. While enterprise birth rate refers to the creation rate of 
new businesses the death rate refers to the failure rate of 
firms. 

Bulgaria.   

(88)  Eurostat, bd_size. 

56 

 
 
 
 
 
(10.7)  is  below  the  failure  rate  (16.5),  which  was 
the  case  across  sectors  and  specifically  for  small 
firms.  

(19.3%). 

This  weak 

Bulgaria's  private 
investment  dynamics 
remain  below  those  of  peer  economies  such 
as  Croatia  and  Romania.  Private  investment  is 
stagnating  and  stood  at  15.2%  of  GDP  in  2024, 
significantly  below  both  the  EU  average  (17.6%) 
and  the  levels  observed  in  Croatia  (19.5%)  and 
Romania 
investment 
performance  is  slowing  Bulgaria's  convergence 
process.  Investment  performance  improved  in  the 
second half of 2025, including all types of assets, 
with  investments  in  machinery,  equipment  and 
weapons 
largest 
contribution.  However,  the  business  climate,  as 
the  Bulgarian  National  Bank 
measured  by 
composite 
is 
weakening  somewhat  in  2025  and  beginning  of 
2026,  mainly  related  to  the  very  uncertain 
economic/political  environment.  This  is  a  major 
factor slowing economic activity and investment.  

displaying 

economic 

indicator, 

activity 

system 

the 

the  efficiency  rate  toward  75%  by  2030.  Closing 
these  gaps  would  not  only  enhance  the  return  on 
each euro spent but also boost GDP by up to 2.3% 
and stimulate private investment (92). 

The shadow economy in Bulgaria is estimated 
to  be  the  biggest  in  the  EU.  In  2022,  it 
represented  33.1%  of  its  GDP  (EU  unweighted 
average 17.6%) (93). Indirect taxes, unemployment 
and self-employment are among the main drivers. 
Additionally,  a  recent  study  (2024)  revealed  that 
Bulgaria,  was  the  Member  State  with  the  highest 
level  of  acceptance  toward  the  shadow  economy. 
Especially  the  younger  population  (those  aged  15 
to 24) show high acceptance. The study concludes 
that  the  younger  generation  might  overlook  the 
importance  of  formal  employment  contracts  and 
do not regard such practices as problematic (94). 

Business environment 

in 

has 

and 

2024 

(about  18 %  of 

Bulgaria’s public investment landscape faces 
challenges in both scale and efficiency. Public 
to  overall 
investment  contributed  negatively 
investment 
reached 
approximately 3.4% of GDP, slightly below the EU 
average  of  3.7%  (89).  This  is  also  related  to  the 
challenging implementation of EU funds due to the 
unstable political situation. Although the country is 
entitled  to  receive  roughly  EUR  18.7 billion  in  EU 
grants 
its  2024  GDP)  the 
absorption rate is still low, with only around 10.2% 
of  cohesion  funds  disbursed  by  12/2025(90).  This 
under‑utilisation is intensified by an efficiency gap 
in  public  investment  that  currently  translates  just 
46%  of  spending  into  productive  capital,  implying 
sizable loss of resources(91).The underperformance 
stems  from  persistent  structural  and  institutional 
barriers, including delays in implementing reforms, 
regulatory  bottlenecks,  and  limited  capacity  in 
project  preparation  and  administration.  Improving 
procurement  practices,  project  appraisal,  and 
multi‑annual capital planning could unlock savings 
of  up  to  5.3%  of  total  contract  values  and  raise 

(89)  OECD (2025). Economic Survey – Bulgaria. 

(90)  Cohesion Open Data Platform. 

(91)  Vahram S. and I. Vassileva (2025) “Scaling Up Quality Public 

Investment for Stronger Growth”, Washington DC: 
International Monetary Fund, Selected Issues Paper, 
SIP/2025/149. 

57 

to 

to 

firms 

continue 

consider 
Bulgarian 
transport  infrastructure  as  an  obstacle  to 
investment.  According 
the  2025  EIB 
Investment  Survey (95),  63%  (up  from  58%  in 
2024)  of respondents see transport infrastructure 
as an obstacle to investment (compared with 45% 
in  the  EU).  In  addition,  64%  (39%  in  the  EU) 
consider  inadequate  infrastructure  as  a  problem 
when doing business (96). Bulgaria has an extensive 
transport  component  under 
the  RRP,  with 
investment  measures  specifically  addressing 
rolling stock. 

face 

considerable 
Bulgarian  businesses 
administrative  pressure  and 
regulatory 
burdens. Fewer firms considered regulations to be 
a  major  obstacle  to  investment,  compared  to  the 
EU  average (60% vs  69%) (97), but this  share  has 

(92)  IMF. 

(93)  European Parliament (2022), Taxation of the informal 
economy in the EU. Schneider and Asllani 2023, for the 
European Parliament 

(94)  Changelova, E. (2024). Bulgarians and the Shadow Economy: 
Psychological Attitudes and Actual Inclusion. Papers of the 
Bulgarian Academy of Sciences, Vol. 1, pp. 44–59. 

(95)  European  Investment  Bank,  EIB  investment  survey  2025 
based on interviews carried out between April and July 2025. 

(96)  Eurobarometer 557, Businesses’ attitudes towards corruption 

in the EU in 2025, July 2025. 

(97)  EIB Investment Survey 2025: European Union overview 

 
 
 
survey(98) 

bureaucracy 

increased  by  5  pp.  Businesses  responding  to  a 
and 
cited 
national 
regulatory  burdens  (55%),  frequently  changing 
regulations  (43%)  and  corruption  (50%)  as  the 
biggest  barriers 
to  business  development. 
Additionally,  more  firms  report  that  they  would 
need  up  to  10%  of  staff  to  deal  with  regulatory 
requirements (63% in 2025 vs. 57% in 2024). This 
share is specifically high for manufacturers (99). 

is 

of 

One 

required 
officially, 

implementing  measures 

laws, 
documents, 
standardising 

Bulgaria 
to 
improve  investment  conditions  and  reduce 
the 
burdens. 
administrative 
cornerstones  of  these  initiatives  is  the  “Plan  for 
Reducing  Administrative  Burden”,  which  was 
adopted  in  2024(100).  The  plan  includes  235 
focused  on: 
measures  amending  91 
collecting 
eliminating 
information 
service 
procedures,  shortening  deadlines  and  improving 
registers  and  their  usability.  Implementation  is 
ongoing  and  regularly  monitored.  RRP  measures 
such  as  the  introduction  of  the  Variable  Capital 
Company  and  the  establishment  of  the  Startup 
Visa  aim  to  make  it  easier  to  start  a  business. 
Additionally,  a  package  of  initiatives  advancing 
digitalisation,  automation  and  standardisation  of 
public  services  is  being  implemented.  All  these 
measures aim to address the 2025 CSR: “Simplify 
regulation,  improve  regulatory  tools  and  reduce 
administrative burden”. 

Insufficient  availability  of  skilled  staff  and 
uncertainty about the future are weighing on 
business activity and investment. According to 
Investment  Survey (101),  the  primary 
the  EIB 
obstacles  to  long-term  investments  for  Bulgarian 
businesses  are  insufficient  availability  of  skilled 
staff  (86%  vs.  EU  average  of  79%)  (see  also  the 
Annex 13) and uncertainty about the future (82%, 
similar 
the 
to  EU  average).  Businesses 
manufacturing sector, where 14.3% of gross value 
added  (GVA)  is  generated,  are  more  affected  by 
these  investment  barriers.  From  the  survey,  there 
is  no  measurable  difference  between  large  and 
small firms. 

in 

Economic and political uncertainty as well as 
skill shortages also impact foreign investors’ 
activities. 
insurance 
In  2025,  financial  and 
services  as  well  as  wholesale  and  retail  trade 
attracted  most  of  foreign  direct  investment  (FDI). 
Although the inflow of FDI reached 61.6% of GDP 
in  the  first  half  of  2025,  the  long-term  trend 
shows  a  decline  compared  to  pre-global  financial 
crisis levels. Following a survey of managers, 52% 
of  respondents  consider  their  current  and  short-
term situation to be good or satisfactory, and 46% 
are optimistic about the next 12 months (up from 
35%  in  2024) (102).  47%  of  respondents  are 
planning to invest.  

important 

Access  to  finance  and  late  payments  are 
issues  for  firms. 
less 
rather 
Investment  Survey (103), 
According  to  the  EIB 
availability of finance is an obstacle to investment 
for only 42% of responding firms (up from 35% in 
2024  and  still  below  the  EU  average  of  45%). 
However,  14.2%  of 
financially 
constrained,  especially 
the  manufacturing 
sectors  and  large  firms  (see  Annex  6).  Late 
business-to-business  payments  continue  to  be 
problematic  for  27.7%  of  SMEs  in  2024  (the  EU 
average  is  48%) (104).  The  business-to-business 
payment gap in 2025 stands at 16.2 days (the EU 
average is 17.4 days) (105). The payment gap from 
the  public  sector  decreased  substantially  (10.8 
days  in  2025  vs.  19.7  in  2024)  and  is  below  the 
EU average (13.6 days).  

firms  are 
in 

in 

performs 
fixed 
strongly 
Bulgaria 
broadband 
infrastructure. Very  high-capacity 
network (VHCN) coverage reached 90.4% in 2024, 
exceeding  the  EU  average  of 82.5%,  while fibre-
to-the-premises  (FTTP)  coverage  also  stood  at 
90.4%,  well  above  the  EU  average  of 69.2%. 
Coverage in sparsely populated and rural  areas is 
comparatively  high,  contributing  to  a  reduction  of 
the  urban-rural  digital  divide,  although  growth 
rates  are  lower  than  the  EU  average, indicating a 
maturing deployment phase.  

(98)  Bulgarian Industrial Association.  

(99)  EIB Investment Survey, Bulgaria. 

(100) Plan for Reducing Administrative Burden, adopted by 
Decision No. 233 of the Council of Ministers in 2024. 

(102) AHK Bulgarian, Konjunkturumfrage 2025. 

(103) European  Investment  Bank,  EIB  investment  survey  2025 
based on interviews carried out between April and July 2025.  

(104) European  Commission  and  European  Central  Bank,  2023 
SAFE  survey.  Survey  conducted  between  September  and 
October 2023. 

(101) European  Investment  Bank,  EIB  Investment  Survey  2025, 
based on interviews carried out between April and July 2025.  

(105) Intrum, European payment report 2025.  

58 

 
 
 
Mobile  connectivity  shows  a  more  mixed 
picture.  Overall  5G  coverage  reached  81.3%  in 
2024, remaining below the EU  average of 94.3%. 
In  contrast,  coverage  in  the  3.4–3.8  GHz  band  is 
more  advanced  and  above  the  EU  average, 
in 
reflecting  Bulgaria’s  strong  performance 
spectrum  assignment.  However,  5G  coverage  in 
sparsely  populated  areas  remains  significantly 
lower  than  the  EU  average,  despite  recent 
improvements.  

Bulgaria 
is  supporting  further  network 
expansion  through  public  investment.  Under 
the  Recovery  and  Resilience  Plan,  dedicated 
measures  focus  on  the  deployment  of  very  high-
capacity  networks  in  remote, rural and  sparsely 
populated  areas,  with  the objective of  ensuring 
gigabit  connectivity  nationwide.  This  investment 
aims to support economic activity, improve access 
to 
regional 
connectivity 
cohesion. Overall,Bulgaria’s 
framework  provides  a  solid  basis  for  digital 
economic  activity  and  participation  in  the  single 
market. Continued deployment efforts, particularly 
for mobile networks and rural areas, are improving 
framework conditions for businesses and citizens.  

digital services and 

strengthen 

Single Market  

Bulgaria is relatively well integrated into the 
Single  Market,  but  its  participation  in  global 
production processes is slowing (106). Bulgarian 
trade  integration  in  goods  was  24.7%  of  GDP  in 
2025 (above the EU average of 18.7%) but trade 
in goods has slowed down in recent years. Trade in 
services is gradually picking up but remains only at 
6.3%  of  GDP  (below  the  EU  average  of  7.6%). 
Economic  ties  in  terms  of  trade  and  investment 
with  Germany,  Romania  and  Italy  are  significant 
for Bulgarian businesses (107).  Bulgaria’s accession 
to  the  Schengen  and  euro  areas  could  encourage 
further  progress  of 
trade  relations  and 
its 
stimulate business and investment activities. 

Bulgaria has made some progress in enacting 
Single  Market  legislation,  but  challenges 
remain  in  ensuring  its  timely  and  correct 
in  several 
implementation,  as  reflected 

(106) IMF (2025). Article IV report. 

(107) Eurostat. 

increasing 

the  number  of 

Single  Market  enforcement  indicators (108). 
The  transposition  deficit  (which  measures  the 
percentage  of  all  directives  not  transposed  into 
national  law)  has  decreased  to  1.3%,  but  this  is 
still above the 1% target set by the EU Council. In 
includes  some  directives 
addition,  the  deficit 
whose  transposition  is  long-overdue.  Bulgaria  is 
also 
incorrectly 
transposed  directives,  which  is  reflected  by  the 
conformity  deficit.  This  stood  at  1.4%  in  2025 
(1.3%  in  2024).  This  is  above  the  EU  average  of 
1.1%.  Bulgaria  ranks  18th  out  of  the  27  EU 
Member  States  on  the  transposition  deficit  and 
19th for the conformity deficit. The relatively high 
number  of  pending  infringement  cases  (31  -  EU 
average:  25)  continues  to  hamper  businesses, 
especially  in  the  environment  sector.  Bulgaria 
resolved  89.3%  of  the  SOLVIT (109)  cases 
it 
handled  as  lead  centre  in  2025  (the  EU  average 
was 84.6%).  

in 

the 

Compliance  of  products circulating  in  the 
Single Market (110) is key to ensuring a level-
playing  field  for  law-abiding  companies  and 
the  safety  of  consumers. In  Bulgaria,  the 
number  of  market  surveillance  investigations  has 
relatively  decreased  compared  with  the  data 
entered  in  2019.  In  2025,  national  authorities 
reported 
and 
EU 
communications  system  for  market  surveillance 
(ICSMS)  a  total  of  40.1  investigations  per  one 
million  inhabitants,  which  is  lower  than  the  EU 
median  of  136.2.  The  number  of  notifications 
remains limited in absolute terms, which may also 
be 
IT  national 
the 
ICSMS  system.  The 
interoperability 
upcoming  revision  of  the  Market  Surveillance 
Regulation  will  upgrade 
fully 
interoperable EU digital platform.  

Information 

insufficient 

result  of 

ICSMS 

to  a 

the 

to 

Regulatory and administrative barriers to the 
Single  Market  persist  in  Bulgaria,  affecting 

(108) Part  of  the  barriers  highlighted  in  the  2025  Single  Market 
Strategy 
strategy. 
See  also  the  Annual  Single  Market  and  Competitiveness 
Report 2026. 

Single  market 

(“Terrible 

10”), 

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

(110) Part of the barriers highlighted in the Single market 

strategy (‘Terrible Ten’) and the 2026 Annual Single Market 
and Competitiveness Report. 

59 

 
 
 
 
goods  and  services  trade  as  well  as  the 
freedom  of  establishment. Bulgaria  scores  low 
among  EU  Member  States  in  the  World  Bank  B-
Ready  report  in  terms  of  international  trade  (111). 
This score is mainly driven by the low performance 
of  pillar  2,  the  quality  of  public  services.  Existing 
barriers  and  inefficient  border  operations  affect 
the free movement of goods and the provision of 
services.  In  the  agri-food  sector  for  example, 
businesses  report  that  certain  national  regulatory 
measures 
create 
implementing 
additional  compliance  requirements  for  operators. 
In  addition,  businesses  report  that  the  incomplete 
implementation  of  e-CMR  in  Bulgaria  contributes 
to  the  persistence  of  fragmented  administrative 
procedures,  generating  additional  costs,  such  as 
delays and legal uncertainty for operators. This, in 
turn, disrupts efficient cross-border logistics chains 
and constitutes a barrier to the free movement of 
goods (112). 

rules 

and 

to 

in  Bulgaria 

remain  higher 

Several  professional  services  are  more 
strictly  regulated  than  in  the  other  EU 
countries  (113).  According 
the  European 
Commission (114)  and  the  OECD (115),  regulatory 
barriers 
in 
comparable  countries 
lawyers,  notaries, 
architects  and  civil  engineers.  Those  barriers 
mostly 
shareholding 
requirements,  obligatory  fees  and  company  form 
restrictions (116). Such restrictions may limit market 
entry  and  reduce  competition.  According  to  the 
OECD, the barriers to entry in service sectors were 
as high in early 2023 as in 2019. 

form 

than 

take 

the 

for 

of 

(111) World Bank, B-Ready (2024). 

https://www.worldbank.org/en/businessready  

(112) ERT Observation report. 

(113) Part of the barriers highlighted in the 2025 Single Market 

Strategy (“Terrible 10”), Single market strategy. 
See also the Annual Single Market and Competitiveness 
Report 2026. 

(114) 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. 

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

Bulgaria compare? OECD, 2024.  

by 

Notably, 

Bulgarian 

The  low  support  for  Bulgaria’s  National 
Standardisation  Bodies  (NSBs)  (117)  hampers 
integration  and  national 
Single  Market 
competitiveness. 
non-translated 
limiting  to  some  extent  their 
standards  risk 
implementation 
companies. 
Especially  SMEs  and  start-ups  might  be  most 
affected  since  they  are  likely  to  rely  on  national-
language  standards  and  face  certain  market 
barriers.  The  online  public  commenting  platform 
launched  in  2023  is  aimed  to  encourage  and 
facilitate the participation of key stakeholders, but 
low  integration  and  interconnection  of  electronic 
services  as  well  as  remaining  document-based 
processes delay rapid updates. Despite the limited 
expertise  in  emerging  technology  like  AI  and 
quantum the NSBs manage to cast national votes 
on  most  draft  standards.  Bulgaria  could  further 
improve  its  influence  in  EU  standardisation  via 
developing these skills. A shift to digitalisation and 
improve 
support 
stronger 
responsiveness and business opportunities. 

could 

NSBs 

to 

Digital public services and e-government are 
is  also 
relatively  well  advanced,  which 
beneficial  for  doing  cross-border  business. 
the  eGovernment  Benchmark 
According 
analysis (118)  Bulgaria  scores  high  on 
the 
availability of services to both, national and cross-
national  users  with  96  points  (EU  86  points)  and 
93 points (EU 76 points) respectively. This implies 
information  about  a  service  for 
that  online 
nation/cross-border users is available and that this 
service can be completed (119)  (see Annex 7). Still, 
the  World  Bank 
“business  ready”  points  to 
challenges  in  the  operational  efficiency,  flagging 
the  need  to  improve  digitalisation  for  business 
services  (120).  Also,  user  rates  of  e-government 
services remain low and below the EU average. 

Bulgaria’s RRP includes measures to improve 
the  efficiency  and  transparency  of  public 
procurement procedures to address the 2025 
the  quality  of  public 
CSR 

(“Improve 

(117) Bulgaria notified as national standardisation bodies the 
Bulgarian Institute for Standardisation (BDS) and the 
Communications Regulation Commission (CRC) published in 
EUR-Lex - 52023XC0704(01) - EN - EUR-Lex (2023). 

(118) European Commission, 2025, eGovernment Benchmark. 

(119) Part of the barriers highlighted in the 2025 Single Market 
Strategy (“Terrible 10”), COM(2025) 500, 21/05/2025. 

(120) World Bank, 2024, 

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

https://www.worldbank.org/en/businessready.  

60 

 
 
 
procurement  procedures”),  but  structural 
governance  issues  persist,  which  undermine 
competition in Bulgaria’s public procurement 
process. In 2025, competition in Bulgaria’s public 
procurement  remains  restricted,  as  evidenced  by 
several  indicators:  The  single  bids  indicator  (the 
number  of  procedures  where  the  contract  was 
awarded to the sole bidder) reached 41% (36% in 
2024)  and  the  share  of  direct  awards  (121) 
increased to 27% (20% in 2024), the highest level 
in the EU. However, the high level is also driven by 
the inclusion of “below threshold” contracts. Out of 
the  27%,  over  20%  are  the  above-threshold 
(122).  Furthermore,  a 
contracts  publications 
significant portion of contracts (27% in 2025 and 
2024) were unsuccessful or cancelled. (123) Finally, 
despite  a  declining  trend,  the  lowest-price  award 
criterion  remains  predominant,  being  used  in 
77.7%  of  procedures  in  2025  (53%  at  EU  level) 
(124).  A  strong  focus  on  price  may  discourage 
participation  by  companies  competing  on  quality 
and  innovation.  This  therefore  potentially  reduces 
the  number  of  bidders  and  increases  the  risk  of 
abnormally low offers. 

Direct  awards  and  single  bidding  are 
prevalent  in  specific  sectors  and  among 
regional  and  municipal  authorities.  Direct 
awards  have  spread  mainly  in  the  energy,  public 
utilities  and  water  supply  sector  and  are  also 
found  in  the  defence  sector.  These  are  most 
frequently  observed  when  contracts  are  awarded 
by organisations  that are subsidised by central  or 
local  authorities.  Single  bidding 
levels  are 
particularly  high  in  recent  years  in  the  transport 
services,  postal  and  telecommunication  services, 
energy and sewage services sectors (125). The lack 
of  competition  is  often  due  to  the  specialised 
nature  of  the 
infrastructure  needs,  technical 
requirements,  complex  regulatory  frameworks, 
specific licensing and the concentration of market 
suppliers. 
power  among  a 
Additionally,  empirical  research 
indicates  that 
public buyers at below national level have a higher 

few  dominant 

(121) This is the share of contracts which were awarded without 

competition but through a negotiated procedure without prior 
publication. 

(122) Ecorys (2025). 

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

were rejected; or other reasons of not successful contracting. 

(124) Typical (mid-ranking) EU country. 

(125) Public Procurement Data Space. 

single-bid 
these  buyers 

contracts.  This 
concentration  of 
face  greater 
that 
suggests 
challenges 
in  establishing  competition  among 
bidders than buyers at national level. Additionally, 
decentralisation  has 
transferred  procurement 
responsibilities  to  municipal  officials,  who  often 
lack  expertise,  contributing  to  formal  errors  and 
delays in the use of European funds.  

Political backing in public procurement harms 
economic  growth  by  favouring  connected 
firms  over  more  efficient  competitors. 
Analysis  shows  (126)  that  firms  linked  to  local 
government  officials  are  41%  more  likely  to  win 
uncompetitive  tenders,  while  those  connected  to 
central  government  figures  have  a  37%  higher 
probability. This pattern discourages innovation by 
rewarding  political  connections,  creating  a  cycle 
where  businesses  invest  in  relationships  rather 
than  efficiency.  In  a  national  survey  by  the 
Industrial  Association,  37%  of  the 
Bulgarian 
respondents  confirmed  that  they  participated  in 
tender  procedures  in  2025  (compared  to  21%  in 
2024).  The  most  common  problems  encountered 
by participants are the biased setting of conditions 
by  a  contractor  (23%),  the  biased  evaluation  of 
tenders  (19%)  and  an  incorrect  requirement  to 
provide  data  already  known  to  the  contracting 
authorities  (19%).  A  further  concerning  trend 
related  to  public  procurement  and  reported  by 
businesses is the rise in late payments (127). 

an 

effort 

Bulgarian 
to 

these  structural 
the 

issues,  some 
Despite 
system 
aspects 
of 
demonstrate 
increase 
transparency.  Bulgaria,  along  with  Hungary, 
Czechia,  Slovakia,  and  Estonia,  is  among  the 
Member  States  where  the  relative  number  of 
modification  notices  is  particularly  high  (8.3%  of 
the EU total), reflecting a more active use of these 
procedures. Contracting authorities tend to publish 
modification notices even when this is not strictly 
required  under  the  Public  Procurement  Directives. 
additional 
While 
administrative  burden,  this  practice  contributes  to 
increased transparency. Measured against national 

this  may 

impose 

an 

(126) Fazekas, M. et al. (2025). Procuring Low Growth - The Impact 

of Political Favoritism on Public Procurement and Firm 
Performance in Bulgaria, World Bank Policy Research Paper 
11085, Washington DC. 

(127) Bulgarian Industrial Association:https://en.bia-

bg.com/uploads/gallery/-
%20ANKETI/Anketa_2025/ANKETA_2025.pdf.  

61 

 
 
 
GDP,  the  rate  of  publication  of  Bulgarian  public 
procurement  notices  on  the  EU  Official  Journal 
(TED)  is  the  second  highest  after  Latvia,  showing 
an active commitment to offering opportunities to 
businesses. 

perceive  the  level  of  independence  of  the  public 
(Commission  on 
procurement 
Protection of Competition) as ‘very’ or ‘fairly good’ 
when it is reviewing public procurement cases (129). 

review  body 

the 

reducing 

approaches. 

Policy  options  to  address  Bulgaria's  public 
include  several 
procurement  challenges 
the 
First, 
complementary 
implementation  of  the  Centralized  automated 
information system“Electronic Public Procurement” 
(CAIS  EPP)  offers  a  pathway  for  modernising 
risks  and 
procurement  processes, 
ensuring  transparency,  though  sustained  political 
commitment  is  critical  for  its  successful  delivery. 
Currently, 
is  progressing 
implementation 
gradually.  Second,  promoting  joint  procurement 
mechanisms  could  help  public  bodies  achieve 
better  prices  and  terms  by  pooling  their  needs, 
which  requires  targeted  capacity-building  and 
awareness  campaigns  to  overcome  its  current 
underuse. Third, a government project launched in 
September  2025  aimed  at 
improving  public 
investment  efficiency  presents  an  opportunity  to 
establish  a  sustainable  framework  for  planning 
and managing investment. It would be benefitial to 
prioritise  such  projects  regardless  of  political 
cycles.  In  Bulgaria’s  Recovery  and  Resilience  Plan, 
five  milestones  and  targets  are  planned  for 
improving public procurement procedures. The EU-
wide  system  of  eForms  has  been  implemented, 
the  Public 
and 
Procurement  Agency  have  been  reinforced  via  a 
new  methodology.  While  the  implementation  is 
advancing  steadily,  the  original  ambition  of  the 
public  procurement  milestones  and  targets  has 
been  notably  reduced,  which  may  affect  their 
overall impact.  

the  ex-ante 

controls  by 

Businesses’  views  on  corruption  risks  in 
public  procurement  are  above  the  EU 
average.  In  Bulgaria,  77%  of  companies  (EU 
average: 58%)  consider tailor-made specifications 
for  particular  companies  in  public  procurement 
procedures, and 62% (EU average: 45%) abuse of 
negotiated procedures, 'very' or 'fairly widespread' 
practice.  Among  companies  that  have  experience 
in  a  public  procurement 
in  and  participated 
procedure,  35% 
that  corruption  has 
prevented them from winning a public tender or a 
public  procurement  contract 
(EU 
average:  25%)  (128).  Only  30%  of  businesses 

in  practice 

think 

of 

subdivision 

procurement; 

The government has committed to developing 
targeted  measures  focusing  on  competitive 
and transparent practices to ensure/enhance 
a  level  playing  field  for  businesses.(130)  The 
most  frequent 
that  have  been 
irregularities 
reported concern: setting terms that unreasonably 
restrict  certain  participants;  non-compliance  with 
the  provisions  of  the  Public  Procurement  Law 
when  determining 
the  award  criteria;  non-
application  of  the  legal  procedure  for  awarding 
public 
public 
procurement,  which  leads  to  awarding  under  a 
more  simplified  procedure;  and  selection  of 
negotiated  procedures  with  a  limited  number  of 
participants  or  with  only  one  participant  in  non-
compliance  with  the  requirements  of  the  Public 
Procurement  Law.  Public  procurement  policy  has 
included limited number of dedicated measures to 
combat  corruption,  as  the  2014-2020  National 
Strategy  for  the  development  of  the  public 
procurement sector includes only a limited number 
of  anti-corruption  measures  and  has  not  been 
followed  up  by  a  post-2020  strategy.  The  2024 
annual  report  by  the  Public  Procurement  Agency 
does  not  refer  to  the  implementation  of  anti-
corruption measures (131). 

the  need 

issues  highlight 

Bulgaria’s  eProcurement  landscape and data 
quality 
for 
interoperable  systems,  common  standards 
and stronger data governance. The centralised 
eProcurement  service  allows  economic  operators 
to use a single system to access all national public 
procurement  procedures.  However,  issues  remain 
procurement, 
cross-border 
concerning 
creating complexity  and barriers  to  participation. 
Bulgaria’s  authorities  reported  a  low  rate  of 
foreign 
in 
their eSubmission service  (132).  This  fragmentation 
underscores  the  need  to  introduce  interoperability 
and common standards. The once-only principle is 
only  partially  implemented  at  national  level  (see 

registered 

operators 

economic 

(129) Justice Scoreboard (2025), p. 53; Flash Eurobarometer 555. 

(130) Rule of Law Report- Country Chapter Bulgaria (2025), p. 17. 

(131) Rule of Law Report- Country Chapter Bulgaria (2025), p. 17. 

(132) Between  (0%  and  1.99%),  as  reported  in  the  eProcurement 

(128) Flash Eurobarometer 557, p.133. 

matrix. 

62 

 
 
 
(TSI), 

Instrument 

the  Technical  Support 
the 
Bulgarian  government  is  currently  setting  up  a 
“National  Industrial  Strategy  for  Manufacturing 
and  Mining  industry  sectors  2025-2030”.  It  is 
designed  to 
increase  the  competitiveness  of 
Bulgarian  industry  through  three  priority  areas: 
improving the regulatory environment, accelerating 
the  green  and  digital  transitions  and  building 
modern  industrial  infrastructure.  Measures  under 
the first priority include optimising and simplifying 
permitting  procedures 
for  strategic  net-zero 
industry projects (as per the Net-Zero Industry Act) 
and  critical  raw  materials  throughout  their  entire 
focuses  on 
second  priority 
lifecycle.  The 
overcoming  obstacles 
transition 
to 
through technological modernisation, equal access 
to  expertise,  climate-neutral  energy  sources,  and 
employee  skills  development,  while  the  third 
priority  involves  developing  industrial  parks  with 
low-emission 
infrastructure, 
industrial  symbiosis  and  supporting  services  to 
attract investors. 

energy, 

digital 

twin 

the 

Graph A5.1: Manufacturing industry production: 
total and selected sector, index (2021=100), 
2015-2024 

Source: Eurostat 

Clean-tech manufacturing is still at an early 
stage  and  scaling  up  would  be  helped  by  an 
enhanced  policy  framework.  The  production 
sector of clean-tech goods sector is currently very 
small,  employing  about  7 000  people,  with  firms 
to 
transitioning  gradually 

from  assembling 

procurement 

Annex 7) and buyers across the EU still lack digital 
access  to  relevant  evidence. In  addition,  some 
monitoring  exists,  but  national  authorities  lack  a 
public 
strategy 
regarding objectives and  management  of  public 
the 
procurement  processes  data.  Therefore, 
Bulgarian system  would benefit from a  dedicated 
public  procurement  data  collection  and  analysis 
service within  the  government to  support  data-
driven oversight of the procurement lifecycle (133). 

data 

Industry and economic security  

services 

Bulgaria’s  economic  structure  is  relatively 
well  diversified,  with  a  stronger  focus  on 
lower  technology  intensive  sectors.  In  the 
services  sector  (73%  of  total  gross  value  added, 
GVA),  the  most  important branches  relate to  low-
tech  sectors,  including  transport,  wholesale  and 
retail  trade,  and  real  estate  (in  sum  31.8%  of 
GVA). Higher technology services as IT (8.5%) and 
increasingly 
(6.6%) 
financial 
important,  but  recent  growth  in  production  is 
slowing  in  comparison  to  peer  countries  such  as 
Croatia  or  Romania.  Bulgaria  has  a  strong 
specifically  manufacturing, 
industrial 
corresponding  to  shares  of  GVA  of  19.5%  and 
14.3%.  Again,  less  knowledge-intensive  sectors 
such  as  basic  metals,  food  and  rubber  dominate 
production, with about 7% of GVA. In recent years, 
production  of  transport  and  pharmaceuticals  is 
picking up, but from a low base. Expanding further 
into  knowledge-intensive  industry  might  support 
productivity growth. 

sector, 

are 

the  highest  within 

Energy-intensive  industries  specifically  face 
significant  challenges  due  to  high  energy 
prices  and  lack  of  clarity  about  the  future 
transition.  Electricity  prices  for  industry  are 
among 
(around 
€0.22/kWh in H1 2025 vs EU average €0.15/kWh) 
(see Annex 9). Energy-intensive industries account 
for about 3.5% of GVA and generated about 24% 
of  the  value  of  national  exports.  After  the 
production  peak  in  2022,  production  levels  are 
again  falling  (see  graph  A5.1).  With  support  from 

the  EU 

(133) European  Court  of  Auditors,  Special  Report  28/2023: Public 
Procurement  in  the  EU.  Less  competition  for  contracts 
awarded for works, goods and services in the 10 years up to 
2021,  2023, Special  report  28/2023:  Public  procurement  in 
the EU 

63 

657585951051151252015201620172018201920202021202220232024ManufacturingManufacture of wood and of products of wood and cork, except furniture;manufacture of articles of straw and plaiting materialsManufacture of paper and paper productsManufacture of chemicals and chemical productsManufacture of rubber and plastic productsManufacture of other non-metallic mineral productsManufacture of basic metals 
 
       
(MCI)(138),  after  Finland,  Poland  and  Sweden  (139). 
So far, Bulgaria has no selected strategic projects 
under  the  Critical  Raw  Material  Act.  The  country 
could also do better in re/using its resources, since 
the  circular  material  use  rate  is  5.0%,  well  below 
the EU average of 12.2%. (see Annex 8) 

to 

its 

thanks 

engineering and developing software (134). Bulgaria 
is  also  advancing  in  large-scale  battery  storage 
manufacturing 
first  battery 
gigafactory  (135).  According  to  a  World  Bank 
analysis, Bulgaria exported about 0.6% of GDP of 
net-zero  technologies,  mainly  wind  technology 
components  in  2022.  However,  most  of  these 
exports  show  a  rather  or  extremely  low  level  of 
complexity,  in  contrast  to  goods  exported  by 
Poland  and  Romania.  The  study  also  reveals  that 
Bulgarian  firms,  despite  being  integrated  into  the 
clean tech value chain network, have a limited role 
intermediary, 
and  potential  as  an  emerging 
compared  to  Polish  firms.  This  is  due  to  their 
smaller,  less  diverse,  and  weaker  links  in  their 
international  buyer/supplier  network.  Despite  this, 
its 
Bulgaria  has 
connectivity and influence within the network, with 
simulations  suggesting  that  the  country  could 
more  than  triple  its  clean  energy  technology-
related  exports  to  the  EU  by  2030,  reaching 
almost  2.8%  of  GDP.  To  achieve  this  potential, 
Bulgaria  will  need  to  address  its limited domestic 
integration,  reliance  on  foreign  suppliers  and  lack 
of  diversity  in  its  supplier  network.  An  enhanced 
policy  framework  could  also  offer  significant 
energy 
incentives 
consumption 
improve 
investment conditions for net-zero technologies by 
e.g.  speeding  up  permitting  processes  and 
promoting their adoption.  

industrial 
foster 

the  potential 

to  enhance 

decrease 

thereby 

and 

to 

Bulgaria’s  material  import  dependency  is 
relatively  low.  With  an  overall  share  of  16.8% 
(EU average: 22.4%), Bulgaria displays the second 
lowest  share  of  imports  needed  for  production, 
after  Romania.  The dependency  ratio  is especially 
low  in  metal  and  biomass  (136).  Bulgaria  has 
significant  production  in  copper,  lignite  and  gold, 
and  significant  potential  for  extracting  and 
recycling  key  minerals  –  although 
targeted 
research  in  this  area  has  been  lacking.  Among 
potential  minerals  are  e.g.  lithium,  manganese, 
lead, zinc and barite (137). The International Council 
on  Mining  and  Metals  (ICMM)  ranks  Bulgaria  61st 
out  of  110  in  its  Mining  Contribution  Index 

(134) Centre for the Study of Democracy. 

(135) Factory X1 by the firm International Power Supply (IPS) is 
one of ten net-zero strategy projects under the Net-Zero 
Industry Act. 

(136) Eurostat. 

(137) Velev, S. (2025). Raw Materials, Critical Choices: The 

(138) The MCI reflects the economic contribution of mining to 

national economies, with higher rankings indicating a greater 
contribution. The Democratic Republic of the Congo occupies 
the 1st rank, while Ireland is on the last (110). 

Backbone of Bulgaria’s Low-Carbon Future, Net Zero Lab. 

(139) ICMM (2025). Mining Contribution Index (MCI), 7th edition. 

64 

 
 
 
Table A5.1:  Single Market and Industry 

Source: (1) Eurostat, (2) EIB Investment Survey, (3) EIF SME Access to Finance Index, (4) Intrum Payment Report, (5) SAFE survey, 
(6) OECD, (7) data up to 2024: Single Market and Competitiveness Scoreboard, 2025: Commission calculation based on TED data, 
accessible at the Public Procurement Data Space (PPDS) (*) the value represented here under EU average is the median, (8) Single 
Market and Competitiveness Scoreboard, (9) European Commission calculations.  

65 

POLICY AREA20212022202320242025EU-27 average52.755.654.958.159.2100.011.512.3---12.62.72.3---3.9Business environment and simplification24.919.621.417.424.034.00.400.370.320.48-0.430.060.070.090.08-0.1914.114.017.016.016.217.49.915.419.019.710.813.6from private entities in the previous or current quarter---27.730.947.1from public entities in the previous or current quarter---15.315.515.938.041.436.733.431.140.7-----0.050323437364127272523202762.21.81.71.61.312.121.61.31.41.19510010092.389.384.63838363131250.30070.50530.23560.21470.22240.146229.530.631.9--32.719.419.123.223.2-25.215.317.315.816.8-22.44.33.04.95.0-12.2BulgariaINDICATOR NAMEBusiness environment and investmentProductivity and investmentLabour productivity (GDP per hour worked in PPP terms), % of EU271Business investment (share of GDP)1Public investment (share of GDP)1Impact of regulation on long-term investment, % of firms reporting business regulation as a major obstacle2SME liquidityEIF Access to Finance for SMEs index - loans3EIF Access to Finance for SMEs index - equity3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment4Payment gap - public sector, difference in days between offered and actual payment4Share of SMEs experiencing late payments, %5Industry and economic securitySingle Market IntegrationEU trade integration, average(intra-EU imports + intra EU exports)/GDP, %1EEA Services Trade Restrictiveness index6Public procurementSingle bids, % of total contractors7*Direct awards, % of negotiated procedures7*ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, resolution rate per country, %8Number of pending infringement proceedings8Energy-intensive industriesElectricity prices for non-household consumers1Electrification (electricity as a share of total energy consumption in industry)1Share of energy from renewable sources (renewable energy generation as a share of overall energy consumption)1Critical raw materialsMaterial import dependency, %1Circular material use rate1Operational cleantech manufacturing capacity in 20259 - Solar PV (c: cell, w: wafer, M:module), GW0.35 (m) - Electrolyzer, GW- - Heat pump assembly - - Battery, GW- 
 
     
 
ANNEX 6: SAVINGS, INVESTMENT AND ACCESS TO FINANCE 

Table A6.1:  Savings and Investments Union summary diagnostic 

Source: OECD (pensions), Eurostat (households' financial wealth), FISMA CMU dashboard (VC and PE), national sources (taxation). End-2024. 

role 

limited 

internal 

financial 

Bulgaria  ranks  relatively  low  across  the  main 
indicators  of  progress  on  the  policy  goals  of  the 
Savings and  Investment Union,  as  shown in  Table 
A6.1. Bulgarian corporates rely more than their EU 
funding. 
loans  and 
peers  on  bank 
Bulgaria’s  domestic  capital  market  is  small  and 
plays  a 
in  financing  Bulgarian 
companies.  Households  in  Bulgaria  have  a  very 
conservative approach to managing their financial 
wealth,  and  still  have  ample  space  to  increase 
direct and indirect participation in capital markets. 
Bank 
lending  to  households  has  been  more 
growing  more  quickly  than  lending  to  companies. 
Bulgaria’s  non-bank 
intermediaries 
(NBFIs), in particular pension funds and investment 
funds, are small but growing rapidly. These NBFIs 
have  the  potential  to  support  the  development  of 
capital  markets  and  increase  households’  wealth. 
Bulgarian  pension  funds  are  more  conservative 
than their EU peers, as regulatory constraints limit 
their  exposure  to  venture  capital  and  private 
equity.  The  ongoing  pension  reform  could  support 
more  diversified  investment  strategies.  Bulgaria’s 
insurance  sector  has  grown  in  nominal  terms  but 
has not kept pace with GDP. The country’s venture 
capital  and  private  equity  ecosystem  remains 
small and is dominated by public funds channelled 
primarily  by  the  various  national  development 
institutions.  The  recent  adoption  of  the  euro 
represents  a  major  opportunity  for  Bulgaria  to 
attract investment and deepen its capital market. 

Business landscape and company 
funding 

Bulgaria's  financial  intermediation  remains 
heavily skewed toward banking, while capital 
markets  play  only  a  marginal  role.  In  2024, 
total  non-financial  corporate  (NFC)  financing  in 
Bulgaria  was  equivalent  to  133.8%  of  GDP,  well 
below  the  EU  average  of  226.1%.  While  this 
it  also 
reflects  supply  and  demand  factors, 
indicates  the  comparatively  smaller  scale  of 
Bulgaria’s financial system, which limits the range 
of  financing  channels  available  to  firms.  Loans 
account  for  33%  of  total  corporate  financing  in 
Bulgaria  above 
(26.9%), 
confirming the importance  of  loan-based  funding. 
Equity  financing  is  dominated  by  unlisted  shares 
and  other  equity  instruments,  which  together 
represent  57.2%  of 
financing, 
significantly  higher  than  the  EU  average  (45.6%). 
This points to strong reliance on retained earnings 
and closely held ownership structures in Bulgarian 
companies.  By  contrast,  market-based  financing 
remains marginal, as bonds account for just 1.3% 
of total corporate financing and listed equity 1.9%, 
compared with 4.7% and 18.8% respectively in the 
EU.  

the  EU  average 

total  NFC 

66 

Main featuresRelative EU positioningAssets at 15.2% of GDP (32.3% in the EU)10-year real return of -1.2% (1.4% in the EU)Low pension assets that yield a negative real return.EUR 16 937 per capita (EUR 85 090 in the EU)o/w 3.2% in listed shares and bonds (7.6% in the EU)o/w 1.6% in investment funds (11.0% in the EU)o/w 1.2% in life insurance (13.4% in the EU)o/w 12.5% in  pension claims (13.6% in the EU)- Relatively low household wealth per capita.- A relatively low share of households’ financial assets is invested in listed shares and bonds.- A significant gap in the proportion of financial assets invested in investment funds and life insurance.- A relatively high share of households’ financial assets is invested in pension funds, reflecting mandatory contributions to supplementary funded pension insurance (Pillar 2).- Bulgaria has no dedicated tax-advantaged “savings and investment account” (but offers tax reliefs for investment in financial instruments)VC at 0.023% of GDP (0.064% in the EU)PE at 0.054% of GDP (0.487% in the EU)Low venture capital and private equity investments.For corporates, capital gains tax on shares and bonds is taxed as corporate income tax at 10% but exceptions apply for for regulated-market instruments.  Individuals' capital gains tax from the disposal of  listed shares and governmental bonds realised on a regulated market in the EU/EEA, are exempt from personal tax. In addition, Bulgaria has extended similar tax treatment to instruments traded on its SME Growth Market (which is not regulated under MiFID)Bulgaria offers tax reliefs for investments in financial instruments that broadly support participation in capital markets1-34-1011-1718-2425-27Colours indicate the country's relative ranking based on five groups, ranging from the three best to the three worst performers. The relative ranking as regards an SIU diagnostic topic derives from a consistent cross-country comparison, the starting point of which is the average of the underlying main features.TopicAsset-backed pension schemesHouseholds' financial assetsVenture capital (VC)Private equity (PE)Capital taxation 
 
 
      
 
 
The funding profile of Bulgarian corporates is 
closely  linked  to  the  dominance  of  SMEs.  In 
Bulgaria,  microenterprises  (140)  contribute  21.8% 
of  total  value  added  (vs  20.1%  in  the  EU),  while 
small firms contribute 22.1% (vs 16.6% in the EU) 
and  medium-sized  firms  21.6%  (vs  16.9%  in  the 
EU). By contrast, large enterprises account for only 
34.5% of value added, about half the EU average 
(46.4%) (141). This structure has direct implications 
for  the  type  of  corporate  financing  used  in  the 
country,  as  large  firms,  which  are  typically  better 
positioned  to  access  capital  markets,  represent  a 
smaller  share  of  the  Bulgarian  economy  than  the 
EU average. 

Graph A6.1: Composition of non-financial 
corporations’ funding 

firms, 

innovative 

scale-ups  and 

that  holds  back 

insurance assets stood at 6.1% of GDP at the end 
of 2024, pension funds at 15.2%, and investment 
funds  at  5.9%  (see  Graph  A6.2).  Because  banks 
are not best suited to invest in – or lend to – start-
ups, 
the 
underdevelopment of Bulgaria’s NBFIs is a limiting 
factor 
the  dynamism  and 
expansion of the economy. This underdevelopment 
of  Bulgaria’s  NBFIs  reduces  the  availability  of 
long-term, market-based financing and also limits 
the  diversification  of  funding  sources.  Moreover, 
the  country’s  equity  and  bond  markets  are  small 
and  shallow,  leaving  firms  with  very  limited 
alternatives  to  bank  lending.  This  means  that  a 
shock to banks’ balance sheets or lending activity 
could  quickly 
reduce  credit  availability  and 
threaten overall financial stability in the country. 

Graph A6.2: Capital markets and financial 
intermediaries 

Source: Eurostat. End-2024. 

Size and structure of the financial 
sector 

Source: ECB, EIOPA, EMACO. End-2024. 

in  Bulgaria 

intermediation 

Financial 
is 
heavily  concentrated  in  the  banking  sector, 
reflecting  the  limited  size  of  NBFIs  and 
shallow  capital  markets.  Bulgaria’s  banking 
system  had  total  assets  in  September  2025 
equivalent  to  96%  of  GDP.  This  is  substantially 
smaller  than  the  EU  average  (246.1%  of  GDP). 
Banks  remain  the  main  source  of  finance  for 
households  and  NFCs.  The  size  of  Bulgaria’s 
banking sector by far exceeds the combined assets 
the  country’s  NBFIs.  By  comparison, 
of  all 

The  domestic  equity  market  remains  small 
and shallow. The Bulgarian Stock Exchange (BSE) 
operates  two  regulated  markets:  the  BSE  Main 
Market  and  the  BaSE  Alternative  Market  (142). 
However,  the  small  size  and  shallow  liquidity  on 
these  markets  deters  corporates  from  seeking 
public  equity  financing  on  them.  Since  January 
2020,  the  amount  of  capital  raised  via  capital 
increases  on  these  two  markets  amounted  to 
EUR 578 m, whereas the amount of capital raised 
via  initial  public  offerings  was  just  EUR  38 m,  of 
which only EUR 2 m in 2024 and EUR 6 m in 2023 
(143).  The  BSE  also  operates  the  SME  growth 

(140) Microenterprises  have  1-9  employees;  small  firms  10-49 
employees;  medium-sized  firms  50-249  employees;  and 
large firms 250+ employees. 

(141) See Annex 5 for more details. 

(142) See BSE Sofia market segmentation. 

(143) Source:  Republic  of  Bulgaria,  Offering  circular  28 April 2025 

for Global Medium Term Note Programme.  

67 

050100150200250BGEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equityNon-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIsPension fundsInsurance corporationsInvestment funds020406080100120   Listed equity               Bonds                        Assets by sector% of GDP 
   
 
     
 
market  BEAM  (144),  which  is  an  effort  to  increase 
market-based  funding  for  growing  businesses  by 
simplifying  SME  listing  requirements.  BEAM  has 
attracted  some  investors’  interest.  Nevertheless, 
the  persistently 
low  and  declining  market 
capitalisation  of  Bulgarian  firms  (equivalent  to 
8.4%  of  GDP  in  September  2025,  compared  with 
an EU average, as seen in Table A6.2) points to the 
limited  use  of  the  public  equity  market  by 
Bulgarian firms. 

that  applicable 

instruments  with 

Recent  policy  initiatives  aim  to  strengthen 
the  attractiveness  of  the  BSE.  A  pilot  tax 
regime  introduced  in  2021,  which  exempted  both 
corporates  and  individuals  from  capital  gains  on 
disposals of financial instruments traded on BEAM, 
was  made  permanent  from  1 January 2026.  This 
effectively  aligned  the  tax  treatment  of  BEAM-
listed 
to 
regulated  markets,  and  thus  directly  supported 
SME financing via capital markets. In the future, it 
is  expected  that  the  adoption  of  the  euro  in 
January  2026  will  have  a  positive  impact  on 
investor sentiment. To stimulate regional markets, 
eight  stock  exchanges  in  central  and  eastern 
Europe  (including  Sofia,  Bratislava,  Bucharest, 
Budapest, Ljubljana, Zagreb, Warsaw, and Skopje), 
alongside  the  European  Bank  for  Reconstruction 
and  Development  signed  a  memorandum  of 
understanding  in  2024.  This  was  followed  in 
August  2025  by 
the  signature  of  another 
memorandum  of  understanding  by  the  ministers 
of  finance  of  these  eight  countries  to  foster  the 
joint  development  of  national  capital  markets 
through  closer  cooperation,  regulatory  alignment, 
and increased market integration. 

Bulgarian  NFCs  make  limited  use  of  the 
domestic  debt  capital  market  to  raise 
finance. The main challenges facing the country’s 
debt markets include low liquidity and the absence 
of  large  issuers  which  could  set  benchmarks  for 
the  market.  As  a  result,  investors  lack  a  well-
established local benchmark against which to price 
credit risk. In December 2024, the capitalisation of 
the  Bulgarian  bond  market  was  equivalent  to 
24.5%  of  GDP,  of  which  84.4%  was  government 
debt. Nevertheless, only a quarter of the country’s 

is 

debt 

government 

outstanding 
issued 
domestically,  as  government  debt  issuance  in 
Bulgaria  is  primarily  conducted  on  international 
markets  (145).  Between  2021  and  2024,  the 
Bulgarian  government  and  corporates 
issued 
in  debt  securities,  but  only 
EUR 11.7 billion 
EUR 0.6 billion  of  this  was  raised  on  the  BSE.  The 
relatively  low  levels  of  financial  illiteracy  among 
entrepreneurs (see section on financial  literacy)  is 
also cited as a barrier for raising funds in the bond 
market. 

Households’ participation in capital 
markets 

for 

and 

Bulgarian  households manage their  financial 
conservatively,  with  a 
assets 
strong 
low-risk 
liquid 
preference 
instruments. Bulgarian households have a culture 
of  investing  a  large  share  of  their  savings  in  real 
estate.  As  a  result  of  this,  their  financial  asset 
holdings  are  relatively  low  (around  EUR 16 900 
per  capita),  compared  with  the  EU  average 
(EUR 85 100) (see Graph A6.3). This strengthens a 
preference  for  simplicity  and  liquidity,  to  the 
detriment  of  long-term  market-based  financial 
products. 
In  December  2024,  currency  and 
deposits  accounted  for  43.7%  of  Bulgarian 
households’ 
financial  assets,  compared  with 
31.6%  on  average  in  the  EU.  By  contrast,  direct 
investment  in  listed  shares  and  bonds  remains 
limited,  accounting  for  only  3.2%  of  Bulgarian 
households’ portfolios (compared with 7.6% in the 
EU).  Participation  in  collective  investment  vehicles 
is  also  low,  as  investment  funds  together  with 
insurance and pension products account for 16.1% 
of  Bulgarian  households’  financial  assets,  far 
below the EU average of 38.8%. At the same time, 
Bulgarian  households  hold  a  relatively  sizeable 
share  (around  37%)  of  their  financial  assets  in 
unlisted  shares  and  other  equity  (146),  compared 
with about 22% in the EU.  

(144) 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. It is designed 
to  help  SMEs  access  capital,  imposing  lighter  regulatory 
requirements than the main market. 

(145) See  Central  Government  Debt  and  Guarantees  Monthly 

Bulletin for December 2024. 

(146) An  inherent  limitation  is  that  unlisted  shares  are  typically 
less transparent and more difficult to value, hence the high 
volatility in data from the prior year. 

68 

 
 
 
Graph A6.3: Composition of households’ financial 
assets 

this  is  not  structured  as  a  formal  savings  and 
investment account (150). 

although 

in  Bulgaria 

literacy 
low 

remains 
Financial 
(151), 
relatively 
recent 
initiatives  aim  to  address  this.  Bulgaria 
adopted  its  first  national  strategy  for  financial 
literacy  in  2021,  and  is  implementing  the  related 
(152).  Based  on  the 
2021–2025  action  plan 
assessment  of  the  work  done  so  far  and  the 
implementation of the action plan for 2021-2025, 
a  new  action  plan  for  2026-2030  has  been 
is  currently  under  consultation. 
drafted  and 
Monitoring of the strategy and action plan includes 
repeated financial literacy surveys and drawing on 
the  OECD/INFE  toolkit.  In  April  2026,  the  Ministry 
of  Finance  launched  a  single  national  financial 
literacy platform(153) , and relevant authorities and 
stakeholders  also  support  the  implementation  of 
the  strategy  and  action  plan  through  dedicated 
initiatives  (154).  Moreover,  financial  education  in 
Bulgaria is integrated throughout the entire school 
curriculum (mainly in the subject ‘Entrepreneurship 
and  Technology’,  as  well  as  in  mathematics, 
geography, and economics) and complemented by 
extracurricular  initiatives.  Despite  these  efforts, 
40.8% of 15-year-old students on average, do not 
have  basic  proficiency  in  financial  literacy  (155).  In 
general,  targeted  measures  to  address  gaps  in 
financial  literacy  cover  vulnerable  groups  and 
SMEs  (156).  Strengthening  financial  literacy  among 
both investors and entrepreneurs is viewed as key 
to  support  the  development  of  the  Bulgarian 
capital market. 

(150) As  proposed  in  the  Commission’s  SWD  on  increasing  the 
investment  accounts  with 

availability  of  savings  and 
simplified and advantageous tax treatment.  

(151) According  to  the  latest  Eurobarometer  survey,  in  the  overall 
(composite)  for  financial  literacy,  15%  of  Bulgarians  scored 
high, 65% medium, and 20% low. 

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

Plan (2021-2025). 

(153) National financial literacy portal. 

(154) Such  as 

the  Financial  Supervision  Commission 

(with 
consumer  tools  and  education  programmes),  the  Bulgarian 
National  Bank  (information  and  educational  materials),  and 
the National Revenue Agency (with tax education for  young 
people). 

(155) OECD 

(2024),  PISA  2022  Results 

(Volume 

IV):  How 

Financially Smart Are Students? 

(156) These  measures  include  training  supported  under  labour-
market policies and skills measures included in the  national 
strategy for SMEs 2021–2027.   

69 

Source: Eurostat. End-2024. 

remains 

low,  although 

in  Bulgarian  capital 
Retail  engagement 
markets 
recent 
initiatives  indicate  some  emerging  investor 
interest. Bulgarian households’ strong preference 
for deposits, and their limited investments in long-
term  savings  instruments  (insurance,  pension  and 
investment funds) can be attributed to three main 
causes:  (i)  their  limited  financial  assets  compared 
with the EU average; (ii) the still-scarce offering of 
attractive  domestic  financial  products;  and  (iii) 
(see  section  on  financial 
financial 
literacy).  Nevertheless,  the  relative  success  of 
recent initiatives facilitating access to international 
instruments  (such  as  the  MTF  BSE  International 
(147)  suggests  that  there  is  appetite  among  retail 
investors  for  greater  exposure  to  diversified 
capital-market products. Regaining local investors’ 
trust  in  the  domestic  capital  market,  in  particular 
by  improving  governance  indicators  (148),  remains 
key. Bulgaria already provides broad tax relief for 
investments in financial instruments (149), although 

illiteracy 

(147) For more, see MTF BSE International. 

(148) According  to  the  World  Bank's  Worldwide  Governance 
Indicators,  Bulgaria  is  one  of  the  three  worst  performers  in 
the  EU-27  in  each  of  the  six  governance  scores  i.e. 
government  effectiveness,  political  stability,  rule  of  law, 
regulatory  quality,  control  of  corruption,  and  voice  and 
accountability. 

(149) For example, capital gains from the sale of securities traded 
on  regulated  markets  in  the  EU/EEA  are  exempt  from  tax, 
and  Bulgaria  also  recently  made  permanent  a  specific 
provision  extending  similar  tax  relief  to  instruments  traded 
on SME Growth Market. 

050100150200250020406080100BGEUBGEUper capita (000 EUR) (lhs)% of GDP (rhs)Currency and depositsInsurance and pension fundsInvestment fundsBondsListed sharesUnlisted sharesOther equityHH Debt (liability) 
      
 
 
The banking sector: resilience and 
financing of the economy 

The  Bulgarian  banking  sector  is  profitable 
and resilient, supported by strong capital and 
liquidity  buffers.  The 
robust  profitability 
performance  in  2024  carried  over  into  the  first 
nine  months  of  2025.  The  sector’s  (annualised) 
return-on-equity  of  14.5%  in  September  2025, 
compares favourably with the EU average of 9.6%. 
The  capitalisation  of  Bulgarian  banks  also 
remained  high,  despite  rapid  credit  growth  and 
rising  risk-weighted  assets,  with  the  common 
equity tier 1 ratio (CET1) at 22% and total capital 
adequacy  at  23.7%  (both  above  the  EU  averages 
of  16.8%  and  20.2%,  respectively).  Liquidity 
conditions remained comfortable, with the liquidity 
coverage ratio at 236% and the net stable funding 
ratio at 162% in September 2025 (157). Resolution 
readiness  also  improved,  as  banks  continued  to 
build loss-absorbing capacity through the issuance 
of  eligible  instruments  (158).  Despite  strong  credit 
growth,  the  stock  of  non-performing  loans  (NPLs) 
declined to around EUR 2 billion (around 7% lower 
than  a  year  earlier),  and  the  NPL  ratio  fell  from 
2.8%  to  2.5%  between  September  2024  and 
these 
September 
improvements,  the  NPL  ratio  of  Bulgarian  banks 
exceeds  the  EU  average  of  1.9%.  However,  the 
coverage ratio of 50% (vs an EU average of 42%) 
indicates solid provisioning (160).  

Despite 

2025 

(159). 

The  Bulgarian banking sector  has  seen  rapid 
lending  growth  in  recent  years.  Household 
credit  continued  to  be  the  main  driver  of  this 
growth  and  it  continues  to  expand  more  rapidly 
than  corporate  credit.  Loans 
to  NFCs  also 
increased in the past year, albeit more moderately. 
In  particular,  the  growth  in  credit  for  house 
purchases  has  been  strong,  reaching  21.7% year-

(157) Profitability,  solvency  and  liquidity  ratios  are  based  on  ECB 

consolidated banking data. 

(158) See the EBA’s MREL Dashboard Q2 2025. 

(159) The ECB measures the share of gross non-performing loans 
and advances based on a ‘broad’ definition encompassing all 
counterparties, including cash balances at central banks and 
other demand deposits. Excluding exposures at central banks 
and  other  demand  deposits,  the  NPL  ratio  would  stand  at 
3.4%. 

(160) For  more  details  on  the  banking  sector,  see  also  the   
Bulgarian National Bank’s Banks in Bulgaria Q2 2025 report.   

70 

on-year  (vs  2.6%  in  the  EU),  while  the  credit 
growth of loans to NFCs was up 10.1% (compared 
with  growth  of  only  2.5%  in  the  EU).  Growth  in 
credit was supported by favourable labour-market 
conditions,  rising  disposable  incomes  and  the 
liquidity 
banking  sector’s  strong  capital  and 
positions.  The  share  of  Bulgarian  banks’  loans  to 
SMEs  in  total  loans  to  NFCs,  although  on  a 
downward  trend,  was  50.2%  at  the  end  of  2024. 
This  remains  significantly  higher  than  Bulgaria’s 
European peers, which allocate, on average, 40.2% 
of their NFC portfolio to SMEs. 

Role of non-bank financial 
intermediaries 

investors 

Institutional 
in  Bulgaria  are 
growing  in  size  and  have  the  potential  to 
support  the  development  of  the  country’s 
capital  markets,  but  their  participation  in 
domestic  capital  markets  remains  limited. 
Given  Bulgaria’s  strong  economic  convergence 
with  its  EU  peers  in  recent  years,  assets  under 
management  by  the  country’s  NBFIs  (insurance 
funds,  investment  funds  and  pension  funds)  have 
they  are  still 
expanded  steadily.  However, 
equivalent  to  a  much  lower  percentage  of  GDP 
than  their  EU  peers.  Moreover, the  contribution  of 
to  Bulgarian 
domestic 
capital  markets  remains  limited,  as  they  tend  to 
favour  investing  in  conservative  portfolios  over 
higher-risk  and  less  liquid  assets.  In  particular 
Bulgaria’s  pension  funds  and  investment  funds 
could  in  principle  play  a  greater  role  in  providing 
long-term risk capital (161).  

institutional 

investors 

Bulgaria’s  insurance  sector  is  very  small 
compared  with  the  EU  average,  with  low 
insurance  uptake  and 
relatively  small 
insurers.  Total  insurer  assets  were  equivalent  to 
just  6.1%  of  GDP  in  September  2025,  well  below 
the  EU  average  of  53.9%.  Non-life 
insurers 
dominate the sector and account for about 70% of 
total  assets  (or  around  EUR  4.5  billion),  while  life 
(or 
insurers  manage 

remaining  30% 

the 

(161) A  recent  study  by  the  European  Capital  Markets  Institute 
(Commentary no 90, August 2024 Closing the gaping hole in 
the  capital  market  for  EU)  showed  that  Bulgarian  pension 
funds accounted on average for only 1% of PE and VC funds 
raised annually over the timeframe 2007-2023. 

 
 
 
EUR 1.9 billion).  Solvency 
the 
corresponding  ratio  of  181%,  although  below  the 
EU average of 253%, indicates large buffers.  

robust,  and 

is 

than 

other 

remain 

securities 

conservative,  as 

The 
investment  strategies  of  Bulgarian 
the 
insurers 
predominance  of  short-duration  non-life 
liabilities  limits  the  scope  for  increased 
allocations  to  long-term  assets.  In  September 
2025,  around  33%  of  Bulgarian  insurers’  assets 
were  invested  domestically,  56%  in  other  EU 
countries,  and  10%  outside  the  EU.  In  terms  of 
shares 
instruments, 
accounted  for  the  largest  share  of  insurers’ 
portfolios  (around  47%).  Shares  and  other  equity 
accounted  for  26%  of  assets,  while  deposits  and 
receivables  each  accounted  for  roughly  7%  (162). 
This  conservative  allocation  is  at  least  partly 
explained by the fact that the Bulgarian market is 
dominated  by  non-life  insurers,  particularly  the 
motor  insurance  sector,  which  has  short-term 
liabilities.  This  limits  the  scope  for  a  significant 
shift  away  from  liquid  assets  toward  equity  and 
private  markets.  Without  a  broadening  of  the 
Bulgarian  insurance  sector’s  activities  into  long-
duration 
insurance 
products,  its  contribution  to  the  deepening  of 
Bulgarian capital markets will remain limited. 

savings-based 

life  and 

to 

country 

amounted 

The Bulgarian asset management industry is 
small  but  growing,  and  is  well  placed  to 
the  mobilisation  of  household 
support 
savings into domestic capital markets. In June 
2025,  the  total  assets  of  resident  and  non-
resident Bulgarian investment funds distributed in 
EUR 6.2 billion, 
the 
equivalent to 5.9% of GDP, a 13.7% increase year-
on-year  (163).  Nevertheless,  this  level  is  still  far 
below  the  EU  median  of  24.5%  of  GDP  (164). 
approximately 
Resident 
EUR 2 billion  of  assets,  and  their  portfolios  are 
equity-oriented,  with  shares  and  other  equity 
accounting  for  43.4%  of  their  total  assets  as  of 
June  2025,  followed  by  fund  units  (32.6%),  debt 
securities  (19.3%)  and  deposits  (4.7%).  Resident 
funds  retain  a  significant domestic  footprint,  with 
51.5% of securities holdings invested in Bulgarian 
issuers and 41.4% in other EU issuers. However, it 

manage 

funds 

(162) See Bulgarian National Bank Insurance Statistics. 

(163) See Bulgarian National Bank’s Investment Funds Statistics. 

(164) The  median  is  used  instead  of  the  EU  average  to  avoid 
distortion from outliers (Luxembourg, Ireland and Malta). 

71 

to 

liabilities 

is  the  non-resident  funds  that  dominate  in  the 
Bulgarian  market.  Non-resident  funds  manage 
around EUR 4.2 billion.  However, holdings of non-
resident funds are mainly institutional, accounting 
for  62.3%  of  total  non-resident  funds’  liabilities, 
households 
while 
represented 20.7% (although the household share 
has  been  increasing  in  recent  years).    These  non-
resident  funds  provide  a  welcome  opportunity  for 
Bulgarian  retail  investors  to  invest  their  savings, 
however a significant share of non-resident funds 
distributed  locally  is  managed  abroad,  which  is  a 
limiting  factor  to  the  sector’s  contribution  to 
domestic capital markets.  

Bulgarian 

the 

Financial 

companies 

insurance 
by 

The second and third pillars of the Bulgarian 
pension  system  are  expanding.  The  first  pillar 
is the state pension, financed on a pay-as-you-go 
basis.  It is  supplemented by  a mandatory,  funded 
second  pillar  (165)  and  a  voluntary,  funded  third 
pillar  (166).  The  funded  pillars  are  managed  by 
licensed  and 
pension 
supervised 
Supervision 
Commission.  Bulgarian  supplementary  pension 
funds have recorded robust growth in recent years, 
and  are  expected  to  expand  further  in  line  with 
rising  wages.  In  December  2024,  around  5.1 
million  people  held  accounts  in  Bulgaria’s  second 
and  third  pillar  pension  funds.  Based  on  OECD 
data,  these  funds  managed  total  net  assets  of 
EUR 13.8  billion  in  December  2024,  a  significant 
increase 
in 
December  2023.  Despite  continuous  growth,  the 
size of private pension fund assets – at 13.1% of 
GDP – is still below the EU average of 28.1% (167). 
The  country’s  mandatory  universal  pension  funds 
(UPFs) dominate the system and account for 87% 
of  total  net  assets,  followed  by  mandatory 
professional  pension  funds  (PPFs)  at  7%  and 
voluntary pension funds at 6% (168). 

the  EUR 11.8 billion  held 

from 

(165) The  second  pillar  is  mandatory  for  those  born  in  1960  or 
later, who must contribute to a Universal Pension Fund (UPF), 
while  employees  working  in  hazardous  conditions  must 
additionally participate in a Professional Pension Fund (PPF).  

(166) The  third  pillar  is  voluntary  and  allows  individuals  (and 
employers)  to  make  extra  retirement  savings  through 
voluntary  pension  funds,  including  occupational  schemes 
agreed collectively.   

(167) Private and public funded pension assets totalled 15.2% of 
GDP  (see  Table  A6.2),  of  which  13.1%  of  GDP  are  private 
pension  funds’  assets  and  2.1%  are  public  reserve  assets 
(see Silver Fund); the latter is excluded from the analysis.  

(168) Based  on  Bulgaria’s  Financial  Supervision  Commission’s 
Results  of  the  supplementary  pension  insurance  activity  for 

 
 
 
 
The  expanding  funded  pension  system  does 
not  yet  channel  sizeable  funds  into  the 
Bulgarian  equity  markets  (in  particular  in 
venture  capital  and  private  equity)  as  its 
relatively 
investment  strategies 
remain 
conservative. 
In  June  2025,  debt  securities 
accounted  for  around  68%  of  assets  in UPFs  and 
63%  in  PPFs,  while  equities  represented  about 
30%  and  35%,  respectively.  The  voluntary  third 
pillar  shows  appetite  for  higher-risk,  longer-term 
investments,  although  bonds  still  represent  the 
largest  asset  class 
(57%).  This  conservative 
allocation  of  funds  significantly  hampers  long-
term real returns. According to OECD pension data, 
the  10-year  average  real  return  of  Bulgarian 
private pension funds was negative -1.2% in 2024 
as opposed to +1.2% in the EU. These results are 
attributed  to  the  current  regulatory  investment 
limits (169) and the design of the Bulgarian system, 
which 
capital 
preservation  and  peer-based  return  comparisons. 
This  led  pension  insurance  companies  to  apply 
fairly  standard  portfolio  allocations  for  their 
members,  where  no  life-cycle  (170)  investment 
strategies were utilised. Additionally, the existence 
of  a  minimum  return  guarantee  mechanism  does 
not  favour  volatility  and  therefore  deters  pension 
investment companies from taking large positions 
in equity. 

historically 

favoured 

has 

has 

reforms 

Bulgaria 
to 
introduced 
modernise  its  funded  pension  system  and 
improved  the  design  of  the  second  pillar 
schemes. The amendments to the Social Security 
Code (171), in line with the OECD recommendations 
following  a  thorough  assessment  of the  country’s 
pension  system,  primarily  focuses  on  UPFs  and 
introduces  a  multi-fund,  life-cycle  structure  with 
differentiated investment strategies and a default 
age-based  allocation.  The  new  framework  also 
introduces 
and 
benchmarks in the management of funds. With the 

performance 

incentives 

the first half of 2025, total assets increased to EUR 14.6% 
by 30 June 2025. 

(169) See  the  OECD’s  2025  Survey  of  Investment  Regulation  of 

Pension Providers.  

(170) Life-cycle strategies allow members to select their preferred 
investment  profile,  usually  aligned  with  their  age  and 
investment  horizon,  typically  shifting  from  higher-risk  to 
more conservative assets over time. 

(171) The  amendments  to  the  Social  Security  Code  have  been 
adopted  by  the  National  Assembly  and  published  in  the 
State Gazette  on the 17 March 2026. 

72 

investments 

establishment  of  sub-funds,  new  types  of  eligible 
assets  have  been  introduced  (including  financial 
instruments traded  on  SME  growth market),  while 
quantitative 
limits  have  been 
adjusted  across  asset  classes  for  the  three  risk 
profiles  (dynamic,  balanced  and  conservative). 
Bulgaria  does  not  operate  a  formal  nationwide 
pension  tracking  system  that  consolidates  all 
pension sources in one place for individuals.  

Venture capital ecosystem 

(172)(173). 

The  Bulgarian  venture  capital  (VC)  and 
private  equity  (PE)  markets  have  expanded 
over the past decade, but are still among the 
smallest in the EU. Lack of capital remains a key 
constraint  for  innovative  firms  and  start-ups  in 
Bulgaria.  While  access  to  seed  and  early-stage 
financing  seems  to  have  improved  recently,  it 
remains constrained for companies at later stages 
of  development 
In  more  developed 
markets, these companies rely to a greater extent 
on  VC 
innovation, 
to 
commercialisation and scaling. In 2024, Bulgaria’s 
PE  investments (on  a three-year moving  average) 
were equivalent to 0.054% of GDP, well below the 
EU average of 0.487%, and placing Bulgaria in the 
lowest  quartile  of  EU  Member  States  on  this 
measure.  In  the  VC  segment,  this  ratio  reached 
0.023% of GDP in 2024. While this was a historic 
high value for Bulgarian VC investment, it remains 
well  below  the  EU  average  of  0.064%,  leaving 
Bulgaria  in  the  third  quartile  of  EU  countries  on 
this type of investments. 

finance 

and 

PE 

The recent growth of the VC and PE markets 
in  Bulgaria  has  been  mostly  supported  by 
institutional  and  public  funding.  Despite 
significant progress over the last decade, both the 
VC and PE sectors in Bulgaria remain too small to 
meet the financing needs of innovative firms on a 
broad  scale.  This  is  partly  because  of  limited 
participation  by  domestic  institutional  investors, 
which  is  especially  due  to  the  fact  that  pension 
funds are not allowed to invest directly in PE or VC, 
indirect  exposure  through 
except  for  a  1% 

(172) According to the Bulgarian Private Equity and Venture Capital 
Association’s  2025  annual  report  on  private  investment  in 
Bulgaria & SEE. 

(173) See also Annex 4. 

 
 
 
Table A6.2:  Financial sector indicators 

(1) Annualised data. EU data for credit growth and pension funds refer to the EA average. 
Source: ECB, Eurostat, European Insurance and Occupational Pensions Authority, DG FISMA CMU dashboard, AMECO. 

alternative investment funds. Bulgaria, through its 
dedicated  state-owned  structure  –  the  “Fund  of 
Funds”  –  and  in  collaboration  with  the  European 
Investment  Fund  (EIF),  the  European  Investment 
Bank  (EIB)  aims  to  improve  access  to  finance  for 
Bulgarian  companies,  and  innovative  firms  and 
start-ups in particular.  

73 

20182019202020212022202320242025-Q3EUTotal assets of MFIs, % of GDP----95.395.495.796.0246.1Common equity Tier 1 ratio19.318.422.022.020.420.521.422.016.8Total capital adequacy ratio20.619.523.122.921.322.123.123.720.2Overall NPL ratio, % of all loans7.76.55.94.83.72.92.72.51.9NPL ratio, loans to NFCs12.710.79.67.66.55.14.64.23.5NPL ratio, loans to HHs9.07.27.35.84.03.02.72.62.1Return on equity ratio111.811.24.98.811.216.315.214.59.6Loans to NFCs, % of GDP----24.724.224.023.229.3Loans to HHs, % of GDP----19.720.822.624.043.6NFC credit growth rate, %-----9.810.610.62.5HH credit growth rate, %-----17.121.721.92.6Stock market capitalisation, % of GDP--10.111.19.28.08.38.469.9Initial public offerings, % of GDP0.200.000.010.210.170.030.05-0.06Market funding ratio----11.410.910.8-49.7Private equity, % of GDP0.0600.0250.0190.0250.0360.0500.054-0.487Venture capital, % of GDP0.0090.0070.0080.0140.0170.0220.023-0.064Financial literacy, composite index-----43.5--45.5Bonds, % of HHs' financial assets0.20.30.30.20.20.70.6-2.8Listed shares, % of HHs' financial assets1.81.92.02.22.32.52.6-4.8Investment funds, % of HHs' financial assets0.70.80.91.21.21.31.6-11.0Insurance/pension funds, % of HHs' financial assets11.412.813.813.112.914.014.6-27.8Total assets of insurers, % of GDP6.86.97.57.35.96.16.16.153.9Pension assets, bn EUR---11.511.613.815.9-5813.8Pension assets, % of GDP---16.113.514.615.2-32.310y real return average of pension assets, %------0.9-1.2-1.4Pension funds assets, ECB (% of GDP)---------1-34-1011-1718-2425-27Colours indicate performance ranking among the 27 EU Member States.Banking sectorNon-banking sector 
 
 
 
 
 
 
        
 
ANNEX 7: EFFECTIVE INSTITUTIONAL FRAMEWORK 

country-specific 

trust  built  on 

institutional  framework 

An  effective 
is 
essential  for  competitiveness.  This  requires 
public 
integrity,  high-quality 
legislation,  regulatory  simplification  and  efficient 
services  for  people  and  businesses.  For  Bulgaria, 
recommendations 
the  2025 
highlighted  challenges  relating  to  the  functioning 
and capacity of public administration, including at 
regional  level.  It  also  stressed  the  need  for  i) 
simplified regulation, ii) improved regulatory tools, 
iii) reduced administrative burden and iv) effective 
anti-corruption measures, particularly in high-level 
corruption cases. 

Public trust 

Graph A7.1: Trust in the justice system, regional / 
local authorities and in government 

(1) EU-27 since 2019; EU-28 before 
Source: European Commission, Standard Eurobarometer 
surveys 

in 

public 

institutions 

Trust 
remains 
significantly  lower  than  the  EU  average 
(Graph  A7.1).  Public  trust  in  local  and  regional 
institutions  is high  and  increasing.  When it comes 
to  government  however,  trust  is  low,  below  pre-
COVID levels. People (Bulgaria 55%; EU 72%) and 
to  a  lesser  degree  businesses  (Bulgaria  79%;  EU 
83%)  have  little  trust  that  public  administration 
handles their data securely and responsibly (174).  

Quality of lawmaking 

Bulgaria  has  strengthened  its  law-drafting 
rules,  but  effective  implementation  remains 
weak (Table A7.1). Unstable legislation remains a 
barrier  to  doing  business  (See  Annex  5).  Impact 
assessments  and  public  consultations  – to  assess 
the  costs  and benefits  of new  legal  proposals  for 
people,  companies  and  government  –  are 
mandatory 
for  all  primary  and  secondary 
legislation.  However,  assessments  tend  to  be 
partial (175) and done as a formality (176). It is only 
in  the  case  of  major  proposals  that  competition 
and  regional  impact  are  assessed.  While  non-
regulatory  options  are  considered,  their  impact  is 
assessed  only  for  some  primary  laws.  It  is  rare 
that  implementation,  compliance  arrangements, 
monitoring  and  evaluation  of  new  regulations  are 
analysed.  The  Council  of  Ministers  Administration 
reviews the quality of the impact assessments and 
evaluations  drawn  up  by  central  government,  yet 
its recommendations are not binding.  

Supported  by  the  recovery  and  resilience 
plan (RRP), in 2025, the government updated 
its  methodology  for  strategic  planning.  and 
upgraded  the  national  system  for  strategic 
planning  “Monitorstat”.  The  two  measures 
modernise the monitoring of progress on strategic 
objectives  and  the  implementation  of  national 
strategies,  and  to  support  policymaking  informed 
by  evidence.  In  addition,  a  new  portal  for  public 
consultation  was  launched,  offering  new  features 
for  tracking  the  decision  making  and  more 
information about public feedback. However, most 
recent  consultations  do  not  make  use  of  these 
features. 

Parliament  does  not  apply  the  same  quality 
standards  to  legal  proposals  as  central 
government,  even  though  75%  of  proposals  are 
made  by  members  of  parliament.  While  most 
proposals  are 
justified  on  the  basis  of  the 
shortcomings of current legislation, in only 17% of 
those  cases  are  shortcomings  explained,  and  the 

(175) Министерски съвет, 2024, Годишни доклади за 

регулаторната политика, 
https://strategy.bg/bg/impact_assessments/library/godisni-
dokladi-za-regulatornata-politika. 

(174) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(176) OECD, 2025, Better Regulation Practices across the European 

Union 2025, https://doi.org/10.1787/6f007516-en.  

74 

00.10.20.30.40.50.60.70.80.9AutumnSpringAutumnSpringAutumnSpringWinterSummerWinterSpringWinterSummerAutumnSpringAutumnSpringAutumnSpring202520242023202220212020201920182017Justice,  legal system EU-27Justice,  legal system BGRegional or local public authorities EU-27Regional or local public authorities BGGovernment  EU-27Government  BG 
 
     
 
 
 
Table A7.1:  Bulgaria. Selected indicators on better regulation practices for primary legislation 

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

changes  assessed.  Furthermore,  7%  provide 
information  about  public  consultations,  and  10% 
offer analysis of alignment with EU legislation(177).  

A plan to reduce the administrative burden is 
being  implemented.  It  focuses  on  a  range  of 
legislative  amendments  in  the  requirements  for 
the  provision  of  administrative  services.  The  plan 
does  not,  however,  provide  for  the  monitoring  of 
follow-up steps to enforce the standardisation and 
simplification of processes established by the legal 
changes (178). 

service  when  requesting  a  new  ID.  Whereas 
obtaining  a  work  permit  for  foreigners  has  been 
fully digitalised, the process of obtaining a local ID 
for  EU  nationals  is  entirely  paper  based(180). 
Businesses are more positive  – 44% are satisfied 
and  27%  expressed  no  preference.  At  the  same 
time,  Bulgarian  companies 
report  significant 
delays  in  their  operations  due  to  administrative 
complexity (Bulgaria 22%; EU 15%).  

Graph A7.2: Most time-consuming aspects of 
service delivery 

Public service delivery and 
digitalisation 

The  quality  of  public  administration  services 
remains  low.  Only  26%  of  people  are  satisfied 
while  37%  expressed  no  preference.  The  main 
concern  is  the  time  it  takes  to  fill  in  forms(179). 
Many opportunities to improve user experience are 
underused.  For  example,  there  is  no  option  to 
make an appointment or track the progress of the 

(177) Народно събрание, Изследване на законодателната 
дейност на 51-oто Народно събрание през четирите 
парламентарни сесии (11 ноември 2024 г. – 13 януари 
2026 г.), https://www.parliament.bg/bg/ncpi.  

(178) Министерски съвет, План за намаляване на 

административната тежест, https://strategy.bg/bg/strategy-
documents/1685. 

(179) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

Source: European Commission. Flash Eurobarometer 567 / 
568 on satisfaction with administrative services (2026) 

Key 
challenges  with  obtaining  public 
administration  services  include  the  time  it 
takes  to  receive  a  reply  and  the  effort  to 
gather  all  of  the  documents  needed  (Graph 
A7.2).  Individuals  and  companies  alike  report 
repetitive  interactions  with  the  administration  in 
relation  to  service  delivery.  This  suggests  high 

(180) European Commission, forthcoming, Simplification of key life 

events. 

75 

0%10%20%30%40%50%ApplicationformsTime forresponsesServiceidentificationTime forresponsesDocumentspreparationApplicationformsPeopleBusinessesEUTools for smart legislation: Share of possible impacts assessed for all primary laws when developing legislation 1Regulators are required to identify and quantify the benefits of a new primary law1Regulators are required to identify and assess the impacts of alternative non-regulatory options0Tools for effective implementation: when developing laws, regulators are required to:Assess the level of compliance0Identify and assess potential enforcement mechanisms0Specify the methodology of measuring progress in achieving the law's goals1Oversight of better regulation: There is an external  body responsible for reviewing the quality of RIAs and of ex post evacuations 1There are publicly available assessments of the effectiveness of RIA in modifying regulatory proposals 1There are reports on the level of compliance by government department with the requirements of RIA1There are indicators on the percentage of ex post evaluations that comply with guidelines0The effectiveness of ex post evaluations in improving the regulatory stock has been assessed in the last five years0 
 
     
 
 
      
 
Table A7.2:  Digital Decade key performance indicators: availability of digital public services 

(1) Digital Decade target by 2030: 100. (2) Publishing year, data was collected in the previous year 
Source: European Commission, 2025, State of the Digital Decade report 2025. 

administrative 
friendliness.  

complexity 

and 

low 

user-

built 

newly 

digital 

led  to 

government 
The 
infrastructure  has  not 
improved 
services.  The  technical  ability  to  exchange  data 
between  key  government  registers  is  improving. 
The  proportion  of  pre-filled  forms  is  74%  (EU: 
71%). Many of the steps needed to obtain services 
however remain paper-based or require a physical 
visit  to  an  office  for  a  digital  profile  to  be 
activated. Additional obstacles to making the most 
of digital opportunities include limited attempts at 
simplifying  working  processes,  administrative 
fragmentation  and  scarce  resources,  with  a  third 
of  public  administrations  relying  completely  on 
external contractors, to maintain their ICT(181). The 
service  improvement  following  the  “life  events” 
approach,  designed  under  the  Technical  Support 
Instrument,  is  progressing  slowly(182).  A  draft 
strategy for data governance prioritises measures 
to  improve  the  quality  of  public  data  and  set 
standards  for  to  exchange  data  across  the  public 
administration(183). 

(181) Министерство на електронното управление, 2025, Отчет 

за състоянието и годишен план за развитие и 
обновяване на информационните ресурси в 
администрацията и информационните ресурси на 
единната електронна съобщителна мрежа на 
държавната администрация и за нуждите на 
националната сигурност за 2024 г”. p 50, 
https://egov.government.bg/wps/wcm/connect/egov.governme
nt.bg-2818/624afd91-2874-4de2-8be6-
5a13f31337c2/25RH255pr.pdf?MOD=AJPERES&CONVERT_T
O=url&CACHEID=ROOTWORKSPACE.Z18_PPGAHG800PLV60
60GL92MR3OU3-624afd91-2874-4de2-8be6-
5a13f31337c2-ppXcve1.  

The  availability of  digital  public  services  for 
people in Bulgaria remains well below the EU 
average  (Table  A7.2).  The  proportion  of  people 
using e-government services and eID also remains 
very low (Bulgaria 36%; EU 75%) (184). This reflects 
the limited availability of fully online services and 
persistent  barriers  to  digital  inclusion,  particularly 
for  minorities  and  those  in  remote  areas.  By 
contrast,  the  availability  of  electronic  health 
records has improved.  

In the case of businesses, the availability of 
digital public services has steadily increased, 
surpassing the EU average (Table A7.2). A large 
proportion  of  companies  (Bulgaria  72%;  EU  68%) 
report  frequent  use  of  digital  services  and  62% 
find that digital public administration services save 
them  time  (EU  73%).  Registering  a  business,  for 
example, is mostly done online.  

There is a major drive under way to digitalise 
the  construction  sector.  Under  the  RRP,  the 
government  has  prepared  a  concept  to  push 
digitalisation  (RRP  C10.R5)  and  a  new  IT  system 
investment  design  and 
for  spatial  planning, 
construction  permits  was 
the 
launched  at 
beginning  of 2026 (RRP C10.I7).  Cadastre BG is a 
new  mobile  application 
that  offers  visual 
simulations of land-registry  data. By contrast,  the 
digitalisation of environmental and energy permits 
remains 
fragmented,  with  companies  often 
required  to  submit  documents  in  both  hard  copy 
and electronic format(185).  

(184) European Commission, 2025, Digital Decade: eGovernment 

(182) Министерски съвет, План за действие за внедряване на 

Benchmark. 

административни услуги на принципа „епизод от живота“, 
https://strategy.bg/bg/strategy-documents/1717. 

(183) Министерство на електронното управление, Стратегия за 
управление на данните в Република България, 2026-
2030 г, https://strategy.bg/bg/public-consultations/12331. 

(185) World Bank, Subnational Business Ready in the European 

Union 2024: BULGARIA, p. 28 and 34. 
https://www.worldbank.org/content/dam/sites/b-
ready/subnational/document/country/2024/bulgaria/Subnatio
nal-B-READY-in-Bulgaria-2024-OVERVIEW-(EN).pdf 

76 

EU-272023202420252025606768828192948677778783Access to electronic health records (0 to 100)Digital public services for citizens (0 to 100)Digital public services for businesses (0 to 100)Bulgaria 
 
 
 
   
 
Bulgaria  is  making  no  progress  in  enabling 
the  cross-border  exchange  of  data  and 
documents  between  authorities  through  the 
EU  Once-Only  Technical  System  (OOTS)(186). 
that  cross-border  citizens  and 
This  means 
businesses  still  have  to  search  for  their  data, 
download, and upload documents manually across 
e-government  portals  in  Bulgaria.  It  also  means 
that  Bulgarian  citizens  and  businesses  are  unable 
to  retrieve  data  and  documents  issued  by  the 
Bulgarian authorities across e-government portals 
in  different  Member  States.  Bulgaria  is  not  yet 
playing an active part in the OOTS community.  

Civil service 

The  overall  workforce  of 
the  public 
administration has remained stable over the 
past  five  years(187).  The  number  of  employees 
at  local  level  has  marginally  increased  over  this 
period,  while  regional  and  central  administrations 
have  decreased  with  respectively  4%  and  1%. 
Aging  is  a  main  risk,  despite  yearly  fluctuations. 
The  share  of  staff  above  50  years  has  increased 
from  38%  in  2019  to  43%  in  2025(188).  National 
data shows also an upward trend for the share of 
staff above 60 years (from 9% in 2021 to 10% in 
2025).  

Attractiveness of public administration as an 
employer  is  another  structural  challenge. 
While the number of candidates and hires in 2025 
shows  an  increased  interest,  the  share  of  long 
term  vacances  (unfilled  for  more  than  6  months) 
fluctuates  between  40%  and  48%  over  the  last 
five  years.  The  share  of  staff  on  civil  service 
contracts  has  been  increasing  steadily,  offering 
more  stable  working  conditions.  However,  some 
regulatory 
staff 
tend 
predominantly  under  the  general  labour  code, 
allowing them more flexibility in terms of pay (189). 

bodies 

recruit 

to 

(186) European Commission, Once-Only Technical System 

Acceleratormeter, Ec.europa.eu. 

(187) Министерски съвет, Доклади за състоянието на 

държавната администрация през 2021, 2022, 2023, 
2024, 2025, https://iisda.government.bg/annual_report/664.  

(188) European Commission, Eurostat, 2026, European Union 

Labour Force Survey, Employed persons by economic activity 
(NACE Rev. 2) (2008-2026). 

(189) Министерски съвет, Доклад за състоянието на 

държавната администрация през 2023, 

77 

Employee  involvement  has  slowly  eroded  (190). 
While  Bulgarian  civil  servants  are  more  satisfied 
than  their  European  peers  with  the  way  their 
organisations are managed, they assess lower the 
levels of autonomy and trust.  

Municipalities  face  significant  challenges  in 
attracting and retaining talent. They also face 
significant  turnover,  especially  among  younger 
staff. 74% find it very difficult to recruit staff with 
the specialist skills needed for the management of 
reforms and investments, especially those funded 
by the EU. (See Annex 18) The main obstacles are 
low  basic  pay  and  an 
imbalance  between 
responsibilities and pay (191).  

Mobility  within  and  between  administrations 
has been steadily increasing (12% in 2025). All 
ministries, state committees, agencies and 92% of 
regional 
such 
recruitment.  Only  67%  of  the  territorial  units  of 
central  administrations and 35% of municipalities 
however are open to external mobility.  

administrations 

allow 

for 

Ensuring  that  civil  servants  have  the  right 
skills  is  critical.  The  proportion  of  civil  servants 
with  higher  education  in  Bulgaria  (64%)  is  above 
the  EU  average  (55%)  and  has  increased  in  the 
past  year(192).  However,  the  participation  of  civil 
servants  in  adult  learning  courses  remains  the 
lowest  in  the  EU,  despite  an  increase  from  2%  in 
2024  to  9%  in  2025  (EU19%).  National  reports 
show that despite of better performance in 2025, 
the  overall  number  of  training  participants  is 
declining  in  the  long  term.  The  low  attendance  in 
mandatory  training  also  sets  in  as  a  long-term 
trend (a median of 49949% for induction training, 
45%  for  newly  recruited  managers  and  11%  for 

https://iisda.government.bg/annual_report/644 и Доклад за 
състоянието на държавната администрация за 2024, 
https://iisda.government.bg/annual_report/664.  

(190) Institute for public administration, 2025 

Engagement_barometer_2025, 
https://www.ipa.government.bg/sites/default/files/engagemen
t_barometer_2025_en.pdf. 

(191) Национално сдружение на общините в Република 
България, Анализ на капацитета на общините за 
подготовка и изпълнение на проекти с европейско 
финансиране, p. 11, 
https://www.namrb.org/bg/aktualno/nsorb-izgotvi-analiz-na-
kapatsiteta-na-obshtinite-za-podgotovka-i-izpalnenie-na-
proekti-s-evropeysko-finansirane-19036. 

(192) European Commission, Eurostat, 2026, European Union 

Labour Force Survey, Employees by educational attainment 
level and NACE Rev. 2 activity (2008-2026). 

 
 
 
 
mandatory annual  training for managers over the 
last  5  years)  (193).  Moreover,  the  number  of 
administrations  allocating  funding  for  training 
continually  decreases 
the 
administrations in 2025. This suggest that despite 
of  improved  learning  opportunities  and  available 
funding,  there  has  been  a  long-term  decline  in 
learning culture in the public administration (194).  

to  only  half  of 

Municipalities,  at  the  same  time,  need  more 
focus  on  upskilling  staff  and  capacity 
building,  including  through  central  administration 
support  for  policy  and  regulatory  implementation, 
set  up  of  shared  services  and  internal  consulting 
(195).  

Integrity  

in  Bulgaria, 

When  doing  business 
the 
perception  of  corruption  remains  far  higher 
than  the  EU  average.  The  reported  level  of 
corruption  actually  experienced  is  also  well 
above  the  EU  average.  In  2025,  89%  of 
companies 
corruption  was 
widespread (EU 63%) and 91% stated that overly 
close  links  between  business  and  politics  lead  to 
corruption  (EU  76%).  55%  of  businesses  consider 
that  corruption is  a problem  when doing business 
(EU 35%)(196).  

considered 

that 

In  Bulgaria  the  sectors  that  are  particularly 
public 
vulnerable 

corruption 

are 

to 

(193) Министерски съвет, Доклад за състоянието на 

държавната администрация през 2023, 
https://iisda.government.bg/annual_report/644 и Доклад за 
състоянието на държавната администрация за 2024, 
https://iisda.government.bg/annual_report/664. 

(194) Institute for public administration, 2025, Is your public 

administration a learning organisation? 
https://www.ipa.government.bg/sites/default/files/doklad_ua_
25.pdf. 

(195) Национално сдружение на общините В Република 
България, Анализ на капацитета на общините за 
подготовка и изпълнение на проекти с европейско 
финансиране, p.23, 
https://www.namrb.org/bg/aktualno/nsorb-izgotvi-analiz-na-
kapatsiteta-na-obshtinite-za-podgotovka-i-izpalnenie-na-
proekti-s-evropeysko-finansirane-19036. 

(196) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services / 
European Commission, 2025, Flash Eurobarometer survey 
557 on Businesses' attitudes towards corruption in the EU. 

procurement,  the  management  of  public 
property,  the  handling  of  EU  funds  and  the 
conclusion of concession contracts (see Annex 
5)  (197).  The  proportion  of  companies  that  report 
that they have been asked or are expected to offer 
a  gift,  a  favour  or  extra  money  for  permits, 
services or procurement is higher in Bulgaria than 
(Bulgaria  16%;  EU  10%). 
the  EU  average 
appropriate 
report 
also 
Companies 
punishment  for  individuals  and  companies  found 
guilty of bribery is significantly lower than the EU 
average (Bulgaria 8%; EU: 33%)(198). 

that 

interest 

regulating 

Bulgaria  has  taken  limited  steps  to  improve 
the  prevention  and  detection  of  corruption. 
Legislation 
lobbying 
is  being  drawn  up  on 
transparency.  In  January  2026,  a  draft  legislative 
proposal 
representation 
activities  was  submitted  for  public  consultation. 
The National Audit Office is expected to manage a 
future  transparency  register.  However,  there  are 
still  no  rules  on  integrity  checks  and  on  the 
suitability  (or  otherwise)  of  persons  hired  as 
advisers to senior political officials. Nor is there a 
any 
code 
comprehensive 
enforcement  mechanism  for  persons 
top 
executive  functions,  although  some  initial  steps 
have been taken to draw up such a code. 

conduct 

of 

or 

in 

Bulgaria  has  taken  limited  measures  to 
improve  the  prosecution  of  corruption.  There 
investigations, 
is  no  robust  track  record  of 
prosecutions  and  final  judgements  in  high-level 
corruption  cases  or  regarding  the  detection, 
investigation  and  prosecution  of  foreign  bribery 
cases.  To  improve  the  effectiveness  of  the  fight 
against 
for 
corruption, 
Illegal  Assets 
Counteracting  Corruption  and 
Forfeiture  was  divided 
separate 
two 
into 
specialised bodies in 2023. In February 2026, the 
anti-corruption  commission  was  abolished  and  its 
responsibilities  were  dispersed  between 
the 
directorate-general for combating organised crime, 
investigative  magistrates  and  the  national  audit 
office.  The  composition  and  functioning  of  the 
Supreme  Judicial  Council  remain  a  concern  (199). 
Furthermore,  there  has  been  no  further  progress 

Commission 

the 

(197) European Commission, 2025, Rule of Law Report. 

(198) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services / 
European Commission, 2025, Flash Eurobarometer survey 
557 on Businesses' attitudes towards corruption in the EU. 

(199) European Commission, 2025, Rule of Law Report, p. 7. 

78 

 
 
 
The  digitalisation  of  administrative  justice  has 
improved  and  a  new  system  for  online  allocation 
of  payment  orders  has  been  set  up.  Despite  the 
improvements in the area of administrative justice 
there  are  still  gaps  in  the  overall  digitalisation  of 
Bulgaria’s  justice  system.  Procedural  rules  have 
not  yet  been  updated  to  allow  the  use  of  digital 
tools in all proceedings.  Further work is necessary 
as 
technologies  and  secure 
communication  to  allow  staff  and  judges  to  work 
securely 
to 
communicate  safely  with,  e.g.  lawyers,  notaries 
and bailiffs.  

in  a  digital  environment  or 

regards  digital 

as  regards  the  functioning  of  the  Inspectorate  to 
the  Supreme  Judicial  Council  and  the  risk  of 
political influence (200). 

The mandates of most independent and regulatory 
authorities  have been  renewed  but  no  steps  have 
been  taken  to  improve  their  independence.  Since 
July  2025,  most  of  the  independent  regulatory 
authorities  that  required  a  simple  majority  in 
Parliament  to  appoint  their  new  leadership  have 
been  renewed.  However,  the  authorities  that 
require a qualified majority vote (two thirds of the 
members  of  Parliament)  have  not  been  renewed. 
For  the  authorities  with  renewed  mandates  the 
risk of political  influence coming from the lack of 
secure  tenure  may  be  dissipated,  yet  no  steps 
have  been  taken  to  strengthen  the  political 
independence  of  the  independent  and  regulatory 
authorities to improve their resilience and prevent 
situations in which most of them function with an 
expired  mandate.  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  regulated  sectors. 
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. 
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(201). 

Justice 

The  justice  system  is  performing  efficiently 
overall.  The  time  it  takes  first-instance  courts  to 
reach a decision in civil and commercial cases rose 
slightly  to  189  days  in  2024  from  186  in  2023. 
The  estimated  time  to  resolve  administrative 
cases at first instance increased from 121 days in 
2023 to 129 days in 2024.   

(200) European Commission, 2025, Rule of Law Report, p. 8. 

(201) Publications Office of the European Union, 2019, Assessing 
the independence and effectiveness of national regulatory 
authorities in the field of energy, 
https://op.europa.eu/en/publication-detail/-
/publication/e5f886d6-917d-11e9-9369-
01aa75ed71a1/language-en. 

79 

 
 
 
SUSTAINABILITY 
ANNEX 8: INDUSTRY DECARBONISATION, CIRCULARITY AND CLIMATE MITIGATION 

tackling 

sustainably. 
remain 

Bulgaria  still  faces  challenges  concerning 
industry  decarbonisation  and  road  transport 
emissions,  as  well  as  water  and  waste 
management. In 2025, Bulgaria received country-
specific  recommendations  on  energy  efficiency  in 
industry,  sustainable  urban,  public  and 
rail 
transport,  and  on  the  need  to  improve  water  and 
waste  management  by 
institutional 
weaknesses  and  by  investing  in  infrastructure  to 
Bulgaria’s 
use 
resources 
particularly 
manufacturing  activities 
greenhouse-gas  intensive.  Measures  have  been 
taken  to  advance  industrial  decarbonisation,  but 
further  actions  are  still  needed  –  in  particular  to 
streamline  industrial  permitting  procedures  and 
increase  demand  for  green  industry  products. 
Transport is the second highest-emitting sector in 
Bulgaria;  despite  efforts  to  prioritise  strategic 
cross-border rail TEN-T sections and advancing an 
inland  waterway  project  to  remove 
ongoing 
bottlenecks, 
transport 
infrastructure remains uneven. While Bulgaria has 
adopted  an  action  plan  for  transitioning  to  a 
circular  economy,  the  plan  does  not  explicitly 
address two main issues: the circular material use 
rate,  which  stands  at  just  5%  in  2024,  and  the 
investment  gap  to  meet  its  circular  economy 
objectives.  Water  pollution  from  industry  also 
remains a concern.  

the  quality 

its 

of 

Industry decarbonisation 

Greenhouse gas emissions from industry 

The  GHG  emissions  intensity  of  Bulgaria’s 
manufacturing  production  is  comparatively 
States (202). 
high 
of 
Manufacturing 

EU  Member 

around  16% 

generates 

among 

(202) This Annex discusses the transition of Bulgaria's 

manufacturing industry, specifically its energy-intensive 
industries, to low-carbon and net-zero modes of production, 
which is key to preserving competitiveness on the path 
towards climate neutrality as mandated by the European 
Climate Law. A broader perspective on the current 
competitiveness challenges facing Bulgaria's manufacturing 
industry is provided in Annex 5. For a more detailed 
description of greenhouse gas emissions from industry, see 
European Commission (2025), 2025 Country Report - 
Bulgaria, Commission staff working document, SWD (2025) 
205 final, Brussels, 4.6.2025, Annex A7. Clean industry and 
climate mitigation. 

Bulgaria’s  total  greenhouse  emissions (203). 
In 
2024,  manufacturing  emitted  716 g  CO2eq  of 
greenhouse  gases  per  euro  of  gross  value  added 
(GVA),  one  of  the  highest  levels  among  EU 
Members, but by about 22% less than in 2019. In 
the  five  years  to  2023,  the  energy-related 
intensity  of  greenhouse  gas  emissions  of 
Bulgaria’s  manufacturing  industry  decreased  by 
24%. Since 2019, the GHG emissions generated by 
manufacturing  fell  by  7%,  less  than  in  the  EU 
overall,  16%.  The  manufacture  of  chemicals  and 
other  non-metallic  mineral  products  are  the 
highest-emitting 
particularly 
and 
sectors, 
emission-intensive in EU comparison. 

Policies to promote industry decarbonisation 

industrial 

streamlined 

Bulgaria  has  identified  strategic  priorities 
for industrial decarbonisation, but it has not 
yet 
permitting 
procedures  or  increased  the  incentives  to 
build  net-zero  industry  capacity.  Bulgaria  has 
limited manufacturing capacity across all net-zero 
technologies.  The  key  challenges  are  related  to 
industrial permitting and the country's reliance on 
raw  materials.  Bulgaria’s 
imports  of  critical 
updated national energy and climate plan sets out 
objectives  and  actions  that  support  industrial 
decarbonisation.  It  describes  the  legislation  to 
facilitate  the  deployment  of  renewables  and 
storage,  enhancing  the  energy  efficiency  of 
renewable 
buildings  and  pilot  projects  on 
for 
hydrogen. 
stimulating 
the  manufacturing  of  net-zero 
technologies (204).  The  proposed  measures  include 
improving  the  conditions  for  investment  in  net-
zero  technologies  and  encouraging  take-up  by 
providing 
the 
permitting  procedures 
for  strategic  net-zero 
technologies,  building  a  skilled  workforce  and 
creating industrial parks (205). 

It  also  outlines  a  strategy 

incentives, 

improving 

financial 

(203) In the following, data on the manufacturing sector exclude 
the NACE division C19 – manufacture of coke and refined 
petroleum products, for better match of the sectoral data 
from Eurostat (gross value added) with those from the 
UNFCCC under the Common Reporting Format; also see the 
annotation to table A8.1 at the end of this Annex.  

(204)See Bulgaria’s updated national energy and climate plan, 

p. 317. 

(205)See ibid., pp. 121, 134, 224. 

80 

 
 
 
 
 
 
 
on 

recommendation 

Bulgaria  is  taking  first  steps  to  tackle  the 
encouraging 
2025 
energy  efficiency  measures  in  industry(206). 
Specifically,  it  has  started  preparing  a  national 
industry  and 
raw  materials, 
strategy  on 
manufacturing,  due  to  be  published  in  the  first 
half  of  2026.  The  strategy  will  include  measures 
on  reducing  energy  consumption 
industry, 
measures  related  to  industrial  decarbonisation 
such  as  reducing  carbon  intensity  and  increasing 
resource efficiency, as well as a net-zero emission 
industry analysis. The strategy also plans to draw 
on a combination of financial, regulatory and joint 
instruments and put the specific focus on energy-
intensive 
is  ongoing  on 
carbon capture and storage, and there are plans to 
sharpen  the  focus  on  developing  the  batteries 
sector. 

industries (207).  Work 

in 

The  metals  and  chemical  products  sectors 
are another key focus of Bulgaria’s action to 
decarbonise  its  industry.  The  Ministry  of  the 
Economy  and  Industry  is  currently  working  on  an 
industrial  strategy  for  the  processing  and  mining 
the  Bulgarian 
industries. 
Federation  of 
Industrial  Energy  Consumers 
presented  a  roadmap  for  decarbonising  the 
energy-intensive industry, which sets the direction 
for  transforming  key  sectors  such  as  metallurgy, 
cement and chemical industries (208). This will feed 
into Bulgaria’s forthcoming industrial strategy (209).  

In  October  2025, 

Bulgaria  promotes  carbon  capture  and 
storage (CCS) projects as a key technology to 
decarbonise  industry.  The  first  project  for 
carbon capture, utilisation and storage in Bulgaria 
is  the  ANRAV  project  run  by  Heidelberg  Cement 

(206) In particular with regard to two RRP measures: 1) C3.I2 

Investment 2.2.b: Guarantee instrument for energy efficiency 
and renewable energy: Contribution to InvestEU with the EIF 
as implementing partner and 2) C3.I2 Investment 2.2.c - 
Grant scheme for the support of businesses in the transition 
to a circular economy (includes EE investments), 
https://commission.europa.eu/document/download/042ce541
-e8a5-4211-9dac-
aea5d92469b2_en?filename=COM_2025_677_1_EN_anne
xe_proposition_cp_part1_v3.pdf.  

(207)Source: written exchange with national authorities as part of 

the fact-finding work on the European Semester. 

(208) Presented to the European Commission during a roundtable 
meeting with the Deputy Director-General of DG CLIIMA in 
2025. 

(209)Source: exchange in writing with national authorities as part 

of the fact-finding in the European Semester. 

81 

Group  (Devnja  Cement)  approved  for  funding 
under  the  Innovation  Fund.  The  project  aims  to 
provide  safe  storage  of  carbon  dioxide  in  a 
depleted  gas  deposit  in  the  Black  Sea,  linking  the 
carbon capture facility  at the Devnya plant to the 
deposit  through  existing  pipelines  on  land  and  in 
water.  The  project  will  avoid  7.8  Mtonnes  of  CO2 
over  ten  years  and  remove  8.3%  of  Bulgaria’s 
industrial emissions. Commissioning is planned for 
April  2028,  with  the  capacity  to  capture  800 
ktonnes  of  CO2  per  year (210).  A  second  flagship 
CCS  project,  'Beli  Net  Zero'  in  Beli  Izvor  in  the 
Vratsa  oblast,  plans  to  decarbonise  the  Holcim 
cement  plant  by  capturing,  transporting  and 
injecting about 0.6 Mtonnes of CO2 per year (211). 

Bulgaria  has  taken  measures  to  promote 
hydrogen  generation  and  use  and  hydrogen-
based value chains (212). Since hydrogen is a key 
component  of  net-zero  technology,  the  2023 
National  Hydrogen  Roadmap (213)  aims  to  support 
hydrogen  production,  integration  and  transport.  It 
focuses  on  improving  the  conditions  needed  to 
unlock 
to  develop  hydrogen 
technologies,  including  by  developing  alternative 
fuel  infrastructure.  The  roadmap  aims  to  provide 
the basis for a framework governing the uptake of 
hydrogen 
use 
technologies  in  industry,  energy,  transport  and  by 
households to foster innovation and investment.  

the  potential 

production, 

transport 

and 

Under  its  recovery  and resilience plan  (RRP), 
Bulgaria  has  put 
forward  a  support 
programme  to  develop  industrial  districts, 
parks  and  similar  areas  (“AttractInvestBG”)(214). 
the  do  no 
This  programme  complies  with 
significant  harm  principle  and  related  EU  and 
national  environmental  legislation  and  is  in  line 
with the RRP. 

(210) ANRAV Project: 7eb6d2d5-c109-4c33-ba50-

c065beb654d7_en 

(211) Beli Net Zero: Bulgarian NECP - CCS Europe 

(212) In particular with regard to RRP measure 'C4.R7 - Supporting 
the green hydrogen value chain'," which consisted of the 
entry into force of legal acts to support the green hydrogen 
value chain. 

(213)Bulgaria Hydrogen Observatory – outlined on European 

Hydrogen Observatory website: Bulgaria | European Hydrogen 
Observatory. 

(214) Program for Public Support for the Development of Industrial 
Regions, Parks and Similar Territories and for Attracting 
Investments ("AttractInvestBG") - Ministry of Innovation and 
Growth of the Republic of Bulgaria. 

 
 
 
Further  action  is  needed  to  promote  the 
manufacturing, 
of 
decarbonisation 
particularly in energy-intensive sectors. There 
is a need to reduce energy consumption in industry 
and to use affordable and clean energy, which can 
be  expected  to  provide  lasting  environmental, 
economic  and  productivity  benefits. The  energy 
intensity of manufacturing fell between 2018 and 
GVA 
2023 to 2.45 kWh/EUR 
the  EU 
but remains significantly  higher 
average 
this 
end, continued efforts  are  needed to  support 
the shift  from  fossil  fuels  to  electricity  and 
renewables.  This  includes  ensuring  the  financial 
resources are available to make the corresponding 
investments. 

than 
of  GVA). To 

(1.05 kWh/EUR 

of 

Investment  in  industry  decarbonisation  is 
constrained  by 
low  demand  for  green 
industry products.  In  Bulgaria there  is  a  lack  of 
policy  measures  to  stimulate  demand  and  create 
lead  markets  for  decarbonised  industry  products. 
There  are  limited  investment  opportunities  as 
renovations and modernisation work are needed to 
adapt 
to 
complement EU funding mechanisms with national 
competition-based  measures  to  subsidise  the 
green  industry  transition,  for  example  by  running 
domestic auctions for low-carbon technologies. 

facilities (215).  Bulgaria  has  scope 

Reduction of effort sharing emissions 

Compliance  with  effort  sharing  limits  with 
domestic measures 

Bulgaria is projected to overachieve its 2030 
effort  sharing  target (216). In  2024,  greenhouse 

(215) Source: written contacts with the national authorities as 

part of the fact-finding work on the European Semester.  

(216) The  national  GHG  emission  reduction  target  is  set  out  in 
Regulation (EU) 2018/842 (the Effort Sharing Regulation). It 
applies  jointly  to  buildings  (heating  and  cooling),  road 
transport,  agriculture,  waste  and  small  industry  (known  as 
the effort sharing sectors). The emissions from effort sharing 
sectors for 2024 are based on approximated inventory data. 
The  final  data  will  be  established 
in  2027  after  a 
comprehensive  review.  Projections  about  the  impact  of 
current  policies 
(‘with  existing  measures’,  WEM)  and 
additional  policies (‘with  additional  measures’,  WAM)  as  per 
Bulgaria’s 2025 reporting under Article 17 of Regulation (EU) 
2018/1999 (the Governance Regulation). Also see European 
Commission (2025),  Climate Action Progress Report 2025 – 
Technical  Information,  Commission  staff  working  document, 

gas emissions  from  Bulgaria’s  effort  sharing 
sectors  are  expected  to  be  12.1%  above  2005 
levels. By 2030, with current and planned policies 
and  measures,  these  emissions  are  expected  to 
fall  by  35.6%,  resulting  in  a  surplus  of  25.6 
percentage  points relative to  the  2030  target,  a 
10% reduction. Bulgaria is projected to exceed its 
effort sharing emission limits temporarily over the 
2021-2030  period  but  could  cover  the  gap  with 
unused annual emission allocations from previous 
years  to  achieve  compliance  with  the  Effort 
Sharing Regulation. 

Sustainable transport 

Graph A8.1: Greenhouse gas emissions in the 
effort sharing sectors, 2005, 2023, and 2024 

Source: European Environment Agency. 

In 2024,  road  transport  generated  42%  of 
Bulgaria’s  effort  sharing  emissions,  a  34% 
increase  on  2005  levels (217).  For  Bulgaria,  the 
2025  CSRs  highlighted  the  need  to  promote  the 
roll-out  and  uptake  of  sustainable  urban,  public 
and  rail  transport,  including  by  accelerating  the 
development of the necessary infrastructure.  

Transport  is  the  second  highest-emitting 
sector  in  Bulgaria  (generating  22.4%  of  all 
GHG  emissions 
in  2023,  below  the  EU 
average of 25.6%). The roll-out of vehicles with 
alternative  propulsion  and 
the  corresponding 
infrastructure remain limited. By the end of 2025, 
Bulgaria  had  installed  less  than  15%  of  the 
charging  infrastructure  needed  to  meet  the  2030 
targets,  one  of  the  lowest  shares  in  the  EU.  The 

Brussels, Chapter 9 (pp. 111ff.), and in particular Tables 25 
and 26. 

(217) See Graph A8.1 below and Table A8.1 at the end of this 

Annex. 

82 

051015202530200520232024MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
 
 
   
 
percentage  of  electric  vehicles  in  Bulgaria  at  the 
end  of  2024  was  0.56%,  against  the  EU  average 
of 15%. Plug-in hybrid electric vehicles accounted 
for  0.15%  of  cars  in  Bulgaria  against  the  EU 
average  of  7%.  During  the  first  three  quarters  of 
in 
2025,  5.9%  of  new  vehicle  registrations 
Bulgaria were alternative-fuel passenger cars and 
vans,  compared  with  17.4%  in  the  EU  for  the 
whole year 2025. By the end of 2025, there were 
12 publicly accessible charging stations for electric 
trucks.  Bulgaria  does  not  yet  exempt  heavy-duty 
vehicles  from  the  toll  system’s  infrastructure 
charge, a sign that support is lacking.   

transport  projects  under 

The  quality  of  Bulgaria’s  TEN-T  transport 
infrastructure 
uneven,  with 
remains 
bottlenecks  on  key  rail  corridors.  This  is  a 
result  of  ageing  assets,  incomplete  sections  and 
long-standing  investment  gaps.  EU  funds  support 
several infrastructure projects. For instance, it has 
the 
44  strategic 
several 
Facility 
Connecting 
investments 
stock, 
zero-emission 
equipment  for  road  safety  and  the  renovation  of 
railway  infrastructure  under  the  Recovery  and 
Resilience 
in 
Facility.  Nonetheless, 
implementation  and  limited  capacity  to  execute 
large-scale 
hinder 
connectivity,  cross-border  efficiency  and  network 
reliability.  

Europe 
in 

and 
rolling 

continue 

projects 

delays 

to 

issues 

is  underway 

lower  Danube.  Work 

include 
Efforts  to  tackle  these 
prioritising  strategic  cross-border  rail  TEN-T 
sections  and  advancing  an  ongoing  inland 
waterway  project  to  remove  bottlenecks  on 
to 
the 
progressively  modernise  the  railway  line  between 
Sofia and the Bulgarian/Greek border, and between 
Sofia  and  the  Bulgarian/Romanian  border,  but  it 
would  merit  acceleration.  Swift  action  is  also 
merited  on  the  project  to  modernise  the  current 
cross-border  rail  section  on  the  Danube  bridge 
from  Ruse  to  Giurgiu,  including  the  proposal  to 
build  a  second  rail/road  bridge  between  the  two 
cities.  

Sustainable industry 

Circular economy industry 

Bulgaria  has  adopted  a  strategy  and  action 
plan for the transition to a circular economy, 

83 

tackling 

in  response  to  the  2025  country-specific 
recommendation  (CSR)  it  received  on  the 
circular  economy  and  to  improve  water  and 
waste  management  by 
institutional 
weaknesses  and  investing  in  infrastructure  to 
ensure  the  sustainable  use  of  resources.  This 
action  plan 
increase 
includes  measures 
recycling,  reduce  waste  and  promote  sustainable 
patterns of production and consumption. However, 
the plan does not address explicitly the issues  of: 
(i) tackling the country’s below-EU-average circular 
material  use  rate;  and  (ii)  closing  the  significant 
investment  gap  to  meet  the  circular  economy 
objectives. 

to 

As  stated  in  last  year’s  country  report, 
despite  some  progress  made  in  recent  years 
on  municipal  waste  management,  there  are 
some  issues  to  address.    Bulgaria  still  has  a 
high  rate  of  landfilling.    Although  the  landfilling 
rate  has  decreased  significantly  over  the  past  10 
years,  it  still  hovers  around  the  50-60%  mark.  A 
positive  development  is  that  Bulgaria  has  closed 
its  substandard  landfills.  However,  it  has  once 
again  postponed  the  application  of  the  polluter-
pays  principle,  this  time  until  2027.  That  is  18 
years  after 
the  Waste  Framework  Directive 
entered into force, when the polluter-pays principle 
became  binding.  An  infringement  procedure  to 
address the issue is ongoing. 

in  2023 

(218).Challenges 

The  rate  of  adoption  of  secondary  materials  is 
accounting  for  just  5%  in  2024,  a  marginal  rise 
from  4.9% 
include 
suboptimal  waste  management  by  companies 
(only 10.1% of SMEs consider recycling to be part 
of  their  production  process,  while  12.1%  struggle 
with  waste  compliance),  limited  awareness  of 
circular business models, and the need for greater 
institutional  cooperation  at  national  level  (219). 
Bulgaria  has  a  material  mining  and  metallurgy 
industry and its national waste management plan 
for 2021–2028 (NWMP) covers the extraction and 

(218) Circular material use rate – Eurostat 

(https://ec.europa.eu/eurostat/databrowser/view/env_ac_cur/d
efault/table?lang=en&category=env.env_mrp). 

(219) As highlighted by the ETC-CE Report 2024/Bulgaria by the 

European Environment Agency 
(https://www.eionet.europa.eu/etcs/etc-ce/bulgaria_2024-ce-
country-profile_final.pdf). The report notes that a Circular 
Economy Council has been established recently with Decree 
of the Council of Ministers n. 95/4.4.2024, to serve as a 
coordination body regarding the transition to a circular 
economy. 

 
 
recycling of critical raw materials (CRMs). Bulgaria 
also has a circular economy transition strategy for 
2022-2027  and  a  related  strategy  action  plan 
(Decision  No  832  of  the  Council  of  Ministers  of 
26 October 2022).  One  of  the  objectives  of  the 
strategy is for Bulgaria to contribute to the supply 
of  CRMs,  underpinned  by a  national  CRM  strategy 
and a CRM act. 

For  Bulgaria,  improving  resource  productivity  is 
critical.  Bulgaria’s  resource  productivity  is  well 
below the EU average, with only 0.6 generated per 
kg of material consumed in 2023, compared to an 
EU average of EUR 2.8 per kg. 

The  2021–2028  waste  management  plan 
envisages  action  to  implement  the  measures  in 
the  circular  economy  strategy  on  products  that 
contain  critical  raw  materials.  It  also  aims  to 
increase the workforce's qualifications and skills in 
making  effective  use  of  resources  for  the  green 
transition  and  the  circular  economy  and  to  raise 
awareness  of  practices  and  behaviours  linked  to 
sustainable 
circular 
economy. 

consumption 

and 

the 

Over the last 12 years, Bulgaria has reduced 
the  total  volume  of  waste  generated.  This  is 
primarily  the  result  of  reductions  in  the  largest 
waste  categories: mineral waste  from mining  and 
quarrying.  Excluding  these  categories,  the  volume 
of  waste  generated  has  increased,  mainly  due  to 
the  increase  in  recyclable  and  mixed  ordinary 
waste.  Although  overall  waste  generation  has 
decoupled from economic growth, total volumes of 
waste  (excluding  the  main  fractions  of  mineral 
waste)  have  increased  at  a  faster  rate  than 
economic growth. 

low  and  broadly 
Bulgaria  has  recorded 
unchanged rates of waste recycling in recent 
years. In 2023, the municipal waste recycling rate 
was 17%, significantly below the estimated EU-27 
average of 49%. In 2022, the rate of recycling and 
preparation  for  reuse  of  mineral  construction  and 
demolition  waste  (CDW)  in  Bulgaria  was  87.8%, 
above  the  EU  average  of  79.8%.  Measures  to 
recycling  and 
further 
preparation  for  reuse  of  CDW  include  separate 
waste  collection  at  source  –  for  instance,  through 
digitalised 
(‘resource 
assessments’),  extended  producer  responsibility 
and  other  economic  instruments,  and  upstream 
measures such as increasing the recycled content 
in construction products and the circular design of 

pre-demolition 

rate  of 

increase 

audits 

the 

construction  works.  The  rate  of  recycling  plastic 
packaging  in  2022  was  39%,  against  the  EU 
average of 42%. 

Despite  the  high  environmental  taxes  levied 
low. 
in  Bulgaria,  recycling  rates  remain 
Bulgaria  has  also  adopted  recent  tax  policy 
reforms  to  help  align  its  waste  management 
policies  with  EU  directives,  but  the  success  of 
these  reforms  remains  unclear  without  stricter 
enforcement 
recycling 
or 
infrastructure (220). 

investment 

in 

in  Bulgaria 

Total  environmental  taxes  amounted  to 
EUR 4.1  billion 
in  2022, 
representing  4.8%  of  GDP  (EU  average:  2.0%). 
Energy  taxes  made  up  the  largest  component  of 
environmental taxes, accounting for 4.5% of GDP, 
significantly  above  the  EU  average  of  1.6%. 
Transport taxes, at 0.25% of GDP, were lower than 
the EU average (0.4%), as were taxes on pollution 
and resources, at 0.03% (EU average: 0.08 %) (221). 

the 

has 

amended 

Bulgaria 
Public 
Procurement  Law  (PPL)  to  include  minimum 
environmental  requirements  in  the  tender 
documentation  for  all  public  contracting 
authorities  under  the  PPL.  According  to  the 
amendments,  when  public  contracts  of  a  value 
referred  to  in  the  PPL  (Article  20(1)  and  (2))  are 
the  procurement  documents  must 
awarded, 
the 
contain  environmental 
products  supplied  or  used  for  the  services 
provided.  The  products,  the  mandatory  minimum 
requirements  for  environmental  protection  and 
instructions  for  proving  compliance  with  the 
requirements are set out in an ordinance issued by 
the  Minister  of  Environment  and  Water  together 
with  the  Minister  of  Finance  and  the  Minister  of 
Economy and Industry. 

requirements 

for 

The overall environmental investment gap is 
around  2.9%  of  GDP  (well  above  the  EU 
average  of  0.8%  of  GDP).  Almost  60%  or 
EUR 147 million of the identified investment needs 

(220) 2026  European  Commission:  Directorate-General 

for 
Environment,  Greening  the  European  Semester  –  Resource 
and  pollution 
factsheets. 
https://op.europa.eu/en/publication-detail/-
/publication/362c4061-fcc2-11f0-8da5-
01aa75ed71a1/language-en. 

taxes.  Annex  6,  Country 

(221) Greening the European Semester - Publications Office of the 

EU. 

84 

 
 
is  the 

are  unmet  (this 
investment  gap).  As 
mentioned above, the strategy and action plan for 
the  transition  to  a  circular  economy  appear 
insufficient  to:  (i)  tackle  the  country’s  below-EU-
average  circular  material  use  rate;  and  (ii)  close 
the  significant  investment  gap  to  meet  circular 
economy objectives.  

The  circular  material  use  rate 
(CMUR) 
measures one aspect of circularity: the share 
of recycled waste out of the total amount of 
material used in the economy. Bulgaria’s CMUR 
reached 5% in 2024, still below the EU average of 
12.2%.  In  October  2022,  Bulgaria  adopted  its 
strategy  and  action  plan  for  the  transition  to  a 
circular  economy  for  2022-2027.  The  strategy  is 
built  around  three  key  goals:  (i)  creating  a  green, 
competitive  economy;  (ii)  reducing  waste  and 
maximising  resource  use;  and  (iii)  fostering  an 
economy 
The 
benefits 
accompanying  action  plan  outlines  specific 
measures to achieve the objectives. Central to the 
strategy is the goal to improve resource efficiency 
by  prioritising  waste  management  practices, 
including  preventing  waste  generation,  promoting 
reuse  and  recycling,  reducing 
landfilling  and 
minimising  the  harmful  effects  on  both  the 
environment  and  human  health.  The  national 
development  programme  shifted  the  focus  from 
landfilling  to  waste  prevention,  reuse,  recycling 
and recovery.  

consumers. 

that 

Bioeconomy industry 

In  Bulgaria, the growth  of  bioeconomy  value 
added  lagged  behind  GDP  growth  in  recent 
years,  though  it  is  still  positive  (222).  It  is 
mostly driven by the food and beverage sector, yet 
approximately one third of potential and produced 
residues  and  by-products  is  currently  lost  or  of 
unclear  use,  pointing  to  significant  untapped 
potential 
the 
bioeconomy sub-sectors, bio-based chemicals and 
plastics  is  the  sector  that  registered  the  highest 

to  create  value 

(223).  Among 

growth in value added (8.4% on average between 
2018 and 2023) (224)(225). 

The  bioeconomy  faces  productivity  challenges: 
labour productivity in the bioeconomy – measured 
as  value  added  per  person  employed  –  stood  at 
33.8%  of  the  national  average  and  it  has  been 
decreasing  from  37.1%  in  2018,  albeit  with 
exceptions:  bio-based  chemicals  and  plastics 
stands  notably  above  the  national  average  at 
166% (226). 

Zero-pollution industry 

Despite  progress  in  implementing  measures 
to tackle air pollution, this is still a cause for 
concern  in  some  parts  of  Bulgaria.  The 
estimated  years  of  life  lost  (YLL)  specifically  due 
to PM2.5 pollution in Bulgaria (at 86 064 total YLL 
or  about  1331  per  100 000  in  2022)  highlights 
the high relative impacts of PM2.5 compared with 
other EU countries. Bulgaria has one of the highest 
relative  mortality  rates  in  the  EU  from  PM2.5 
exposure,  with  about  158  premature  deaths  per 
100 000 population – the highest in the EU.  This 
is  however,  a  significant  reduction  compared  with 
earlier  years.  Persistent  breaches  of  air  quality 
requirements,  which  have  severe  negative  effects 
on health and the environment, are being followed 
up  by 
through 
the  European  Commission 
infringement  procedures  covering  all  Member 
States concerned, including Bulgaria. 

to 

the 

Emissions  of  several  air  pollutants  have 
decreased in  Bulgaria  since  2005,  while  GDP 
inventories 
has  grown.  According 
submitted  under  Article  10(2)  of  the  National 
Emission Reduction Commitments Directive (NECD) 
in  2024,  Bulgaria  has  met  its  emission  reduction 
commitments for 2020-2029 for the air pollutants 
nitrogen  oxides 
(NOx),  non-methane  volatile 
organic  compounds (NMVOC),  sulfur  dioxide  (SO2), 
PM2.5  and  ammonia  (NH3).  According  to  the 
projections  submitted  under  Article  10(2)  of  the 
NECD  in  2023,  Bulgaria  is  expected  to  meet  its 
for  2030 
reduction  commitments 
emission 

(222) Joint Research Centre, Developments of Economic Growth 

and Employment in Bioeconomy Sectors across the EU, Link. 

(223) EXECUTIVE SUMMARY OF THE STRATEGIC CONCEPT PAPER 

(224) Bioeconomy  subsectors:  food  and  beverages;  bio-based 
textiles;  wood  products  and  furniture;  bio-based  chemicals 
and plastics. 

(225) Joint Research Centre, Developments of Economic Growth 
and Employment in Bioeconomy Sectors across the EU, 
https://datam.jrc.ec.europa.eu/datam/mashup/BIOECONOMIC
S/. 

FOR BIOECONOMY: BULGARIA 

(226) Ibid. 

85 

 
 
 
onwards for NOx, SO2, NH3 and PM2.5, but not for 
NMVOC. The latest available annual estimates (for 
2022)  for  Bulgaria  attribute  9 000  deaths  each 
year  (or  86 000  YLL)  to  fine  particulate  matter 
(PM2.5),  1 500  deaths  each  year  (or  14 100  YLL) 
to  nitrogen  dioxide  (NO2)  and  930  deaths  each 
year (or 9 000 YLL) to ozone (see Annex 15).  

Water  pollution  from  industry  is  another 
challenge. Bulgaria has the 15th highest level of 
emissions  of  heavy  metals  to  water  and  the 
second  highest  emission  intensity  (above  the  EU 
average of 0.864 kg/EUR 1 billion GVA). The main 
industrial  sources  of  emissions  to  water 
in 
Bulgaria  are  the  agricultural  sector  for  total 
phosphorus  and  total  nitrogen,  the  electricity  and 
heat  production  sector  for  heavy  metals  and  the 
pulp,  paper  and  wood  sector  for  total  organic 
carbon. Water pollution by industry imposes direct 
and  indirect  costs  of  EUR  4  million  annually  (227), 
not yet sufficiently borne by the polluters. 

(227) European Commission: Directorate-General for Environment, 
IEEP, Green taxation and other economic instruments – 
Internalising environmental costs to make the polluter pay, 
2021, https://environment.ec.europa.eu/publications/green-
taxation-and-other-economic-instruments-internalising-
environmental-costs-make-polluter-pay_en. 

86 

 
 
Table A8.1:  Key clean industry and climate mitigation indicators: Bulgaria 

Sources and notes: Industry decarbonisation: All data are from Eurostat; data following the UNFCCC Common Reporting 
Format (CRF) are from the European Environment Agency (EEA), republished by Eurostat. (1) Sectors covered: all divisions of 
section C - Manufacturing - of the NACE Rev. 2 statistical classification of economic activities, except C19 (manufacture of coke 
and refined petroleum products). (2) GHG emissions as per UNFCCC Common Reporting Framework (CRF) categories 1.A.2 - fuel 
combustion in manufacturing in industries and construction (that broadly correspond to the broadly correspond to the NACE 
sections C - Manufacturing and E - Construction, excluding C-19), and CRF2 - industrial processes and product use. The figures 
shows the emissions in the 1.A.2 category as a share of the sum of CRF1.A.2. and CRF2 emissions. (3) Sectors covered: CRF 1.A.2 
as described above. Gross value added (GVA) data in the denominator aligned in sectoral coverage, in 2020 prices. (4) Sectors 
covered: NACE section C excluding C19. (5) Nominator: NACE divisions C17, 20, 23, 24; denominator: NACE section C excluding 
C19 (see above). (6) GVA (denominator) in 2020 prices. Reduction of effort sharing emissions: Data source: European 
Environment Agency, greenhouse gas data viewer; European Commission, Climate Action Progress Report, 2025. For details, see 
the footnote in the "Reduction of effort sharing emissions" section. Sustainable road transport: (7) Source: Eurostat; (8) Source: 
European Alternative Fuels Observatory; (9) Source: Eurostat. For all climate mitigation indicators, the trend arrows compare the 
latest available data (year t) with the data four years earlier (t-4). Sustainable industry: Bioeconomy value added, employment 
and productivity: JRC, Developments of Economic Growth and Employment in Bioeconomy Sectors across the EU. Bioeconomy 
R&D business expenditure: JRC, Business expenditure in Research and Development (R&D) in the EU bioeconomy. Damage cost for 
industrial pollution: EEA, The costs to health and the environment from industrial air pollution in Europe, 2024. Water industrial 
pollutants releases: EEA, Industrial releases of pollutants to water and economic activity in the EU-27, 2024. Water chemical 
status: WISE, Surface water bodies: Chemical status, 2024 and WISE Groundwater bodies: chemical status, 2024. Other indicators: 
Eurostat. For circular economy indicators, the trend arrows compare the latest available data (year t) with the data two years 
earlier (t-2). 

87 

Climate mitigationTrendIndustry decarbonisation201820192020202120222023202420182023GHG emissions intensity of manufacturing production, g/€ (1)10109149331052780661716330-Share of energy-related emissions in industrial GHG emissions (2)46.647.448.450.348.949.8-55.557.9Energy-related GHG emissions intensity of manufacturing and construction, g/€ (3)513.1481.2499.9593.4439.7365.2-203.9163.0Share of electricity and renewables in final energy consumption in manufacturing, % (4)38.039.139.136.538.940.440.542.843.9Energy intensity of manufacturing, GWh/€ (4)3.393.183.523.692.812.452.591.271.05Share of energy-intensive industries in manufacturing production, % in GVA (5)20.0620.3820.2119.7623.3217.7117.96--GHG emissions intensity of production in sector [...], g/€ (6)- paper and paper products (NACE C17) 1 164       1 004       1 073              1 091         1 303               1 173        1 226          722             619            - chemicals and chemical products (NACE C20) 7 497       5 384       5 185              17 800       5 789               5 090        5 545          --- other non-metallic mineral products (NACE C23) 4 258       3 837       5 818              5 617         6 637               4 705        4 974          2 495          2 352         - basic metals (NACE C24) 998          1 229       1 165              1 060         852                  1 017        1 048          2 842          3 099         Reduction of effort sharing emissions201820192020202120222023202420182023GHG emission reductions relative to base year, % 13.310.67.312.1- domestic road transport23.525.518.127.127.330.034.0-1.4-5.6- buildings-25.6-28.6-28.7-17.4-35.4-44.6-44.6-20.3-33.520052021202220232024TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %22.325.324.724.025.0-10.0%-35.6%-35.6%Sustainable road transport2018201920202021202220232024202520182021New zero-emission vehicles, electricity motor, % (7)0.510.571.362.253.574.683.891.038.96Number of publicly accessible AC/DC charging points (8)--1616161036162430204030446956n/aShare of electrified railways, % of total (9)71.2271.1971.2674.4574.5874.4874.5655.4756.49Sustainable industryTrendEU-27Circular economy transition20182019202020212022202320242018latest dataMaterial footprint, tonnes per person17.419.321.321.720.719.420.714.813.7Circular material use rate, %2.4            4.0           5.8                  4.3             3.0                    4.9             5.011.612.2Resource productivity, €/kg0.4            0.4           0.4                  0.5             0.5                    0.6             0.72.13.0Employees in circular economy2.9            3.13.0                  3.0             2.7                    2.7             -2.12.0Patents in circular economy0.5-           -                  -            12.312.0Recycling rate           31.5           34.6                  35.2             28.2                   24.6            16.7 :46.4048.1Plastic recyling 59%51%-47%39%:-41%42%Construction and demolition waste (CDW) recovery 24-968889Bioeconomy industry 2018201920202021202220232024CAGR 2018-202320182023Value added, million EUR4 1304 3104 5865 4886 1385 454-4.7%642 438863 436Employment, total number of people employed806 924739 064738 020698 492685 187677 182--2.9%17 649 04017 085 642ProductivityValued added per worker, thousand EUR5.15.86.27.99.08.1-7.9%36.450.5Valued added per worker, % of national average37.138.239.442.940.333.8--1.5%62.270.7R&D business expenditureTotal bioeconomy (biomass producing and converting sectors)1719171923246.0%15 67223 335Total R&D business expenditure305344353362439483-8.0%196 587259 525Zero pollution industry201820192020202120222023202420182021Damage cost for industrial pollution11.69.18.111.5---414.9352.7Water industrial pollutants releases 2021change (2010)2021change (2010)2021change (2010)2021change (2010)7 736       -68%2 145 209       -62%1 998 000        -75%193 517      -83% Water chemical statusGood634                 Good (%)0.7                    Poor185.0Poor (%)19%EUTOCPhosporusBulgariaBulgariaCd, Hg, Ni, Pbnitrogen 
 
  
 
ANNEX 9: AFFORDABLE ENERGY TRANSITION 

This  annex  outlines  the  progress  made  and 
the  ongoing  challenges  faced  in  increasing 
energy  affordability,  while  advancing  the 
transition 
the 
implementation  of  past  energy-related  country-
specific recommendations. 

to  net  zero. 

reflects 

It 

2025 

Bulgaria’s 
country-specific 
recommendations called for reduced reliance 
on  fossil  fuels, 
including  by  promoting 
market  liberalisation  and  accelerating  the 
roll-out  of  renewables, 
in  particular  by 
designating  fast-track  permitting  areas  for 
wind installations. Bulgaria was asked to phase-
out  fossil fuel  subsidies, increase the flexibility of 
its  electricity  system  to  reduce  wholesale  price 
its  electricity  grid 
volatility  and  upgrade 
infrastructure.  Bulgaria  was  also  asked  to  take 
steps  to  address  energy  poverty  and  improve 
energy efficiency in industry. 

Energy prices and costs 

In  2025,  household  energy  bills  in  Bulgaria 
were  again  significantly  below  the  EU 
average  as  a  result  of  regulated  tariffs. 
Similarly,  industrial  consumers  in  Bulgaria 
benefitted  from  energy  prices  below  the  EU 
average,  although  prices,  in  particular  for 
electricity,  have  been  rising  since  2024. 
During  the  first  half  of  2025,  household  gas  and 
electricity prices  in  Bulgaria  were  the  third  lowest 
in  the  EU  and  significantly  below  the  EU  average, 
at  EUR 0.0765/kWh  for  gas  and  EUR 0.1300/kWh 
for  electricity.  Retail  energy  prices  for  industrial 
consumers  (EUR  121/MWh)  increased  during  the 
first  half  of  2025,  while  remaining  considerably 
below.  While  73%  of  the  electricity  price  for 
industry  is  accounted  for  by  wholesale  cost, 
network  costs,  carbon  costs,  and  taxes  represent 
respectively 17%, 24% and 14% of electricity bills. 
For  large  businesses,  electricity  was  2.7  times 
more  expensive  than  gas  during  the  first  half  of 
levies  are 
2025. 
excluded,  the  electricity-to-gas  price  ratio  would 
have increased as a result of fiscal measures. The 
effect is marginal for household prices, where the 
ratio remains at 1.7 (228). 

Importantly, 

taxes  and 

if 

Graph A9.1: Electricity and gas prices for 
household and non-household consumers, first 
half of 2025 

(i) For household consumers, the consumption band is DC for 
electricity and D2 for gas. 
(ii) For non-household consumers, the consumption band is ID 
for electricity and I4 for gas. VAT and recoverable charges are 
not displayed for non-household consumers as these are 
typically recovered by businesses. This also applies to the ‘% 
of taxes and levies’, which is shown excluding VAT and 
recoverable charges for non-household consumers. 
(iii) ‘Without taxes and levies’ indicates the retail price 
excluding all taxes and levies. It always includes the 
energy/supply and network cost components, which are not 
disaggregated in Eurostat’s six-monthly price dataset. 
Source: Eurostat 

Due  to  Bulgaria’s  continued  dependence  on 
coal  for  electricity  generation  and  limited 
non-fossil  flexibility,  wholesale  electricity 
prices  averaged  EUR 110/MWh  in  2025  (vs 
EU  average  of  EUR 85/MWh)(229),  the  fifth 
highest  in  the  EU.  Fossil  fuels  accounted  for 
28.2% of Bulgaria’s electricity generation in 2025. 
Imported  electricity  from  neighbouring  countries 
was also largely produced from fossil fuels. Fossil 
fuels  maintained  their  structural  role  as  the 
dominant  marginal  price-setting 
technology, 
keeping costs elevated (67% of price setting hours 
for  28.2%  electricity  generation).  Average  day-
ahead  electricity  prices  increased  by  5%  in  2025. 
Although daytime prices continued to benefit from 
growing  solar  output,  Bulgaria  remained  highly 
vulnerable  to  severe  price  spikes  during  peak-
demand hours. Falling solar output in the evening 
and  early  morning,  combined  with  limited  non-
to 
fossil 
significantly  ramp  up  generation  electricity  from 
neighbouring  countries  to  cover  the  supply–
demand gap. As a result, price spreads in Bulgaria 
averaged EUR 157/MWh in 2025, down 15% from 

thermal  plants 

flexibility 

required 

(228) Analysis based on S1 2025 Eurostat data. 

(229) Ember. 

88 

 
 
 
 
 
 
 
 
2024  while  remaining  significantly  above  the  EU 
average  of  EUR 121  /MWh  (230)(231).  The  National 
Electricity  Company’s  long-term  Power  Purchase 
Agreement  with  AES  Maritza  East  1  expired  on  8 
May 2026. 

Graph A9.2: Low-carbon electricity generation vs. 
electricity wholesale prices, 2025 

Unavailable data for Cyprus and Malta. Wholesale price is 
given as average of day-ahead electricity prices over 2025. 
EU-27 average is calculated as consumption-weighted. EU 
low-carbon share is calculated out of total EU electricity 
generation. Low-carbon share by country is calculated out of 
total public electricity generation. Low-carbon includes 
renewables and nuclear. 
Source: Eurostat 

Flexibility and electricity grids 

Bulgaria  is  taking  steps  to  liberalise  its 
electricity  market.  Amendments  to  Bulgaria’s 
Energy  Act  in  order  to  liberalise  the  wholesale 
electricity market entered into force in July 2025. 
As  a  result  of  those  amendments,  the  National 
Electricity Company (NEK)  transitioned  away  from 
its role as a public supplier and a separate market 
was  established  (233)  to  supply  the  household 
in  this  market  segment  are 
sector.  Buyers 
essentially limited to distribution system operators 
(DSOs)  which satisfy the criteria for  end-suppliers 
(234),  namely  which  supply  more  than  10 000 
households.  Electricity  traded  on  this  market 
segment  is  reportedly  supplied  only  by  the  NEK 
which  acts  as  the  coordinator  of  a  special 
balancing  group 
composed  of  state-owned 
nuclear,  hydro  and  coal-based  generation  assets. 
More  than  25%  of  total  electricity  traded  on  the 
Bulgarian  electricity  exchange  was  traded  in  this 
segment 
to 
31 December  2025  after  a  tender  was  launched 
by  end-suppliers.  Households 
in  Bulgaria  are 
supplied at a single regulated electricity price. The 
difference  between  the  price  at  which  end-
suppliers procure electricity and the price at which 
they  supply  households 
the 
Electricity  System  Security  Fund.  This  Fund  is 
financed by collecting revenue from inframarginal 
electricity  producers  above  a  technology-specific 
threshold. The Fund is also used to operate a State 
aid  scheme  which  compensated  industry  for  high 
electricity costs. 

the  period  1 July  2025 

is  covered  by 

in 

limited 

cross-border 

The price gap observed in 2025 between the 
South-East  Europe  (232)  and  CORE  capacity 
(CCRs)  continues  to 
calculation  regions 
capacity. 
highlight 
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  zones,  including  in  the  Western  Balkan 
countries.  The  Bulgaria-Greece  and  Bulgaria-
Romania  borders  are  market-coupled  and 
experienced  consistently  high  trading  levels  in 
2025  despite  instances  of  short-term  curtailment 
of  capacity.  Bulgaria  is  a  net  electricity  exporter 
(3% of own consumption). 

(230) Analysis based on S1 2025 Eurostat data. 

(231) Spread refers to the difference between the highest and 
lowest hourly day-ahead electricity prices in a single day. 

(232) 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. 

is 

its 

liberalising 

Bulgaria 
electricity 
balancing  market,  although  stakeholders 
share concerns about transparency and real-
time  data  sharing.  Bulgaria’s 
transmission 
system operator (TSO) has joined the PICASSO and 
MARI  balancing  platforms.  Electricity  traders  and 
market  associations  have  raised  concerns  over  a 
lack  of  transparency  in  the  way  the  TSO  spends 
imbalance  settlement  revenue.  They  have  also 
commented  on 
limited  predictability  of 
balancing prices, which are reportedly much higher 
than 
Additionally, 
stakeholders  have  highlighted  a  need  for  data 
which  is  closer  to  real  time.  Information  about 
imbalances  is  shared  with  a  significant  delay, 
which prevents financial portfolios from operating 
properly.  Under  Bulgaria’s REPowerEU  chapter  the 

forecasts. 

TSO’s 

the 

the 

(233) Energy Act of the Republic of Bulgaria, Article 100. 

(234) Energy Act of the Republic of Bulgaria, Article 100. 

89 

 
 
 
 
Energy  and  Water  Regulatory  Commission 
is 
expected  to  report  on  how  demand-response 
measures  have  been  enabled,  including  on  the 
balancing market.  

Additional  non-fossil  flexibility  could  help 
tackle high electricity prices. Under its recovery 
and 
to 
resilience  plan,  Bulgaria  committed 
deploying 350 MW of co-located electricity storage 
coupled  with  1 425  MW 
renewable  energy 
production  (C13.I4)  and  close  to  4 900  MWh  of 
grid-scale  battery  storage  systems  (C4.I8  and 
C13.I2).    Bulgaria  reportedly  operates  1 181 MW 
of  battery  energy  storage  systems  as  well  as 
1 070 MW  of  hydro-pump  storage  in  generation 
mode  and  937 MW  in  pumping  mode.  However, 
with  three  units  out  of  operation  at  the  Chaira 
hydro-pump 
capacity 
currently  stands  at  410 MW  in  generation  mode 
and  346 MW 
is 
exploring  solutions  to  repair  the  three  turbines 
which  are  out  of  action  in  the  course  of  2026  in 
order  to  take  the  power  plant  back  up  to  its  full 
800 MW capacity. 

in  pumping  mode.  Bulgaria 

storage  power  plant, 

energy 

rising  energy  demand, 

The  expansion  of  Bulgaria’s  cross-border 
interconnection 
along  with 
capacity, 
reinforcement  of  the  national  grid  and 
improvements  to  grid  connection  procedures 
and  transparency,  will  enable  Bulgaria  to 
meet 
integrate 
production  more 
renewable 
effectively  and  enhance  grid  flexibility.  The 
Nea  Santa  interconnector  between  Greece  and 
Bulgaria, which was a Project of Common Interest 
(PCI),  became  operational  in  June  2023.  With 
Bulgaria’s interconnection level now at 19%, it has 
achieved the 2030 interconnection target of 15%. 
Under  its  recovery  and  resilience  plan  (RRP), 
Bulgaria added a total  of 1 200 MW of additional 
net  interconnection  capacity  with  Romania  and 
Greece in 2025. Moreover, it will enable 4 500 MW 
of  cumulative  new  production  capacity  from 
renewable  sources  to  be  integrated  into  the 
electricity transmission system by 31 March 2026 
(C4.I4).  Bulgaria  is  also  focused  on  implementing 
the  Carmen  Smart  Grid  Project  of  Common 
Interest  with  Romania,  which  will  reinforce  cross-
border  TSO-TSO  cooperation 
in  data-sharing, 
enhance  TSO-DSO  cooperation,  increase  capacity 
integrating  renewables,  and  improve  grid 
for 
stability,  security  and  flexibility.  Concerning  grid 
connections  and  transparency,  under 
its  RRP 
Bulgaria  is  expected  to  draw  up  a  map  providing 

information  on  available  grid  hosting  capacity 
(C13.R2). 

Bulgaria  has  made  efforts  to  facilitate 
permitting  for  infrastructure  projects  but 
could  take  further  steps  to  streamline 
procedures and improve the capacity of local 
administrations.  Bulgaria  has  been  applying  its 
existing legal framework for permitting renewable 
energy 
including 
installations  to  all  projects, 
Projects  of  Common  Interest.  There  is  no  specific 
legislation on new types of energy projects such as 
smart  grids,  electrolysers,  hydrogen  and  carbon 
dioxide.  Bulgaria  would  benefit 
fully 
digitalising  its  permitting  procedures,  accelerating 
decision-making  and  consent  processes,  and 
enabling  more  effective  public  participation. 
Bulgaria  should  continue  maturing  its  hydrogen 
infrastructure 
the 
interconnection with Greece (a Project of Common 
Interest  and  a  priority  investment  under  the 
Central  and  South-Eastern  Europe  Energy 
Connectivity - High-Level Group). 

planning, 

including 

from 

In  2025,  electricity  accounted  for  27.5%  of 
Bulgaria’s  final  energy  consumption  (FEC) 
(above  the  EU  average  of  23.4%),  a  share 
which  has  increased  slightly  over  the  last 
decade (235).  Electricity  accounted  for  56.6%  and 
30.0%  of  household  and 
FEC 
respectively (see Annex 8). In the transport sector, 
the  share  of  FEC  accounted  for  by  electricity 
remained negligible at 1.1%. Further electrification 
across  sectors  would  help  to  cost-effectively 
decarbonise  the  economy  and  improve  access  to 
affordable renewable generation. 

industrial 

Renewables and long-term contracts 

In 2025, renewables accounted for 32.2% of 
Bulgaria’s  electricity  mix,  up  1.6%  on  the 
previous  year  and  exceeding  coal  for  the 
first time (236), while hydro represented 7.9%, 
biomass  4%  and  solar  17.4%  of  the 
electricity mix. Installed capacity for renewables 
represented  9261  MW  in  2025.  The  installed 

(235)The CAGR (compound annual growth rate) was 0.63% 
between 2015 and 2024. The minimum/maximum shares were 
25.9% and 27.5% respectively. Source: Eurostat. 

(236) Еnergy-charts based on ENTSO-E Transparency Platform. 

90 

 
 
capacity for wind energy stalled to 0.7 GW in 2025 
(compared  to  the  same  0.7  GW  in  2024)  whilst 
installed  capacity  for  solar  increased  (+29.6% 
compared  to  2024),  reaching  5.9  GW  (237).  In  its 
national energy and climate plan, Bulgaria set the 
target  to  increase  the  share  of  renewable  energy 
in  its  energy  mix  to  34.96%  by  2030,  above  the 
33%  target  laid  down  in  the  Renewable  Energy 
Directive. The inframarginal  revenue cap  currently 
in force and Bulgaria’s State aid scheme to offset 
high  industrial  electricity  costs  are  reportedly 
deterring  long-term  power  purchase  agreements 
in  energy  production  while 
and 
undermining 
increase  energy 
efficiency,  decarbonisation  and  flexibility  in  the 
private  sector.  On  16  April  2026  the  European 
Commission  approved  Bulgaria‘s  planned  reform 
of 
introducing  more 
decarbonisation incentives.  

the  State  aid  scheme 

investments 

incentives 

to 

In 2025, Bulgaria registered 148 hours of negative 
prices, a 169% increase year-on-year(238). 

Graph A9.3: Bulgaria’s installed renewable 
capacity vs electricity generation mix 

Electricity mix is given as net electricity generation (gross 
electricity production minus consumption of power stations’ 
auxiliary services). Electricity produced in pumped hydro 
plants is excluded from total net electricity production, as it 
was previously counted as electricity produced from another 
source. 
“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Eurostat 

In  2025,  Bulgaria  adopted  legislation  to 
and 
streamline 
procedures 
facilitate 
energy 
of 
is  scope  for 
communities.  However, 
improvements  in  areas  such  as  administrative 

permitting 
the 

creation 

there 

capacity and digitalisation. In Bulgarian legislation 
there  is  no  presumption  of  overriding  public 
interest.  Moreover,  Bulgaria  has  not  set  out 
measures  to  increase  the  visibility  of  renewable 
projects,  while  limited  use  is  made  of  power 
renewable  energy. 
purchase  agreements 
Bulgaria  has  committed to  adopting  a  plan  which 
designates  priority  zones  for  onshore  wind 
installations  and  identifies  at  least  2 GW  of 
aggregated deployment potential for onshore wind 
energy production (C4.R6) 

for 

Bulgaria could better empower consumers by 
removing  barriers  to  demand  response, 
energy  communities,  dynamic  pricing  and 
smart  grids.  In  Bulgaria,  smart  meter  roll-out 
rate  is  still  below  5%  (239).  Together  with  fully 
regulated household retail tariffs, this is hindering 
the  introduction  of  dynamic  pricing.  A  national 
framework for renewable energy communities and 
citizen energy communities has been in place since 
2023. However, Bulgaria only has a few registered 
energy  communities,  underlining  the  scope  for 
further policy action to remove barriers and make 
these regulatory opportunities more attractive. 

Energy efficiency 

In  Bulgaria,  energy  efficiency  has  improved 
in  sectors  such  as  the  residential  sector, 
while  in  the  transport  sector  final  energy 
consumption  has  increased.  In  2024,  final 
energy  consumption  (FEC)  increased  by  2.3%  to 
9.89  Mtoe,  as  compared  to  2023,  continuing  the 
gradual  upward  trend  observed  since  2019,  when 
FEC  was  9.85  Mtoe.  Bulgaria’s  FEC  in  2024  was 
therefore  not  fully  aligned  with  the  trajectory  for 
meeting 
its  expected  contribution  by  2030. 
Between  2019  and  2024,  FEC  decreased  in 
industry 
the 
residential  sector  (-9.3%).  However,  the  transport 
sector saw a notable increase in FEC by 9.1%. This 
increase  was  mainly  due  to  a  rise  in  passenger 
and  freight  transport,  mostly  by  road,  and  a 
decrease  in  rail  transport.  The  downward  trend  in 
industrial  FEC  was  largely  thanks  to  measures 
targeting  sustainable  transformation,  such  as 
grant schemes to help SMEs improve their energy 

(-3.1%),  services 

(-2.6%),  and 

(237) International Renewable Energy Agency (IRENA) - Renewable 

Capacity Statistics 2026 

(238) Ember, 2026. 

(239) European Commission, Report on market-based electricity 

supply prices, 2026. 

91 

 
 
 
 
and resource efficiency. The reduction in FEC in the 
residential  sector  was  mostly  driven  by  energy 
savings,  including  through  structural  measures 
such as building renovations. 

In  its  latest  long-term  renovation  strategy, 
Bulgaria  committed  to  reducing  the  energy 
consumption of its building stock by 251 ktoe 
by 2030. Between 2021 and 2030, Bulgaria plans 
to  renovate  approximately  8%  of  the  total  floor 
space of its building stock. Bulgaria has submitted 
its  draft  national  building  renovation  plan.  This 
represents  an  important  step  in  establishing  a 
predictable  pathway  towards  an  energy  efficient 
and  decarbonised  building  stock.  Given  that 
buildings are responsible for 31.3% of energy use 
in 
in  Bulgaria,  they  play  an 
improving energy efficiency. Thus, the final version 
of  the  plan  is  expected  to  include  sources  of 
financing,  investment  volumes  and  timelines  for 
achieving energy efficiency improvements.  

important  role 

final 

residential 

Heating  and  cooling  account  for  66%(240)  of 
Bulgaria’s 
energy 
consumption,  with  renewables  supplying 
34%(241) of total energy used for heating and 
cooling  across  all  sectors.  Approximately 
210 000  households  heat  their  homes  with  gas, 
while  1.6 million  households use biomass as their 
primary  heating  source.  According  to  the  latest 
figures,  around  355 000  heat  pumps  have  been 
installed (including aerothermal units) (242). 

Bulgaria  has  made  progress  in  improving  its 
energy efficiency thanks to investments and 
reforms  under  its  recovery  and  resilience 
plan.  In  2025,  Bulgaria  established  a  National 
Decarbonisation  Fund.  It  has  also  approved  a 
guarantee-based  instrument  for  energy  efficiency 
and  renewable  energy,  supported  by  EUR 75 
million  in  RRF  funding  via  InvestEU,  intended  to 
support  over  450 beneficiaries.  Bulgaria  expects 
that  1 500  solar  domestic  hot  water  or 
photovoltaic  systems  (up  to  10  kWp)  will  be 

(240) Eurostat, 2021. 

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

(241) Eurostat, 2022. 

https://ec.europa.eu/eurostat/databrowser/product/view/SDG_
07_40?lang=en&category=sdg.sdg_07  

installed  and  that  energy-efficiency  renovations 
will  be  carried  out  on  at  least  2.15 million  m²  of 
residential  buildings.  Bulgaria  also  plans 
to 
upgrade  at 
least  354  non-residential  public 
buildings  and  170  non-residential  buildings  in 
manufacturing, trade and services, and to transfer 
EUR 246.5 million  to  the  Bulgarian  Development 
Bank for residential energy-efficiency renovations. 
Furthermore, 
of 
120 000 MWh are expected from modernising the 
street lighting system. 

savings 

energy 

annual 

Security of supply and diversification 

in  deploying 
Despite  making  progress 
renewables,  Bulgaria’s  overall  energy  mix  in 
2024  was  still  heavily  based  on  fossil  fuels. 
inland 
Oil  accounted 
consumption,  coal  for  17.8%  and  natural  gas  for 
13.5%,  while 
(including  biofuels) 
contributed 15.1%. Nuclear accounted for 2%(243) 

for  29.3%  of  gross 

renewables 

in 

investing 

Bulgaria  has  taken  steps  to  strengthen 
supply  security  and  diversify  its  natural  gas 
sources  by 
infrastructure. 
Following  the  expiry  of  the  Ukraine-Russia  gas 
transit agreement, Bulgaria became the only entry 
point for Russian pipeline gas into the EU. After the 
completion  of  the  Greece-Bulgaria  Interconnector 
(ICGB),  Bulgaria  cemented  its  role  as  a  key 
stakeholder in the LNG terminal in Alexandroupolis 
in  2024.  Bulgaria  is  expected  to  accelerate  the 
delayed Project of Common Interest to expand the 
capacity  of  the  Chiren  underground  gas  storage 
facility  to  1 bcm  in  view  of  its  relevance  for 
regional  supply  security.  Bulgaria  is  also  actively 
supporting  efforts  to  upgrade  the  ICGB (phase  II), 
a priority project under REPowerEU and the CESEC 
High-Level Group which will allow increased flows 
from  the  Trans-Adriatic  Pipeline  and  from  LNG 
terminals in Greece. The Bulgarian authorities and 
the gas transmission system operator are working 
to  maximise  the  use  of  existing  infrastructure  in 
south-east  Europe.  Bulgarian  stakeholders  are 
committed  to  delivering  on  the  commitments  of 
the  CESEC  High-Level  Group,  in  particular  to 
harmonising different gas quality standards which 
are  currently  preventing  the  full  potential  of  the 

(242) EurObserv’ER, 2021. https://www.eurobserv-er.org/heat-
pumps-barometer-2021/ and population figure from 
Eurostat, 2023 

(243) Gross inland consumption (Eurostat). Electricity and heat are 
excluded to avoid double-counting. The focus is on primary 
energy sources. 

92 

 
 
 
Trans-Balkan  pipeline  from  being  exploited.  With 
the  Bulgarian  government, 
the  consent  of 
companies  are  exploring  for  gas  reserves  in  the 
country’s Black Sea territory. 

Bulgaria’s  Kozloduy  nuclear  power  plant 
operates  two  VVER-1000  reactors  which 
generate  close  to  one  third  of  the  country’s 
electricity. In order to phase out Russian nuclear 
fuel,  the  plant  has  signed  agreements  with 
Westinghouse  and  Framatome  to  diversify  fuel 
supplies.  During  the  annual  planned  outage  in 
2025,  a  second  batch  of  42  additional 
Westinghouse-designed 
fuel  assemblies  were 
loaded into unit 5. All Russian-made fuel (TVEL) in 
unit  5  is  due  to  be  replaced  by  2027.  The  first 
delivery of Framatome fuel assemblies is expected 
in 2026. The government has announced plans for 
two  new  reactors  (AP1000)  at  Kozloduy  nuclear 
power  plant.  The  first  reactor  is  not  due  to  be 
is 
commissioned  until  after  2030.  Bulgaria 
evaluating  SMRs  to  support  its  coal-to-nuclear 
transition and expand its nuclear program. Success 
depends  on  direct  developer  collaboration  and 
streamlining  administrative  processes  for  site 
conversion  and 
infrastructure  upgrades.  To 
address  limited  domestic  industrial  participation, 
EU supply chain initiatives will be vital to integrate 
Bulgaria into European value chains. 

In  response  to  the  regional  crisis  in  the 
introduced 
Middle  East,  Bulgaria  has 
targeted  temporary  income-based  support, 
providing  €20  per  month  to  low-income 
individuals  earning  below  twice  the  poverty 
line.  Additional  measures  include  free  transport 
for  children  and  students,  automatic  fuel  support 
for motorists when prices exceed €1.60/litre, and a 
€100  million  support  package  for  businesses, 
including  electricity  compensation  and  subsidies 
for bus transport operators. 

Fossil fuel subsidies 

Bulgaria  has taken  measures  to address  the 
2025  country-specific  recommendation  to 
take  specific  steps  to  phase  out  fossil-fuel 
subsidies  including  by  removing  subsidies 
supporting  coal-based  electricity  production 
and  district  heating.  In  2024,  environmentally 

harmful(244) fossil fuel subsidies without a planned 
phase-out before 2030 decreased to 0.31%(245) of 
Bulgaria’s  GDP(246),  mainly  after 
the  state 
terminated  its  purchase  order  for  electricity  from 
the  Maritsa  East II  thermal  power  plant.  However 
feed-in  tariffs  for  combined  heat  and  power  and 
district  heating  remain  in  place,  while  Bulgaria 
continues to operate fossil fuel subsidies without a 
planned  phase-out  before  2030  which  do  not 
specifically  address  energy  poverty  or  genuine 
energy  security  concerns.  Additionally,  Bulgaria’s 
2023 Effective Carbon Rate (247) averaged EUR 65 
per tonne of CO₂, below the EU weighted mean of 
EUR 84.80 (248). 

(244) Explicit fossil fuel subsidies (e.g. direct transfers) and implicit 
fossil fuel subsidies (i.e. tax expenditures linked to forgone 
tax revenues that have an identifiable fiscal impact for the 
central budget) that support fossil fuel energy production, 
transmission and/or consumption 

(245) Ratio denominator based on volumes cross-checked with 

Bulgarian authorities. 

(246) Ratio numerator based on 2024 gross domestic product at 

market prices provided by Eurostat. 

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

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

(248) OECD (2024), Pricing Greenhouse Gas Emissions 2024. 

93 

 
 
ANNEX 10: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

Bulgaria  has  made  some  progress 
in 
developing resilience and adaptation policies 
in the last year, but some severe challenges 
remain.  2025  demonstrated 
the  significant 
challenges  that  Bulgaria  faces  in  relation  to 
extreme  weather  events,  with  significant  impact 
on  mortality  and  the  economy.  These  challenges 
include a lack of coordination between authorities, 
a  lack  of  monitoring  tools,  and  difficulties  related 
to  reporting  practices.  At  the  sectoral 
level, 
Bulgaria  suffers  from  a  lack  of  climate-proofing, 
particularly in the energy and transport sectors.  

Bulgaria  faces  difficulties  with  increasing 
the  uptake  of  nature-based  solutions  (NbS). 
Both, the LIFE and RRP programmes have provided 
funding  to  projects  to  promote  NbS,  but  there  is 
still room for improvement. Bulgaria currently has 
a  net  removal  in  terms  of  its  land  use,  land-use 
change,  and  forestry  (LULUCF)  emissions,  but  it 
still  has  some  way  to  go  to  achieve  its  2030 
targets. In particular, there is scope in the forestry 
sector to address this further. 

increasing. 

Water  resilience  is  becoming  important  for 
the  EU’s  economic  stability.  Droughts,  floods 
and  contamination  are 
Industry, 
households  and  public  services  are  therefore 
facing  greater  operational  disruptions.  Rising 
labour  productivity 
health  risks  and  reduced 
increase  economic  strain.  Bulgaria 
in  2025 
received  a  CSR  concerning  water  management. 
Limited  progress  has  been  achieved  in  improving 
infrastructure  for  water  treatment  and  water 
leakage. 

Climate adaptation and preparedness 

to 

Bulgaria  continues 
face  significant 
challenges in the area of climate adaptation 
increased  vulnerability  to  extreme 
and 
weather  events  such  as  heavy  rainfalls  and 
heatwaves.  Bulgaria  has  a  medium  level  of 
vulnerability to floods, and its water management 
In  2025,  Bulgaria 
system 
experienced  many  cases  of  flash  flooding  due  to 
intense  rainfall.  This  resulted  in  fatalities  and 
cutting  of  electricity  supply.    Bulgaria  is  further 
compromised by its high vulnerability to droughts, 
with  9.3%  of  ecosystems  suffering  from  severe 
drought in 2020. The average impact of droughts 
on  ecosystems  is  significantly  higher  in  Bulgaria 

is  under  strain. 

in  other  EU  Member  States 

than 
(EU-27 
average: 4%).  Bulgaria  also  suffers  from  an 
increasing number of wildfires. Between 2006 and 
2023,  wildfires  burnt  an  annual  average  of  over 
10 509 ha  in  Bulgaria.  In  the  summer  of  2025, 
over  100 wildfires  occurred  concurrently,  as  a 
result of extreme heat (249). 

in 

Climate  risks  have  a  direct  and  significant 
impact  on  Bulgaria’s  economy  and  society. 
Increasing climate stress will likely produce higher 
debt-to-GDP  projections 
southern-eastern 
Europe,  as  well  as  increase  pressure  on  the 
region’s  already  changing  demography.  Bulgaria’s 
national  climate  change  adaptation  strategy  and 
action plan predict a cumulative anticipated loss in 
real  GDP  of  between  1% and  3.5%  (250).  Between 
1980  and  2023,  Bulgaria  suffered  EUR 6.2 billion 
in  economic 
losses  caused  by  weather  and 
climate-related  extreme  events.  The  ECB  has 
estimated  that  Bulgaria  lost  1%  of  its  GDP  in 
2025  due 
that  year’s  extreme  weather 
events (251).  

to 

Bulgaria  will  need  to  invest  approximately 
EUR 591 million  per  year  up  to  2050  in 
climate  adaptation (252).  This  is  equivalent  to 
0.5%  of  annual  GDP  and  in  line  with  the  EU 
average  of  0.5%.  Investment  must  focus  on 
ecosystem  restoration  (more  than  54%  of  the 
total); infrastructure retrofitting and reinforcement 
(around  16%). 
(around  20%);  and  health 
Investment  in  food  system  resilience  is  relatively 
less than in other Member States (9% vs 17% EU 
average). 

Bulgaria  also  has  one  of  the 
lowest 
insurance  coverage  rates  against  extreme 
events in the EU, with only 2% being insured 

(249) EFFIS - Statistics Portal 

(250)Strategy and Action Plan - Full Report  

(251)Economic losses from climate-related extremes in Europe 

(252)European  Commission,  2026,  Assessment  of  EU  and 
Member  States  adaptation  investment  needs,  Table  25, 
https://op.europa.eu/en/publication-detail/-
/publication/d2039eac-f742-11f0-b9bc-
01aa75ed71a1/language-en%20(Table%208).  The  study 
provides detailed estimates of adaptation investment needs 
at the level of the EU and individual Member States per type 
of measure. It relies on a common methodology that makes 
estimates  comparable  across  the  EU.  Four  accompanying 
methodological  reports  describe  in  detail  how  the  results 
were estimated to ensure full transparency. 

94 

 
 
 
 
(EU  average:  25%) (253).  Bulgaria 
recorded 
around  156 deaths  per  100 000  citizens  due  to 
extreme heat in 2013-2022 (a 5% increase on the 
previous  decade)  (254).  Bulgaria  was  one  of  the 
EU’s  worst-hit  countries  by  forest  fires  in  2025 
(255).  In  Bulgaria,  insurance  coverage  of  property 
and  infrastructure  damage  from  climate-related 
impacts operates via a voluntary market. The rate 
insurance  coverage  for  homeowners  and 
of 
business  against  climate 
therefore 
remains low. Bulgaria has historically  relied on  ex 
post  ‘state  as  insurer’  compensation.  Bulgaria  is 
insurance 
working 
protection  gap  related  to  climate  emergencies. 
Overall, the focus is on strengthening the existing 
structure  of 
insurance  mechanisms.  Policy 
discussions  are  ongoing  on  how  to  expand 
insurance  protection  against  natural  disasters 
(including through incentivised insurance schemes, 
improved risk awareness and better integration of 
into  property  and 
climate  risk  considerations 
investment decisions). 

the  growing 

to  address 

impacts 

Bulgaria has put several national governance 
structures  in  place,  but  greater  national 
policy  action  and  institutional  capacity  to 
address  climate  change  challenges  on 
adaptation  and  preparedness  is  needed.  The 
existing  climate  adaptation  framework  includes 
(i) a  national  climate  change  adaptation  action 
plan; 
change 
adaptation  strategy;  (iii) a  national  expert  council 
on 
change 
coordination  council;  and  (v) a  unified  rescue 
system  and  focal  point  for  the  collection  and 
reporting of environmental data. Bulgaria is one of 
13  EU  Member  States  that  have  adaptation in its 
national climate legislation (256).  

(ii) a  2030  national 

change; 

climate 

climate 

climate 

(iv) a 

The  national  climate  change  adaptation 
strategy and action plan date from 2019 and 

(253)Bridging insurance protection gaps: regulation, incentives and 
Insurance  and  Occupational 

coordination  –  European 
Pensions Authority. 

(254) Janoš, et al., 2025, Heat-related mortality in Europe during 

2024 and health emergency forecasting to reduce 
preventable deaths. https://www.nature.com/articles/s41591-
025-03954-7.  

(255) EFFIS - Statistics Portal. 

(256) European Commission, EU Climate Action Progress Report 
2025, https://climate.ec.europa.eu/eu-action/climate-
strategies-targets/progress-climate-action/eu-climate-
action-progress-report-2025_en. 

95 

require  updating,  including  with  an  updated 
national  climate  risk  assessment.  The  mid-
term  review  is  ongoing,  and  its  completion  is 
planned for 2026. It is important for this review to 
assess  progress  to  date,  identify  implementation 
gaps and reassess priorities in the light of evolving 
climate  risks.  Alignment  of  the  mid-term  review 
with the EU adaptation strategy’s priorities is key. 

of 

concerns 

key  gap 

Bulgaria’s 

The  main  barriers  to  the  development  and 
implementation 
climate 
adaptation  policy  do  not  relate  to  the 
absence of a strategic framework but rather 
to implementation capacity, data availability 
and coordination across sectors and levels of 
governance.  One 
the 
comparable  and 
availability  of  up-to-date, 
decision-relevant  climate  risk  and  vulnerability 
information  (particularly  at  the  regional  and  local 
levels).  The  existing  national  assessment 
is 
outdated,  and  this  limits  the  ability  to  prioritise 
and  sequence  adaptation  measures  effectively. 
EU-level 
harmonised 
methodologies,  access  to  high-resolution  climate 
data  and  guidance  on 
translating  climate 
information  into  policy  and  investment  decisions 
would significantly strengthen national efforts. 

through 

support 

the 

It  is  important  for  Bulgaria  to  focus  on 
strengthening 
implementation  and 
operationalisation  of  its  existing  climate 
adaptation  framework.  Still  more  efforts  are 
needed to: (i) strengthen coordination between the 
competent 
(ii) develop 
monitoring  and  modelling  tools;  and  (iii) improve 
reporting  and  planning  at  the  sub-national  level. 
Bulgaria  also  needs  to  increase  its  institutional 
capacity  to  address  the  social  and  economic 
impacts of climate change. 

authorities; 

national 

climate 

coordination 

In  parallel,  priority  should  be  given 
in 
Bulgaria to further strengthening governance 
change 
on 
and 
adaptation  mechanisms,  ensuring  clearer 
allocation  of  responsibilities  and  improving 
cross-sectoral  cooperation.  At  national  level, 
the Ministry of Environment and Water (MOEW) is 
further  refining  the  functioning  of  the  Climate 
Change  Coordination  Council,  but  focus  is  needed 
on  strengthening  both,  horizontal  and  vertical 
coordination  on  climate  adaptation,  building  on 
existing  institutional  arrangements  and  recent 
administrative reforms. 

 
 
The  2021-2027  operational  programme  for  the 
environment  (OPE)  provides  support  measures 
related  to  climate  adaptation  of  a  total  of 
EUR 225.64 million, but it is important for practical 
efforts 
to  focus  on 
link  between  adaptation 
strengthening 
planning  and  ongoing  investments  under  the 
programme,  as  well  as  to  improve  the  use  of 
climate, 
early  warning 
information.  

the  coming  period 

hydrological 

and 

the 

in 

into 

Bulgaria  needs  more  focus  on  tackling 
climate  adaptation  at  sub-national  levels. 
Sub-national  level  efforts  to  mainstream  climate 
adaptation 
territorial  and  development 
planning  is  set  to  continue.  Municipal  integrated 
incorporate 
development 
climate 
risk 
reduction  considerations.  In  parallel,  to  enhance 
consistent  planning  and  reporting,  efforts  are 
focused  on  mainstreaming  climate  resilience  in 
procurement and project development. 

risk  management  and  disaster 

increasingly 

plans 

At  the  same  time,  combined  maps  of  areas 
with  significant  potential  flood  risk  have 
been  created  in  the  context  of  reducing  the 
adverse  impact  of  climate  change.  These 
maps  provide  better  visualisation  and  analysis  of 
vulnerable territories by integrating data from the 
cadastral  map,  satellite  images  and  specialised 
thematic maps into a single model. 

But still, only around 24% of the population 
live  in  areas  covered  by  the  Covenant  of 
Mayors  for  climate  and  energy 
(with 
signatories  in  10  of  the  49 cities  that  have 
made  commitments  on  adaptation).  44%  of 
signatories  have  submitted  a  sustainable  energy 
and  action  plan  (SECAP)  on  time  (i.e. within  two 
years  of  their  initial  commitment  to  the  EU 
Covenant) and 50% of signatories have submitted 
at 
the 
recommended  timeframe  (i.e. at  least  two  years 
after  submission  of  their  SECAP) (257).  Two  cities 
(Sofia  and  Burgas)  have  significantly  improved 
their climate adaptation policies (Sofia now has an 
a 
adaptation 
development vision). 13 of the 305 EU regions and 
local authorities participating in the EU Mission on 
Adaptation are in Bulgaria. 

least  one  monitoring 

report  within 

and  Burgas 

strategy 

has 

(257)Bulgaria | EU Covenant of Mayors. 

96 

not 

has 

instability, 

Climate-proofing 
been 
systematically  applied  across  sectors  and 
key  infrastructure.  This  is  due  to  low  fiscal 
capacity,  governance 
infrastructure 
legacy issues and the late prioritisation of climate 
preparedness.  Bulgaria  has  not  provided  an 
the  requirements  of  climate 
assessment  of 
adaptation  on 
the  energy  system,  and  no 
additional  measures  or  analysis  have  been 
proposed.  The  2019  national  strategy 
for 
adaptation  to  climate  change  and  an  action  plan 
up to 2030 identifies transport and energy as key 
vulnerable sectors.  

design 

transport 

planning, 

transport 

Systematic integration of climate adaptation 
into 
and 
investment decisions remains limited. Climate 
risk  assessments  are  not  yet  consistently  applied 
across  transport  projects.  Adaptation  measures  in 
a 
infrastructure  context  are  often 
addressed on an ad hoc basis rather than through 
a coherent, network-wide approach. Bulgaria’s rail, 
road  and 
inland  waterway  system  therefore 
remains vulnerable to climate shocks, which could 
transport  connectivity  and  economic 
impact 
activity.  Bulgaria  should  mainstream  climate 
resilience  in  transport  planning  by  mandating 
climate  risk  assessments  for  major  road  and  rail 
projects.  It  should  also  (together  with  Romania) 
accelerate the major EU co-funded Danube project 
to  secure  navigability  when  water  levels  are  low. 
The  medium-term  risks  identified  in  the  study 
concern  increasing  impacts  of  blizzards,  snowfall 
and  extreme  heat.  There  is  a  growing  risk  of 
wildfires  and  droughts  affecting 
the  TEN-T 
network. The most vulnerable infrastructure is the 
national  road  network,  including  the  municipal 
transport  infrastructure  (streets  and  roads)  and 
public transport services. 

lack  of  preparedness 

The  transport  vulnerability  index  of  the 
trans-European transport network (TEN-T) in 
Bulgaria to climate change impacts as one of 
the highest in the EU (258). This is mainly due to 
a 
in  terms  of  social, 
economic  and  institutional  capacity,  as  well  as  to 
in  rules,  regulations  and  data 
specific  gaps 
collection.  The  EEA  estimates  the  annual  costs  of 
climate-related damage to transport infrastructure 
at  BGN 115-135 million  (EUR 57.5-67.5 million), 

(258) Support  study  on  the  climate  adaptation  and  cross-border 
the  TEN-T  network  – 
realise 

to 

investment  needs 
Publications Office of the EU. 

 
 
 
excluding  social  and  economic  costs.  Rising 
temperatures,  extreme  weather  events,  sea-level 
rise  and  increased  precipitation  will  contribute  to 
infrastructure deterioration, damage and potential 
closures.  The  most  significant 
impacts  on 
in 
infrastructure  from  weather-related  events 
Bulgaria  have  in  the  past  come  from  floods  and 
landslides.  Major  and  regional  roads  became 
impassable  due  to  floodwaters,  landslides  and 
debris.  Collapsed  bridges  and  cut-off  roads  were 
reported.  Droughts  and  recurrently  low  water 
levels  on  the  Danube  are  increasingly  disrupting 
transport in this vital EU transport corridor. 

LIFEFORHAB  project  (262).  This  aims  to  mobilise 
support  from  national  and  regional  policymakers, 
relevant institutional stakeholders and the general 
public  as  drivers  of  change,  with  a  specific  focus 
on  achieving  wide  stakeholder  support 
for 
implementing  NbS.  The  Bulgarian  RRP  contains  a 
reform  to  protect  and  restore  ecosystems  and 
natural habitats of EU and national importance. In 
particular,  it  contains  measures  to  update  the 
strategic framework of the agricultural sector and 
funds to promote the technological and ecological 
transition of agriculture. 

Bulgaria’s  energy  sector  will  be  both 
positively and negatively affected by climate 
change,  but  the  overall  net  impact  will  be 
negative.  Climate  change  is  expected  to  change 
the 
intensity,  frequency  and  distribution  of 
extreme  heat,  precipitation  and  storms,  thus 
energy 
of 
exacerbating 
infrastructure.  Projections 
for  Bulgaria  show 
increasing  temperatures  and  decreasing  summer 
precipitation  by  2100  and  an  associated  increase 
in the number of dry spells and droughts (259). 

vulnerability 

the 

(NbS) 

Nature-based 
are 
solutions 
economically and strategically important for 
Bulgaria’s  climate  resilience,  but  they  have 
not been deployed on a large scale or widely 
across  sectors.  Bulgaria  has  a  high  natural 
ecosystem  potential,  but  many  settlements  in 
Bulgaria  lie  in  floodplains (260),  flood  insurance 
low (261),  and  public 
coverage 
compensation 
climate-change-driven 
after 
disasters is placing strain on the budget.  

is  generally 

Tapping  better  into  the  potential  of  NbS 
could  contribute  to  disaster  management  by 
buffering  hazards  such  as  floods  and 
droughts.  In  Bulgaria,  most  funds  from  the 
operational programme for the environment (OPE) 
focus  on  infrastructure  and  not  on  NbS.  An 
example of a project in Bulgaria funded under the 
LIFE  programme  that  focuses  on  NbS  is  the 

(259)https://www.google.com/search?q=https://doi.org/10.3390/cli1

3020040.  

(260) Assessment  of  the  exposure  of  settlements  in  Bulgaria  to 
flood risk, Nikolova, Proceedings of the International scientific 
and practical conference ‘Bulgaria of regions’. 

(261) Appendix 10  –  DRM  Final 

(2018-8-17)  –  EN  –  for 

printinga70031dbf36a2e1153e2ef575cb2dad9.pdf. 

97 

types), 

The  main  challenges  for  the  roll-out  of  NbS 
include policy and legal framework challenges (i.e. 
lack  of  clear  legal  definitions  and  regulations  for 
resource 
many  NbS 
limitations 
for  NbS 
projects  from  national  budgets  and  private 
investments)  and  capacity  barriers  (i.e. limited 
planning,  design, 
in  NbS 
expertise 
local 
maintenance, etc.) (263). 

financial  and 
funding 

(i.e. insufficient 

Water resilience 

Strengthening  governance,  improving  water 
quality  and  water-risk  assessments  and 
investing  in  resilient  infrastructure  such  as 
efficient distribution networks and advanced 
water reuse systems are essential in order to 
safeguard  Bulgaria’s  competitiveness.  Water 
productivity in Bulgaria (264) stood at EUR 9 per m³ 
of  abstracted  water  in  2022  (below  the  EU-27 
average  of  EUR 1 per  m³).  Bulgaria’s  water 
productivity  has  remained  stable  during  the  last 
five  years.  The  Water  Exploitation  Index  Plus 
(WEI+) was 0.85 in 2022. This does not indicate a 
systematic  water  scarcity  (265).  The  WEI+  value is 
generally  very  low  and  ranged  quarterly  between 
0.8  and  1.4  between  2016  and  2022.  The  main 
consumers  of  water  are  electricity  cooling  (64%), 

(262) LIFE 3.0 - LIFE16 NAT/BG/000817. 

(263) Mission-Green-Bulgaria_Green-Restart-Coalition-

Bulgaria.pdf. 

(264)Water  productivity  is  a  metric  that  is  calculated  by  dividing 
GDP  (in  chain-linked  volume)  by  total  water  abstraction.  It 
indicates  the  average  economic  value  (GDP)  a  Member  State 
creates for each unit of water it takes from nature. 

(265)Eurostat, 
https://ec.europa.eu/eurostat/databrowser/view/sdg_06_60/defa
ult/table?lang=en. 

Exploitation 

Water 

Index 

plus, 

 
 
 
public  water  supply 
(17%) (266). 

(17%)  and  agriculture 

The  Water  Framework  Directive 
(WFD) 
establishes  a  procedural  framework  for 
achieving  good  surface  water  ecological  and 
chemical  status  and  good  groundwater 
quantitative  and  chemical  status.  In  Bulgaria, 
ecological status deteriorated between the second 
and  third  river  basin  management  plans  (RBMPs). 
The  share  of  surface  waterbodies  with  good 
ecological status fell from 45% to 37%. However, 
this  was  still  close  to  the  EU  average  (38%).  The 
chemical  status  situation  is  relatively  good  and 
improved  from  the  second  RBMP  with  66%  of 
surface  water  bodies  and  80%  of  groundwater 
bodies having good chemical status (EU averages: 
30% and 83%) (267). The assessment of Bulgaria’s 
third  RBMP  has 
from 
agriculture  as  one  of  the  sources  affecting  water 
basins’  ‘good’  status  and  one  of  several  reasons 
for Bulgaria not achieving the WFD’s objectives. 

identified  nutrients 

Bulgaria  is  still  far  behind  in  reaching  full 
compliance with the Waste Water Treatment 
Directive  (WWTD). 
In  2022,  only  36%  of 
Bulgaria’s  agglomerations  were  compliant,  below 
the  EU  average  of  75.9%  (268).  This  is  only  a 
limited  improvement  from  2020,  when  35%  of 
agglomerations  were  compliant.  There 
is  a 
significant  amount  of  water  (incl.  urban  waste 
water)  that  is  still  being  discharged  without 
treatment.  Bulgaria  is  planning  to increase its  per 
capita investment from EUR 3 to EUR 73. Between 
2025  and  2032,  a  total  of  EUR 2 699  million  is 
expected  to  be  invested  in  improving  compliance 
with the WWTD (269). 

(266) EEA,  2025,  Water  abstraction  by  economic  sector,  2000-

2023, 
https://www.eea.europa.eu/en/analysis/indicators/water-
abstraction-by-source-and/water-abstraction-by-economic-
sector. 

(267)WISE,  Surface  water  Bodies:  ecological  status  or  potential. 
https://water.europa.eu/freshwater/resources/metadata/wfd-
dashboards/surface-water-bodies-ecological-status-or-
potential-group-table. Note that the deterioration can be due 
to more accurate monitoring rather than an actual decline of 
parameters. 

(268) WISE, 2025, Country profiles on urban waste water 

treatment – Bulgaria, 
https://water.europa.eu/freshwater/countries/uwwt/bulgaria. 

(269)Internal documents, implementation of Directive 91/271/EEC 

(UWWTD), 2022. 

98 

Bulgaria  has  reported  its  second  flood  risk 
management  plan  but  still  needs  to  develop 
drought  management  plans  as  part  of  its 
river  basin  management  plan.  Further  efforts 
to  address  the  significant  investment  gaps  in 
water  management  would  be  beneficial.  An 
estimated  additional  EUR 707 million  per  year  is 
needed  and there is an annual  investment gap of 
EUR 439 million. 

Nature restoration 

Nature degradation poses significant risks to 
Bulgaria’s  economy  and  competitiveness. 
Bulgaria’s  supply-chain  dependency  on  ecosystem 
services  amounts  to  30%  of  gross  value  added 
(EU average: 22%) (270). Overall, 39% of Bulgaria’s 
economy 
is  highly  dependent  on  ecosystem 
services  to  produce  its  gross  value  added  (EU 
average: 44%). 100% of the gross value added in 
several  sectors  (e.g. agriculture,  forestry,  fishery, 
mining,  construction  and  healthcare)  is  directly 
dependent on ecosystem services. 

the  Natura  2000  network 

Action  on  nature  protection  and  restoration 
will allow Bulgaria to achieve the EU goal of 
30%  by  2030  (including  both  Natura  2000 
and  other  nationally  designated  protected 
areas).  In  2022,  34.9%  of  land  in  Bulgaria  was 
covered  by 
(EU 
average: 18.6%).  Bulgaria  legally  protects  44.2% 
of  its  land  (EU  average:  26.4%)  and  8%  of  its 
marine  areas  (EU  average: 12.3%) (271).  Bulgaria 
still needs to restore up to 5 030 km2 of the land 
habitats listed in Annex I to the Habitats Directive 
(corresponding  to  up  to  4.5%  of  Bulgaria’s 
land) (272).  Bulgaria  recorded  fewer  fires  and  a 
smaller  area  burnt  in  2025  than  in  2024,  but 

(270) Hirschbuehl  et  al. 

(JRC),  2025,  The  EU  economy`s 
dependency on nature, Vasilakopoulos, P. editor(s), European 
Commission, 
https://publications.jrc.ec.europa.eu/repository/handle/JRC140
304?mode=full. 

(271)Eurostat, 

Indicator, 
https://ec.europa.eu/eurostat/databrowser/view/env_bio4/defa
ult/table?lang=en&category=env.env_biodiv. 

Protected 

Areas 

(272) European 

Commission, 

assessment 
accompanying  the  proposal  for  a  Regulation  on  nature 
restoration, 
https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX:52022SC0167. 

Impact 

2022, 

 
 
 
wildfires  are 
damage (273). 

increasing 

in 

frequency  and 

in  the  EU. 

Bulgaria  has  one  of  the  highest  levels  of 
biological  diversity 
It  hosts 
92 habitat  types  and  209 species  covered  by  the 
Habitats Directive. 26% of the species identified in 
the EU and over 2% of those worldwide are found 
in  Bulgaria.  Bulgaria  would  therefore  do  well  to 
preserve  and  protect  its  environmental  resources, 
while  maintaining  its  economic  growth.  According 
to  the  latest  available  assessments  (274)(275),  only 
12.2%  of  habitats  and  38%  of  species  have  a 
good  conservation  status.  Bulgaria  can  ensure 
efficient progress by ensuring that the central and 
regional  management  structures  that  are 
in 
charge of Natura 2000 sites are financially stable 
and operational. 

Invasive  alien  species  (IAS)  are  a  growing 
threat  to  Bulgaria’s  rich  but  increasingly 
fragile biodiversity.  The  total  cost  of  IAS  in the 
EU 
(both  damages  and  management)  was 
EUR 116.61 billion between 1960 and 2020. More 
recent studies have put this cost at USD 28 billion 
per year in the EU (increasing to USD 148.2 billion 
by  2040)  and  at  USD 423 billion  annually  at  the 
global level (276). There are currently 66 IAS on the 
EU  list  of  concern,  out  of  which  20  have  been 
observed  in  Bulgaria.  The  spread  of  IAS  nitrogen 
deposition 
industrial 
from  agriculture  and 
combustion  remains  a  critical  driver  of  this 
degradation. 

marine 

Bulgaria’s 
ecosystems  are 
climate 

change 

and 

freshwater 
increasingly  exposed  to 
rising 

(including 

(273) EFFIS, Annual statistics for Bulgaria, https://forest-

fire.emergency.copernicus.eu/apps/effis.statistics/estimates. 

(274) EEA, 2021, Conservation status of habitats under the EU 

Habitats Directive, 
https://www.eea.europa.eu/en/analysis/indicators/conservatio
n-status-of-habitats-under. 

(275) EEA, 2021, Conservation status of species under the EU 

Habitats Directive, 
https://www.eea.europa.eu/en/analysis/indicators/conservatio
n-status-of-species-under. 

(276) NeoBiota, Economic Cost of invasive alien species across 
Europe, 2021, https://neobiota.pensoft.net/article/58196/, 
and European Commission: EMRC, Logika Group and RPA 
Europe, Update of the costs of not implementing EU 
environmental law,  
2025, https://op.europa.eu/en/publication-detail/-
/publication/4dead000-263d-11f0-8a44-
01aa75ed71a1/language-en, p. 62.   

This 

temperatures,  extreme  weather  events  and 
hydrological variability). In the Black Sea, these 
pressures  interact  with  eutrophication,  pollution 
and  biodiversity  degradation. 
impairs 
ecosystem  stability  and  the  resilience  of  fish 
stocks,  which  remain  sensitive  despite  signs  of 
recovery.  Eutrophication  is  recognised  under  the 
Marine Strategy Framework Directive (277) as a key 
pressure  affecting  the  Black  Sea,  altering  species 
distribution  and  productivity.  Reinforcing  fisheries 
control  and targeted  monitoring  of  stock  recovery 
in the Black Sea, is key to safeguarding Bulgarian 
marine biodiversity and ecosystems  

Bulgaria has a persistent biodiversity finance 
gap. The annual investment needs for biodiversity 
and  ecosystems  are  estimated  at  EUR 1.8 billion 
(in  2022  prices)  in  Bulgaria  in  2021-2027.  To 
meet the environmental  objectives concerning the 
protection  and  restoration  of  biodiversity  and 
relevant  cross-cutting 
ecosystems  and  other 
measures,  Bulgaria’s  annual  investment  gap  is 
estimated at EUR 1.4 billion, (1.7% of its GDP) (278). 

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)(279).    The  latest  available  projections 
show a gap to target of around 1.1 MtCO2-eq for 
2030(280). Additional  measures  are 
therefore 
needed  in  the  land  sector  to  reach  the  2030 
target.  In  addition  to  increasing  LULUCF  net 
removals,  further  investment  in  healthy  forests 
and  soils  is  key  to  building  resilient,  biobased 

(277) The Marine Strategy Framework Directive (Directive 

2008/56/EC) is an EU directive requiring Member States to 
achieve or maintain Good Environmental Status of marine 
waters by 2020, including assessment against eleven 
descriptors such as eutrophication (Descriptor 5). 

(278) European Commission, 2025, Environmental Implementation 
report, 

Review, 
https://op.europa.eu/webpub/env/eir-country-reports-
summaries/en/bulgaria.html. 

Bulgaria 

country 

(279) National LULUCF targets of the Member States in line with  
Regulation (EU) 2023/839, https://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:02018R0841-20230511. 

(280) Climate action progress report 2025, 

https://climate.ec.europa.eu/eu-action/climate-strategies-
targets/progress-climate-action/eu-climate-action-progress-
report-2025_en. 

99 

 
 
 
EU  bioeconomy. 

product  value  chains  and  enabling  a  growing, 
particular, 
competitive 
continued improvements in the monitoring system 
of  net  removal  data  and  projections  will  play  a 
crucial  role  in  supporting  timely  and  effective 
action in the sector. 

In 

include  using 

Building  on  the  lessons  learned  from  the 
implementation  of  the  national  strategy  for 
forestry  sector  development  (2013-2020), 
Bulgaria  has  proposed  an  updated  strategy 
for  the  period  up  to  2030.  This  is  currently  in 
the  development  stage  (the  draft  strategy  was 
under 
review  by  government  bodies  and 
stakeholders  until  mid-2025).  The  currently 
proposed  measures 
‘unforested 
areas for afforestation’ in forest areas; increasing 
the  area  of  urban  and  suburban  parks  and  green 
areas;  protecting  and  conserving  wetlands 
in 
forest  areas,  peatlands  and  marshes;  increasing 
density  in  listed  natural  and  artificial  plantations; 
and  restoring  and  maintaining  protective  forest 
belts  and  new  anti-erosion  afforestation. 
In 
October  2025,  Bulgaria  adopted  a  methodology 
for  conducting  a  national  forest  inventory  (NFI). 
Currently  pending  proposals  for  amendments  to 
the  Forest  Act  will  enable  the  NFI  to  cover  all 
forests  in  Bulgaria  (including  national  parks  and 
reserves).  

Water  quality  pressures  are  intensifying. 
the  EU  Nitrates  Directive,  37.8%  of 
Under 
Bulgaria’s 
stations 
groundwater  monitoring 
recorded average nitrate concentrations exceeding 
25 mg/l  (and  14.5%  above  50 mg/l,  the  EU 
threshold  for  safe  drinking  water)  between  2016 
and  2019 (281).  Ammonia  emissions  remained 
stable  in  the  last  five  years  –  in  contrast  to  the 
general  decrease  in  the  rest  of  the  EU (282).  This 
trend underscores systemic agricultural  pressures, 
despite  Bulgaria’s  relatively  low  livestock  density 
(0.23  livestock  units  per  hectare  in  2020 (283) 
compared with the EU average of 0.75).  

(281)EEA, 

2025,  Nitrate 

in 
https://www.eea.europa.eu/en/analysis/indicators/nitrate-in-
groundwater-8th-eap. 

groundwater 

in 

Europe, 

(282)EEA,  Air  pollutant  emissions  data  viewer  (Gothenburg 
1990-2023, 

Protocol, 
https://www.eea.europa.eu/en/topics/in-depth/air-
pollution/air-pollutant-emissions-data-viewer-1990-2023. 

Convention) 

Air 

(283)Eurostat, 

index, 
https://ec.europa.eu/eurostat/databrowser/view/tai09/default/t
able?lang=en. 

Livestock 

density 

Pesticide  contamination  in  soil  is  an  issue, 
but  no  contamination  has  been  detected  in 
water (284).  75%  of 
samples  exceed 
0.05 mg kg-1  of  pesticides  contamination  and 
48% are highly contaminated (285). 

soil 

The  share  of  the  total  area  under  organic 
farming in the total utilised agricultural area 
increases  from  2.20%  in  2022  to  3.95%  in 
2024. Despite the increase, it remains the second 
lowest in the EU and well below the EU average of 
9.1% in 2020 (286). The data for 2025, which have 
not  yet  been  published  in  Eurostat,  indicate  a 
significant increase in area under organic farming 
in the country to 5.81%. 

(284) EEA,  2024,  Pesticides  in  rivers,  lakes,  and  groundwater  in 

Europe, 
https://www.eea.europa.eu/en/analysis/indicators/pesticides-
in-rivers-lakes-and. 

(285) Vieira  et  al.  (JRC),  2023,  Pesticides  residues  in  European 
agricultural  soils  –  Results  from  LUCAS  2018  soil  module, 
Publications 
Union, 
https://publications.jrc.ec.europa.eu/repository/handle/JRC133
940. 

European 

Office 

the 

of 

(286) Eurostat, Organic crop area by agricultural production 

methods and crops, 
https://ec.europa.eu/eurostat/databrowser/view/org_cropar/de
fault/table?lang=en 

100 

 
 
 
Table A10.1:Key Adaptation Indicators 

(1)  EFFIS (European Forest Fire Information System). https://forest-fire.emergency.copernicus.eu/apps/effis.statistics/estimates. 
(2) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters, based on 
modelling of the risk from floods, wildfires and windstorms and on the insurance penetration rate. Scale: 0 (no protection gap) – 4 
(very high gap). EIOPA, 2025, Dashboard on insurance protection gap for natural catastrophes. 
(3) This 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 to or greater than 40% 
indicate severe water scarcity. 
(4) European Commission, 2024, Seventh 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). 
(5) Indicator refers to concentrations of nitrate (NO3) in groundwater, measured as milligrams per litre (mgNO3/L). Nitrate 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 is limited to 50 mgNO3/L to avoid threats to human health. 
(6) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2025 
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 – Annex IIa. 
Sources: Eurostat, EEA and JRC 

101 

Climate adaptation and preparedness:EU-27201920202021202220232024latest dataDrought impact on ecosystems0.139.330.813.562.49-2.76[area impacted by drought as % of total]Forest fires burned area (1)13 530     8 844       3 688       14 579     15 845     43 931     354 510     [burned area in ha. per year]Economic losses from extreme events-          7              2              42            25            2               40 452       [EUR million at constant 2022 prices]Insurance protection gap (2)---2              2              2               -[composite score between 0 and 4]Sub-national climate adaptation action19            19            21            23            26            26            34               [% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:EU-27201920202021202220232024latest dataWater Exploitation Index Plus, WEI+ (3)0.99         1.03         0.91         1.34         0.85         -4.53            [total water consumption as % of renewable freshwater resources]Water productivity8              9              9              9              --151[EUR per m3]Water abstractionWater abstraction by source (% from surface water)89.64%88.94%89.82%90.02%--Water abstraction by sectorAgricultureElectricity coolingManufactu-ringPublic water supplyMining and QuarryingConstru- ction 16.77%61.39%4.23%17.12%0.49%0.00%Status of water bodies (4)[% of water bodies in a good status]Surface water bodies (ecological)-----37%38%Groundwater bodies (quantitative)-----98.2%93%Nature restoration:EU-27201920202021202220232024latest dataEcosystem dependency---39%--44%[% of direct dependency]Protected area40.940.940.940.944.226.4[% of terrestrial protected areas]Invasive alien species (IAS)-----2029.2[number of IAS of Union concern]Damage cost of IAS----0.271.69[EUR billion]Eutrophication 231231295[AAE of area at risk of euthrophication]Sustainable agriculture and land use:EU-272012-20182018-2021latest dataYearly net land taken by Member State209          296          670            [ppm of total urban surface per Member State]Land conversion in functional urban area [% of total land taken from 2018-2021]Arable land35%Complex and mixed cultivation0%Forests9%Herbaceous vegetation associations7%Open spaces with little or no vegetation0%Pastures45%Permanent crops2%Water3%Wetlands0%201920202021202220232024latest dataNitrates in groundwater (5)27.828.128.428.729.2[mgNO₃/l]Livestock density0.23:0.75(number of livestock units per hectare of utilised agricultural area)Ammonia emissions 93%93%93%94%94%-94%[% of total utilised agricultural area]Pesticide contamination on rivers and lakes water bodiesrivers1%27%[% of monitoring sites with pesticides exceeding thresholds, 2018-2023]lakes0%18%Pesticide contamination in soil 75%57%[% of samples with a concentration over 0.5 mg/Kg⁻¹Net greenhouse gas removals from LULUCF (6)-9227.1-9269.1-9201.7-9153.9-8601.1--198 421[ktCO₂-eq] 
 
       
 
FAIRNESS 
ANNEX 11: LABOUR MARKET 

as 

such 

challenges, 

trends  and 

Bulgaria’s  labour  market  remains  tight,  but 
structural  challenges  persist  and  weigh  on 
competitiveness.  After  several  years  of  rising 
employment,  the  country  is  close  to  its  2030 
national  employment  target.  Some  small  but 
gradual  progress  has  been  made  in  addressing 
negative 
structural 
demographic 
regional  disparities. 
However,  improvements  have  been  limited  in 
critical areas, including upskilling and reskilling the 
workforce  (in  preparation  for  the  twin  transition) 
and  the  availability  of  quality  jobs.  The  active 
(ALMP)  system  faces 
labour  market  policies 
in  providing 
considerable  capacity  constraints 
job  creation  for 
labour  market  support  and 
vulnerable  groups.  In  2025,  the  country-specific 
recommendations  for  Bulgaria  highlighted  the 
need  to  tackle  labour  shortages  by  implementing 
measures  effectively  to  increase  the  employment 
rate  of  persons  with  disabilities,  people  with  a 
lower level of education, Roma and people outside 
the workforce and to tackle the shortage of health 
results, 
professionals.  Despite  some  positive 
challenges remain. Improving access to integrated 
employment  and  social  services  is  expected  to 
improve 
labour  market  outcomes  and  social 
inclusion. 

Employment outcomes remain strong, but the 
labour force continues to shrink and regional 
disparities  persist.  In  2025,  the  employment 
rate (age 20-64) went up to 77.0% from 76.8% in 
2024,  just  above  the  EU  average  of  76.1%.  This 
leaves Bulgaria broadly on track to meet its 2030 
national  employment  target  of  79%.  However, 
mirroring overall demographic developments, total 
employment declined for a third consecutive year. 
The  unemployment  rate  (age  15-74)  stayed  at 
record low levels at 3.5% (EU: 6%). The long-term 
unemployment  rate  also  improved  noticeably  in 
2025 (1.5% vs EU: 1.9%), but the share of people 
in  long-term  unemployment  at  42.3%  remained 
almost  11 pps  above  the  EU  average.  Inactivity 
levels  did  not  improve  in  2025.  Looking  ahead, 
Bulgaria  is  projected  to  lose  one  third  of  its 
2060 (287). 
working-age 
Improvements in fertility rates (since 2022) and a 

population 

by 

(287) OECD (2025), Optimising Processes and Services at 

Bulgaria’s National Employment Agency, Connecting People 
with Jobs, OECD Publishing, Paris, 
https://doi.org/10.1787/4e79e9db-en. 

a 

negative 

long-standing 

reversal  of  net  outward  migration 
(since 
2020) (288)  are  positive  signs,  but  insufficient  to 
offset 
trend. 
Demographic  developments  exhibit  stark  regional 
differences:  the  population  decline  between  2011 
and 2021 ranged from 1.3% in the capital region 
to  25.4%  in  areas  in  the  north-west (289).  Despite 
emigration 
net  migration 
continues  to  result  in  brain  drain,  with  many  of 
those  leaving  being  young  people  or  of  working 
age (290).  Despite  some  convergence  in  recent 
labour  market 
years, 
differences  remain,  with  employment 
in  the 
Severozapaden  region  lagging  behind  the  leading 
Yugozapaden  region  by  almost  10 pps  (71.6%  vs 
81.5%). 

turning  positive, 

considerable 

regional 

Graph A11.1: Key labour market indicators 

Source: Eurostat, LFS [lfsi_emp_a, une_rt_a] 

Vulnerable groups face persistent barriers to 
participation  as  ALMPs  have  limited  reach 
and impact. The share of young people neither in 
employment nor in education and training (NEETs) 
increased  to  13.8%,  for  the  first  time  in  5  years 
and  remains  above  the  EU  average  of  11%. 
Bulgaria has one of the highest shares of inactive 

(288) See data from the Bulgarian National Statistical Institute: 

https://www.nsi.bg/sites/default/files/files/data/timeseries/Po
p_1.3.2._birth_DR.xlsx. 

(289) NSI, Census 2021. 

(290) See National Statistical Institute migration data and 

Education and Training Monitor on students studying abroad. 

102 

024681012141645505560657075808520092010201120122013201420152016201720182019202020212022202320242025% of labour force% of populationBGUnemployment rate 15-74 (rhs)Activity rate 20-64Employment rate 20-64 
 
 
 
   
 
 
 
NEETs  (11.3%  vs  EU:  6.7%),  with  the  public 
employment  service  (PES)  struggling  to  identify 
and  engage  with  them.  Intensifying  PES  outreach 
and  services  provision  for  this  group  is  crucial  as 
there  is  a  risk  that  it  could  become  part  of  the 
informal economy. Young persons with disabilities 
are  particularly  affected:  86.6%  were  NEETs  in 
2024 (vs EU: 29.8%). The gap in employment rates 
for  those  with  and  without  disabilities  remained 
high at 33.2 pps, compared with the EU average of 
24.2 pps.  Employment  among  Roma  adults  aged 
20-64 rose considerably between 2021 and 2024, 
from  47%  to  62% (291):  this  surpassed  the  2030 
EU Roma strategy target but is still almost 15 pps 
below the national employment rate. Nearly one of 
two Roma aged 16-24 is NEET, a persistent trend 
over  the  past  decade (292).  Some  measures  to 
increase  employment  levels  of  vulnerable  groups 
have  been 
the  2025 
recommendation.  The  focus  on  persons  with 
disabilities,  however,  has  been  on  sheltered 
workshops rather than on the open labour market. 
In  2025,  14  activation  hubs  were  operational, 
employing  140  activation  experts, 
targeting 
inactive people, particularly Roma. ALMP measures 
totalling  over  EUR 50  million,  with  support  from 
the  European  Social  Fund  Plus  (ESF+),  targeting 
vulnerable 
including  marginalised 
communities,  were  adopted  or  entered  their 
implementation  phase  in  2025.  The  PES  suffers 
from  gaps  in  internal  organisation,  particularly  in: 
(i)  embedding  customer-centricity  in  performance 
management;  (ii)  strengthening  outcome-based 
evaluation  of  ALMPs;  and  (iii)  implementing  risk 
and quality management frameworks. 

line  with 

groups, 

taken, 

in 

Employment  outcomes  are  still  closely  tied 
to  educational  attainment.  The  employment 
rate  for  people  with  at  most  lower-secondary 
education  was  just  46%,  45.5 pps  lower  than  for 
those  with  tertiary  education  (compared  with  an 
average  gap  of  28.6 pps  in  the  EU).  Only  3%  of 
Roma 
post-secondary 
education (293), which greatly limits their access to 
high-skilled jobs. Despite ESF+ co-funded  projects 
and 
increase 
for  persons  with 
employment  opportunities 

legal  measures  aiming 

30-34 

aged 

have 

to 

(291) EU Fundamental Rights Agency (FRA) Report: Rights of Roma 
and travellers in 13 European countries. Main results–- Roma 
survey 2024 | European Union Agency for Fundamental 
Rights. 

(292) Ibid. 

(293) FRA Roma Survey 2024. 

this 

disabilities, the disability employment gap has not 
shown  a  consistent decline.  This  suggests  gaps  in 
effectiveness of these measures exist, in particular 
in transitioning from  education to employment  by 
promoting  universal  design,  digital  skills,  and 
group’s 
training  mirroring 
vocational 
needs (294). 
Integrated  employment  and  social 
assistance 
in  76 
are 
services 
employment  and  social  assistance  centres,  but 
expansion  in  coverage  has  stalled.  Planned  PES 
measures,  which  could  boost  the  activation  and 
employment  of  vulnerable  groups  include:  (i)  the 
creation  of  a  register  of  the  inactive;  (ii)  the 
development of a virtual labour office; and (iii) an 
application 
training 
relevant  to  them.  Challenges  remain  in  getting 
employers involved and developing more effective 
measures targeting vulnerable groups.  

jobseekers  find 

to  help 

provided 

that 

indicates 

(0.7-0.9%).  However, 

Labour shortages persist due to considerable 
demand  in  an  already  tight  labour  market, 
although demand is showing signs of easing. 
The  job  vacancy  rate  has  been  low  for  over  a 
decade 
the  2025  PES 
employers’  survey (295) 
labour 
demand remains high, with an estimated need for 
over  230 000  additional  workers  (7.9%  of  the 
workforce), but 11.8% less than reported in 2024. 
Machine  operators,  construction  workers,  waiting 
staff, cooks and tailors were the most in-demand 
skilled  workers.  Demand  among  occupations 
requiring  higher  education  or  specialised  training 
was  the  highest  for  teachers,  drivers,  nurses  and 
doctors.  Demand  for  low-skilled  labour  increased, 
with  noticeable  regional  imbalances,  as  some 
low-skilled 
regions 
labour (296). In the EU, Bulgaria has also one of the 
highest numbers of occupations simultaneously in 
to 
surplus  and 
limited 
shortage,  pointing 
workers (297). 
geographical 
Furthermore, EU survey data show that an above-
labour 
average  share  of  employers  expects 

reported  a 

surplus  of 

mobility 

of 

(294) European Semester 2025-2026 Country fiche on disability 

equality: Bulgaria, 
https://ec.europa.eu/social/BlobServlet?docId=28103&langId
=en. 

(295) PES employers’ survey 2025. 

(296) See EURES webpage on Bulgaria, 24 February 2025. 

(297) European Labour Authority (2025), EURES Report on labour 
shortages and surpluses 2024, Publications Office of the 
European Union, Luxembourg, p. 20. 

103 

 
 
 
limit  production (298):  34.1%  of 
shortages  to 
companies  in  the  services  sector  (EU:  23.1%), 
39.7%  in  industry  (EU:  17.5%)  and  42.3%  in 
construction  (EU:  27.5%).  An  ageing  workforce  is 
exacerbating  existing  staff  shortages 
in  the 
healthcare  sector (see  Annex  15):  in  2023,  one  in 
five  physicians  and  nurses (299)  continued  to  work 
beyond  the  retirement  age,  while  the  number  of 
nurses  declined (300).  Following  a  simplification  of 
procedures and a more flexible implementation of 
existing  rules, the  number  of  work  permits issued 
to  non-EU  nationals  increased  by  42%  in  2025. 
This  increase  is  helping  address  labour  shortages 
in sectors such as tourism, construction, transport 
and industry. 

Strong  wage  growth  has  continued  to 
outpace  productivity  gains,  but  unit  labour 
costs  remain  among  the  lowest  in  the  EU. 
Wage  growth  was  10.4%  in  2025,  following 
increases  of  more  than  13%  between  2022  and 
2024.  This  growth  is  well  above  the  EU  average, 
but  it  is  projected  to  fall  to  5.7%  in  2026  and 
4.3% in 2027. Over the past decade, wage growth 
has  exceeded  what  would  be  expected  on  the 
basis  of  macroeconomic  factors (301).  Unit  labour 
costs  grew  by  10.8%  in  2022,  12.8%  in  2023, 
11.5%  in  2024  and  9.4%  in  2025,  but  remain 
among  the  lowest  in  the  EU (302).  Real  wages 
increased  by  5.2%  in  2025,  following  a  11.3% 
growth  in  2024.  Although  this  growth  is  set  to 
slow further, it is expected to remain above the EU 
average  in  2026,  at  1.5%,  reflecting  both  robust 
nominal wage growth and a drop in inflation (from 
8.6%  in  2023  to  4.2%  in  2026).  The  statutory 
minimum  wage  increased  by  86.7%  between 
January 2022 and January 2026, a rise of 48.1% 
in  real  terms.  Labour  productivity  increased  at  a 
slower  pace,  reaching  a  high  of  7%  year-on-year 
legally  mandated 
in  2021. 
automatic indexation, the minimum wage reached 
EUR 620  in  January  2026  (a  12.6%  rise  from 
2025).  Nonetheless,  even  with  relatively  low  unit 

line  with  the 

In 

(298) Source: European Business and Consumer Surveys, data until 

October 2025. 

(299) OECD/European Observatory on Health Systems and Policies 
(2025), Country Health Profile 2025: Bulgaria. State of 
Health in the EU. 

(300) OECD Data Explorer. 

(301) Wage benchmarks are predicted by developments in 
inflation, productivity and the unemployment rate. 

(302) In 2024, unit labour costs were EUR 10.6 per hour and the 

labour  costs  and  real  wage  growth  slowing,  the 
magnitude  of  wage  increases  in  recent  years 
warrant close monitoring  to assess their potential 
impact on competitiveness. 

and 

and 

safety 

relatively 

Job quality shows mixed characteristics, with 
high  in-work  poverty  and  low  levels  of 
occupational 
collective 
bargaining,  which  risk  offsetting  gains  from 
rising  wages 
secure 
employment. Despite recent real wage increases, 
Bulgaria  has  one  of  the  highest  rates  of  in-work 
poverty  (11.5%  vs  EU:  8.3%  in  2025)  and  low-
wage earners (26.8% vs EU: 14.7% in 2022) in the 
EU.  Involuntary  temporary  employment  is  below 
the  EU  average,  suggesting  better  than  average 
job security, which is consistent with a tight labour 
market:  only  1.5%  of  employees  could  not  find  a 
permanent or full-time job in 2024, compared with 
3.4% 
in  the  EU.  However,  workplace  safety 
outcomes  are  weak,  in  line  with  a  decade-long 
trend, which is a persistent challenge to improving 
job  quality.  In  2023,  Bulgaria  had  one  of  the 
highest incidence rates of fatal accidents in the EU 
at  3.51  per  100 000  employed  (more  than  twice 
the EU average of 1.63). 

in 
Social  dialogue  faces  many  barriers 
Bulgaria,  and  the  formal  adoption  and 
implementation  of  key  measures  is  lagging 
behind.  Collective  bargaining  covered  only  16.2% 
of  workers  in  2023 (303)  but  it  has  increased 
slightly  in  the  last  decade  following  a  steep 
negative trend (304). Bulgaria has one of the lowest 
rates of  trade  union  density  (15.2% in 2020)  and 
employer organisation  density (60.4% in 2020) in 
the  EU (305).  The  predominant  level  of  collective 
bargaining is at company level, but the number of 
collective  agreements  in  force  at  company  level 
decreased by 30% between 2011 and 2024, while 
the  number  of  workers  covered  mostly  increased. 
At  national  level,  Bulgaria  only  has  a  limited 
number  of  sectoral  level  agreements  and  no 
collective bargaining. The reasons for the relatively 
low collective bargaining coverage include shifts in 
the  economy,  with  an  increasing  share  of  SMEs 

(303) Data provided in accordance with Article 10(2) of Directive 

(EU) 2022/2041, 

(304) Müller, T., Vandaele, K. and Waddington, J. (eds), Collective 
bargaining in Europe: towards an endgame, ETUI, Brussels, 
2019, Vol. I and the plan for the promotion of collective 
bargaining 2026-2030 in Bulgaria. 

EU average was EUR 33.5. 

(305) OECD/AIAS ICTWSS v2.0. 

104 

 
 
 
Just  Transition  Fund  for  those  regions  most 
affected by the green transition faced delays.  

that lack both collective bargaining structures (306) 
and  collective  bargaining  arrangements  at  branch 
level.  To  further  strengthen  the  capacity  of  social 
partners and support joint initiatives, the ESF+ has 
allocated  EUR 22.3 million,  and  implementation  is 
already  under  way.  A  plan  for  the  promotion  of 
collective  bargaining  in  2026-2030,  including  a 
2030  target  of  20%  was  adopted.  Proposals  for 
legal 
collective 
to 
bargaining, were prepared in 2025. However, they 
have  yet  to  be  adopted  and  implemented.  Recent 
outcomes of public consultations (e.g. on the draft 
2026 budget and the minimum wage mechanism) 
point  to  a  limited  and  uneven  involvement  of 
employers,  trade  unions  and  civil  society  and 
difficulties in engaging in constructive discussions. 

amendments 

enhance 

Skills  shortages  weigh  on  competitiveness 
and  slow  progress  on  the  twin  transition. 
Bulgaria is among the Member States with a high 
number of occupations facing both shortages and 
surpluses (307).  With  one  of  the  highest  emission 
intensity  levels  of  output  in  the  EU  and  lower-
than-average  employment  in  the  environmental 
sector, the country appears insufficiently prepared 
for  the  green  transition.  Bulgaria  also  had  one  of 
the  highest  reported  numbers  of  occupations 
relevant  to  the  green  transition  or  climate 
adaptation  that  experienced  shortages  in  2025. 
These include electrical engineers, air conditioning 
and  refrigeration mechanics,  and  heavy  truck  and 
lorry drivers. Progress on the digital transition has 
been  limited  as  well:  as  Bulgaria  works  to  meet 
the  EU’s  Digital  Decade  targets,  digital  skills 
remain  a  key  challenge  for 
labour  market 
performance  and  competitiveness.  The  share  of 
the  population  aged  16-74  with  at  least  basic 
digital skills increased modestly to 38.3% in 2025 
(from 35.5% in 2023) but is still well below the EU 
average  of  60.4%.  Low  digital  skills  limit  an 
individual’s  use  of  online  administration  and 
health and banking services and risk exacerbating 
existing social and regional disparities. In addition, 
the  share  of  ICT  specialists  in  total  employment 
was below the EU average (4.8% vs EU: 5%)  and 
only  8.6%  of  companies  reported  using  AI, 
compared  with  20% 
the  EU.  Policy 
implementation has also lagged behind: the output 
of a key project on digital skills, co-funded by the 
Recovery  and  Resilience  Facility,  has  been  scaled 
down considerably and training activities under the 

in 

(306) SMEs employ more than 75% of the labour force. 

(307) European Labour Authority, op. cit. 

105 

 
 
 
ANNEX 12: SOCIAL POLICIES 

Bulgaria  continues  to  face  significant  social 
challenges.  Despite  progress  in  reaching  the 
2030  poverty  target,  Bulgaria  has  one  of  the 
highest  at-risk-of-poverty  or  social  exclusion 
(AROPE)  rates  in  the  EU,  especially  for  vulnerable 
groups  such  as  children,  persons  with  disabilities 
inequality 
and  Roma. 
remains  high, 
Income 
compounded  by  the 
limited  poverty-reducing 
capacity  of  social  transfers  and  minimum  income 
support.  The  adequacy  and  sustainability  of  the 
social  security  system  –  pensions  in  particular  – 
are  negatively 
impacted  by  a  pronounced 
demographic  decline.  While  social  and  care 
services  are  evolving  towards  community-based 
care  and  home  care,  access  challenges  persist, 
especially  in  rural  areas.  Staff  shortages,  poor 
working  conditions  and  insufficient  training  in  the 
care  sector  are  also  hindering  the  provision  of 
community-based services to support independent 
living and the transition towards home-based care 
for  adults  with  disabilities.  The  2025  country-
specific  recommendations  highlighted  challenges 
in  tackling  energy  poverty  and  social  inclusion,  as 
well as access to health services. Addressing these 
challenges  can  be  expected  to  contribute  to 
sustainable and inclusive growth.  

Graph A12.1: Components of AROPE rate, 2015-
2025 

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

Poverty  and  social  exclusion  risks  vary 
widely  by  age,  place  of  residence,  ethnicity, 
disability  and  employment  status.  Persistent 
poverty  risks  are  the  result  of  a  combination  of 

factors,  such  as  the  limited  impact  of  social 
benefits but also unequal opportunities and limited 
access  to  quality  inclusive  education,  healthcare 
(see  Annex  15)  and  social  services  (including 
accessible  social  housing,  see  Annex  16).  This  is 
in  rural  areas  and  for 
especially  the  case 
disadvantaged groups, notably Roma and persons 
with  disabilities.  Children  were  among  the  most 
affected, with AROPE rates of 33.1% in 2025 (EU: 
24.3%)  and  parents’  education  level  having  a 
significant  impact  on  child  poverty.  Older  people 
(65 and over) were also more at risk, with 35.3% 
(EU: 
experiencing  poverty  or  social  exclusion 
18.8%).  Persons  with  disabilities  and  the  Roma 
population had the highest AROPE rates, at 42.3% 
and 77.8% respectively. Households in rural areas 
were  twice  as  likely  to  be  at  risk  of  poverty  or 
social  exclusion  (40.8%)  than  those  residing  in 
cities (20.9%). Furthermore, stark differences exist 
at  regional  level,  with  the  AROPE  rate  in  the 
Yugoiztochen region being nearly twice as high as 
that 
(35.8%  vs  19.8%). 
Unemployed  people  in  Bulgaria  were  also  more 
likely  to  experience  poverty  and  social  exclusion 
risks with a rate more than 3 pps higher than the 
EU average (69,4% vs 66.3%).  

for  Yugozapaden 

Strengthening aspects of the implementation 
of  the  European  Child  Guarantee  (ECG)  will 
be  key  to  reaching  the  2030  child  poverty 
reduction  target.  Bulgaria  has  made  limited 
progress  towards  its  voluntary  target  of  reducing 
the number of children in poverty by 196 750. The 
ECG has been the main instrument put in place to 
achieve  that  goal,  yet  challenges  remain 
in 
ensuring  adequate  nutrition  and  a  healthy  diet, 
affordable housing and access to ECEC. The 2025-
2026  operational  plan  for  the  implementation  of 
the  ECG  has  focused  on  the  above  by  including 
measures such as preparatory work for a housing 
strategy,  the  reinforcement  of  patronage  care  for 
children aged 0-3, the creation of a framework for 
healthy nutrition and the establishment of quality 
standards for ECEC.  

transport  poverty 

Energy  and 
remain 
relatively  high.  The  share  of  the  population 
unable  to  keep  their  homes  adequately  warm 
decreased  from  19%  in  2024  to  16.1%  in  2025. 
Nevertheless, it remains significantly above the EU 
average  of  8.8%  and  particularly  high  for  people 
at risk of poverty, at 33.1%. Arrears on utility bills 
are  also  more  common  than  in  most  other 
Member  States:  17.2%  of  Bulgarian  households 
faced  arrears  on  utility  bills  in  2025,  more  than 

106 

0510152025303540455020152016201720182019202020212022202320242025At-risk-of-poverty or social exclusion rateAt-risk-of-poverty rateSevere material and social deprivationPeople living in low work intensity households 
 
 
       
 
and 

of  Ministers 

double  the  EU  average  of  7%.  Since  2008, 
Bulgaria  has  been  providing  targeted  heating 
allowances,  benefiting  approximately  340 000 
vulnerable  households  annually.  The 
revised 
recovery  and  resilience  plan  (RRP)  provides  for  a 
coordination  unit  to  tackle  energy  poverty  under 
Bulgaria’s  Council 
the 
development  of  an  information  system  to  track 
affected households, based on the legal definition 
of energy poverty. These should be in place by July 
2026.  A  coordination  mechanism  for  energy 
poverty  was  created  through  a  council  decision, 
adopted  in  November  2025,  which  will  develop  a 
long-term  strategy  for  addressing  energy  poverty 
within six months of its establishment. It will also 
be  responsible  for  overseeing  the  overall  policy 
development,  as  well  as  for  proposing  concrete 
responses.  Further  to  this,  the  energy  efficient 
renovation of multiapartment buildings is ongoing. 
in  line  with  the  2050  strategy  for  the  renovation 
of  the  building  stock.  With  respect  to  transport, 
issues  of  affordability,  availability  (especially  in 
Northern  Bulgaria  –  see  Annex  18)  and  user 
preferences  remain  pertinent.  People’s  propensity 
to take the train for inland transport is low (2.3% 
for passenger-kms vs 8.4% in the EU). Reliance on 
private  cars  for  inland  transport  remains  high,  at 
86% (308) (EU average: 82%), despite the fact that 
the percentage of people unable to afford a car is 
higher  than  the  EU  average  (10%  vs  5.5%  in 
2025).  22.2%  of  people  at  risk  of  poverty  report 
being unable to afford a car compared with an EU 
average of  16.5% (309). Transport fuel  expenditure 
is projected to increase less than the EU  average, 
as a result of the EU emissions trading system for 
(ETS2),  but 
buildings  and 
affordability  risks  remain  high  for  low-income 
households.  Strengthening  the  affordability  and 
availability of public transport is important and, in 
areas  with  limited  access,  support  for  zero-
emission  vehicle  leasing  schemes  may  also  be 
beneficial. Heating expenditure is projected to rise 
less  than  the  EU  average,  owing  to  low  exposure 
to  ETS2-covered  fuels  in  household  energy  use 
and a large reliance on electricity. From 2026, the 
EU’s Social Climate Fund will aim to help mitigate 

transport 

road 

these  impacts  through  targeted  energy-efficiency 
investments.  

Income  inequality  remained  very  high  in 
2025,  with  the  downward  trend  observed 
since  2019  having  stalled  after  2023.  The 
income  of  the  richest  20%  of  the  population  was 
6.94  times  higher  than  that  of  the  poorest  20%. 
Income  inequality  (measured  using  the  S80/S20 
ratio)  remained  among  the  highest  in  the  EU (EU: 
4.62).  The  S40/S100  share,  representing  the 
lowest  income  groups  i.e.  the  bottom  40%  of  the 
population stood at 17.7% of total income among 
the  lowest  in  the  EU  (21.9%).  The  inequality-
reducing  effect  of  taxes  (see  Annex  3)  and  social 
benefits also remains among the lowest in the EU 
(27%  vs  48%) (310).  The  impact  of  taxes  in 
reducing inequality was particularly low (only 4.7% 
in  2024,  vs  EU  average  16.5%),  down  from  5.6% 
the previous year, with social benefits also having 
a  limited  effect  (at  21%  compared  with  the  EU 
average  of  34.6%).  The  wider  implications  of 
income  poverty  relate  to  inequality  in  access  to 
quality  education  and  healthcare,  and  labour 
market integration.  

in 

the 

According 

addressing 

The  social  protection  system  shows  limited 
effectiveness 
poverty. 
Expenditure  on  social  protection  benefits  as  a 
share  of  GDP  was  among  the  lowest  in  the  EU 
(19.8%  vs  27.3%)  in  2024,  especially  on  social 
assistance,  family  benefits  and  unemployment 
benefits. 
benchmarking 
to 
framework (311) on minimum income, Bulgaria has 
consistently  performed  much  worse  than  the  EU 
average  in  terms  of  the  adequacy  of  its  scheme, 
at  19.1%  of  the  poverty  threshold  vs  56.3%  for 
the EU in 2023. Preliminary data for 2024 point to 
an  increase  in  adequacy  following  the  2023 
minimum income reform, now estimated at 38.1% 
of  the  AROP  threshold,  which  is  nevertheless  still 
well below the EU average. In 2025, the impact of 
social  benefits  (excluding  pensions)  on  poverty 
26.9%, 
reduction 
significantly  below  the  EU  average  of  33.2%. 
forms  of 
Some  workers 

in  non-standard 

remained 

subdued, 

at 

(308) Eurostat, 2023. 

(309) No data on public transport accessibility in Bulgaria exist on 
the Commission’s Transport Poverty Hub because the data 
on Bulgaria’s national access point (set up as part of 
Delegated Regulation (EU) 2017/1926 (the MMTIS 
Delegated Regulation)) do not exist in the required data 
format. 

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

Commission: https://employment-social-
affairs.ec.europa.eu/document/download/960863c4-b2b3-
45ac-a79b-
e693d5cec7da_en?filename=20240712_Analytical%20pap
er_final.pdf. 

(311) European Commission, Joint Employment Report 2026. 

107 

 
 
 
employment  (including  certain  seasonal  workers) 
and  the  self-employed  (e.g.  farmers)  have  little 
social  protection  coverage  and  face  substantially 
higher poverty and deprivation rates. Only 23.8 of 
those  unemployed  for 
less  than  12  months 
received  unemployment  benefits  in  2025  (EU: 
37.7%).  The  social  protection  system  has  been 
recently  strengthened 
the  minimum 
income reform, which resulted in better adequacy 
and broader coverage. Yet, despite improvements, 
including  to  other  schemes  such  as  disability-
related  benefits,  the  system’s  effectiveness  in 
limited (312). 
poverty 
addressing 
is 
Notwithstanding  Bulgaria’s  efforts, 
there 
sufficient  scope  for  additional  measures 
to 
strengthen access to social protection, in line with 
the 2019 and 2023 Council recommendations (313). 

remains 

through 

pension 

aggregate 

replacement 

Rapid  demographic  decline 
is  putting 
increasing  pressure  on  the  adequacy  and 
sustainability  of  the  social  security  system. 
People  over  65  are  expected  to  account  for  a 
larger share of the total population by 2070, rising 
to 31% compared with 22% in 2022 (314). In 2024, 
ratio 
the 
(excluding  other  social  benefits) (315)  slightly 
increased  from  0.44  to  0.46  (below  the  EU 
average  of  0.60)  but  the  theoretical  replacement 
rates  are  expected  to  decline  in  the  long  run. 
Automatic 
some 
improvements  in  pension  adequacy  over  recent 
years,  with  pensions  increasing  by  8.6%  in  July 
2025 and a further 7.8% indexation scheduled for 
July  2026.  Nevertheless, 
challenging 
macroeconomic environment has shifted attention 
towards  the  fiscal  sustainability  of  the  social 
security  system,  particularly  in  light  of  estimates 
that  in  2026  pensions  alone  would  account  for 
11.3%  of  GDP.  Bulgaria’s  Ministry  of  Labour  and 
Social  Policy  is  working  on  a  pensions’  roadmap, 
which  would  outline  potential 
reforms  and 
measures  to  balance  adequacy  and  sustainability 

indexation 

has 

the 

led 

to 

(312) OECD Review of Labour Market and Social Policy – Bulgaria 

2025, page 69. 

(313) 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. 

(314) 2024 Ageing Report – Country Fiche for Bulgaria. 

(315) This ratio is 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). 

concerns.  The  national  Parliament  adopted 
modifications  to  the  2nd  and  3rd  pillars  of  the 
pension  system 
to  stimulate  flexibility  and 
investments,  but  the  new  pension  scheme  will 
commence  in  2027.  In  addition,  retaining  older 
people in the labour market will be vital, alongside 
complementary  steps  such  as  expanding  overall 
labour-market  participation  and  encouraging 
private  pension  savings  to  secure  a  more  stable 
social security system in the longer term. 

Access  to  long-term  care  (LTC)  services  is 
hindered  by  a  lack  of  affordability  and 
scarce  availability,  especially  in  rural  areas. 
Affordability  of  LTC  is  the  biggest  barrier  to 
access.  In  2024,  29.4%  of  people  who  were  in 
(more) 
need  of  LTC  but  were  not  using 
professional home-care services reported this was 
due  to  financial  reasons  (vs  10.6%  in  the  EU). 
Public  social  protection  for  home  care  is  limited, 
with  relatively  high  out‑of‑pocket  costs.  LTC 
provision is also hindered by the shortage of (well-
trained)  care  workers,  coupled  with  unattractive 
working  conditions  and  pay.  The  number  of  LTC 
workers  per  100  individuals  aged  65  and  over  is 
2.4  vs  3.2  in  the  EU  and  gross  hourly  wages  for 
LTC workers only came to 64.2% of wages in other 
sectors (vs 89.2% in the EU). Staff challenges are 
compounded  by  limited  training  for  targeted, 
person-centred  support,  insufficient  capacity  to 
assess  needs  and  plan  services,  and  persistent 
investment gaps in suitable infrastructure. Despite 
insufficient access and high unmet needs, the LTC 
system remains underfunded, with public spending 
among the lowest in the EU (0.5% vs 1.7% in the 
EU  in  2022)  and  largely  covered  by  the  RRF,  the 
European  Regional  Development  Fund  (ERDF)  and 
the  European  Social  Fund  Plus  (ESF+)  in  recent 
years.  

Access,  affordability  and  quality  of  social 
services have been improving, but challenges 
remain. As part of the RRP, Bulgaria has adopted 
the  ordinance  on  the  quality  of  social  services 
(2022)  and  the  national  map  of  social  services 
(2024), which have laid the groundwork for future 
investments 
in  the  accessibility,  quality  and 
attractiveness  of  social  services.  Nevertheless, 
82%  of  all  social  services  were  based  in  urban 
centres, with only 18% in rural areas in 2024. The 
government  is  preparing  new  financial  standards 
for  all  social  services,  taking  into  account  the 
wider  reform.  In  conjunction,  it  intends  to  amend 
the  ordinance  on  the  quality  of  social  services  in 
2026  to  strengthen  the  existing  standards  for 

108 

 
 
to 

aimed 

services 

increase 

social 
their 
effectiveness  and  quality  provision.  Funding  from 
the  ESF+,  the  ERDF  and  the  RRF,  taken  together 
with  national  co-financing  of  EUR 950  million,  is 
being  channelled  towards  addressing  issues  of 
resources. 
quality, 
Notwithstanding 
further 
promotion  of  a  people-centred  approach  and 
continued  support  for  the  sustainable  transition 
remain 
towards  a  community-based  model 
relevant.  

the  progress  made, 

human 

access 

and 

109 

 
 
ANNEX 13: EDUCATION AND SKILLS 

the 

quality, 

including 

relevance 

labour-market 

country-specific 

recommendations 

competitiveness  of 

Boosting 
the 
Bulgarian economy and supporting the green 
and digital transitions requires further policy 
action  to  improve  skills  and  education.  The 
for 
2025 
Bulgaria  pointed  to  the  need  to  strengthen 
competence-based  teaching  and 
learning  and 
improve  teaching  quality  with  initial,  continuous 
and  needs-based  teacher  training.  Furthermore, 
the 
and 
inclusiveness of education and training need to be 
improved, 
for  Roma  and  other 
disadvantaged  groups.  Lastly,  action  is  needed  to 
make  skills  acquisition  more  effective  to  boost 
competitiveness and support the green and digital 
transition.  Bulgaria  still  has  shortcomings 
in 
quality  and  equity  in  education,  including  early 
childhood  education  and  care  (ECEC).  Educational 
outcomes  and  basic  skills  remain  alarmingly  low, 
particularly in mathematics, and for disadvantaged 
shortages, 
including  Roma.  Skills 
students, 
specifically 
are 
and 
exacerbated  by  low  levels  of  adult  learning  and 
low 
relevance  of  vocational 
education and training (VET) and higher education. 
Bulgaria  is  addressing  educational  challenges  by 
lowering 
age, 
compulsory 
eliminating kindergarten fees, investing in science, 
technology,  engineering  and  mathematics  (STEM) 
laboratories  in  schools  and  in  STEM  centres, 
amending the VET Act,  and providing scholarships 
for  STEM  studies.  These  measures  are  backed  by 
EU  funding  to  ensure  equity  and  labour-market 
alignment,  but  the  impact  of  these  measures  is 
still to be seen. 

labour-market 

education 

digital 

green 

skills, 

the 

Despite  an  upward  overall  trend, 
low 
participation  of  disadvantaged  children, 
including  Roma, 
in  quality  ECEC  fuels 
learning  disparities  and  inequalities.  Despite 
an  increase  of  3.8  percentage  points  (pps)  from 
2023,  participation in  formal  childcare  of  children 
aged 0-3 remained below the EU average in 2024 
(21.2% vs EU: 39.5%, increasing slightly to 22.1% 
in 2025 vs EU: 40.5%) and the national Barcelona 
target  for  2030  (30%)  (316),  partly  due  to  lack  of 
facilities  and  parental  leave  arrangements.  For 
children  aged  three  up  to  the  starting  age  of 
compulsory 
slightly 
increased  to  89.3%  in  2024  (EU  average:  95%), 
continuing  a  gradual  rise  over  the  last  decade. 

education, 

enrolment 

and 

lower 

participation 

Bulgaria  has  lowered  the  compulsory  education 
age  to  four  and  eliminated  kindergarten  fees,  but 
including  urban  capacity 
challenges  persist, 
shortages 
among 
disadvantaged  children,  particularly  Roma,  whose 
enrolment has nevertheless risen to 68% (up from 
58%  in  2021)  (317).  Implementing  the  new  ECEC 
quality 
to 
fragmented 
inconsistent 
regulations,  and  weak  monitoring  and  evaluation 
systems.  With  EU  Technical  Support  Instrument 
(TSI)  support,  Bulgaria  is  working  to  establish  a 
comprehensive monitoring and evaluation system. 

faces  hurdles  due 

framework 

provision, 

service 

reading 

(53.6%), 

Low  and  declining  basic  skills  proficiency 
among  young  people  reflects  a  structural 
barrier to skills development. In 2022, around 
half  of  Bulgarian  15-year-olds  underachieved  in 
mathematics 
(52.9%)  and 
science  (48%),  around  double  the  EU  averages 
(29.5%,  26.2%  and  24.2%,  respectively)  (318), 
representing  a  10  pps  increase  since  2012,  more 
than  the  EU  average,  with  a  particularly  stark 
rural-urban divide (see Annex 19). Meanwhile, only 
3.1%  were  top  performers  in  mathematics  (EU 
average:  7.9%),  2.2%  in  reading  (EU  average: 
6.5%)  and  1.4%  in  science  (EU  average:  6.9%), 
limiting  the  pool  for  innovation  and  excellence. 
Only 52.1% of 16-19-year-olds had at least basic 
or  above-basic  digital  skills  in  2023  (EU  average: 
66.5%)  (319).  These  outcomes  highlight  curriculum 
student 
and 
achievement  and  higher  education  participation, 
particularly in STEM. Bulgaria is investing in STEM 
competences  through  its  ‘Construction  of  school 
programme 
STEM 
complemented  by  STEM  laboratories  in  2 000 
schools  –  funded  by  the  Recovery  and  Resilience 
Facility  (RRF)  –  and  a  national  STEM  centre  with 
training  facilities.  Additionally, 
three 
Bulgaria has launched the ‘Skills in Focus’ national 
programme  for  the  2025/2026  school  year,  to 
deliver  modular  interventions  in  basic  skills  for 
kindergartens  and  schools  while  generating 
evidence to inform future policy development (320). 

environment’ 

challenges, 

hindering 

national 

regional 

quality 

(317) FRA Roma survey 2024 and 2021. 

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

Learning and Equity in Education. 

(319) European Social Survey 2023 - DESI index. 

(316) Bulgaria set a national target of 25% in its Child Guarantee 

(320) Ministry of Education (2025). National programme ‘Skills in 

Action Plan 

focus’. 

110 

 
 
 
 
 
Persistent 
disparities 
socio-economic 
severely  hinder  vulnerable  students’  basic 
skills  development.  In  2022,  Bulgaria  had  the 
EU’s  lowest  level  of  educational  equity,  with  only 
2.5%  (321)  of  disadvantaged  students  achieving 
good  PISA  results  (level  4)  in  at  least  one  basic 
skill  (EU  average:  16.3%),  down  from  8.2%  in 
2015  (EU  average:  21.1%).  This  compares  to 
33.4%  of  advantaged  peers  (EU  average:  59%). 
62%  of  students  from  the  poorest  quartile 
underachieve  simultaneously  in  all  three  basic 
skills 
(EU  average:  28.8%).  Recent  national 
evaluations reveal strong social segregation, while 
seventh-grade  tracking  shows  widening  socio-
economic  disparities  as  students  progress  (322). 
These 
by 
are 
disadvantaged  students’  over-representation  in 
VET  and  the  prevalence  of  small,  non-urban 
schools,  both  of  which  are  associated  with  lower 
basic skills performance, reflecting broader issues 
in curriculum and quality as well as school network 
fragmentation (323). 

compounded 

challenges 

targeted 

insufficient 

Despite  overall  progress  in  reducing  early 
school leaving, persistent gaps in basic skills 
highlight 
policy 
interventions.  Early  school  leaving  rose  slightly 
to  8.6%  in  2025  (EU  average:  9.1%),  following  a 
steady  decline  from  13.9%  in  2019,  remaining 
high  in  rural  areas  (18.6%)  and  among  Roma 
(55%)  (324).  Improvements  stem  from  efforts  to 
reintegrate  out-of-school  children  and  reduce 
dropout 
remedial 
education and social measures co-financed by the 
European  Social  Fund 
(ESF/ESF+).  However, 
persistent  challenges  include  irregular  attendance 
long-term 
patterns  such  as 
absenteeism 
the 
and 
effectiveness  of  remedial  measures  in  improving 
performance,  which  warrant  further  evaluation 
(325). 

lateness  and 
uncertainty 

large-scale 

through 

about 

rates 

Education is a key driver for Roma inclusion, 
yet  school  segregation,  early  leaving  from 
education  and  training  and  low  educational 
attainment  persist.  Despite  desegregation 

measures,  the  share  of  Roma  children  attending 
segregated  education  increased  from  64%  in 
2021  to  70%  in  2024.  Whereas  89%  attended 
education  within  the  national  compulsory  school 
age period (ages 4-16) in 2024, 55% of their older 
peers  aged  18-24  left  education  or  training 
prematurely. In 2024, only 42% of Roma aged 20-
24  had  completed  at 
least  upper-secondary 
education  (vs  90% in  the general  population)  and 
just  3%  of  30-34-year-old  Roma  had  attained 
tertiary  education (326).  The  ESF+ 
supports 
educational  integration  of  Roma  from  ECEC  to 
higher  education  with  targeted  and  mainstream 
measures.  Since  2018,  educational  mediators 
have  been  engaged  in  schools  and  kindergartens. 
Their  role  was  expanded  in  2024 by  adding  them 
to  the  VET  professions  list  and  increasing  their 
numbers, potentially strengthening their  impact in 
Roma communities.  

basic 

basic 

A  content-heavy  curriculum  and  imbalanced 
teaching hours continue to hinder basic skills 
development.  The  2016  competence-based 
curriculum  remains  heavily  focused  on  content, 
with  limited  effectiveness  due  to  insufficient 
teacher  support  and  professional  development, 
uneven  regional  implementation  and  unaligned 
assessment  practices  (327).  Secondary  education 
favours  foreign  languages  and  profiling  subjects 
over 
skills 
skills,  worsening 
performance.  In  2025,  the  Ministry  of  Education 
proposed two complementary approaches to focus 
on  skills  development:  a  fast  increase  in  basic 
skills  teaching  hours  without  expanding  their 
knowledge  content  (328),  and  a  concept  for  long-
term  curriculum  revision  prioritising  skills  and 
higher  literacy  over  specialisation  (329).  These 
efforts  would  be  in  line  with  recommendations to 
increase 
instructional  hours 
(currently  below  the  EU  average),  with  student-
(330).  Meanwhile, 
centred 
Bulgaria  is  refining  the  curricula  for  grades  5-7 
with  TSI  support  to  enhance  competence-based 
learning 
learning  and  teaching  and 
outcomes. 

teaching  methods 

the  number  of 

improve 

(326) FRA Roma survey 2024. 

(321) Declining trend: 8.2% in 2015 and 4.2% in 2018. 

(327) OECD (2023), Skills Strategy Bulgaria. 

(322) OECD (2025). Education and Skills in Bulgaria. 

(328) Ministry of Education and Science (2025). Proposal for a 

(323) OECD (2025). Education and Skills in Bulgaria. 

(324) FRA Roma survey 2024. 

(325) OECD (2025). Education and Skills in Bulgaria. 

change in the curricula. 

(329) Ministry of Education and Science (2025). Draft concept for 

curriculum change. 

(330) OECD (2025). Education and Skills in Bulgaria. 

111 

 
 
 
about 

approaching 

to  125%  of 

targets  STEM 

Weak  levels  of  basic  skills  reveal  major 
challenges  in  teaching  quality  and  teacher 
education.  Bulgaria  faces  persistent  teacher 
shortages,  especially  in  STEM,  amid  an  ageing 
workforce,  with  32.9%  of  general  education 
teachers  and  35%  of  VET  teachers  aged  at  least 
55 in the 2024/2025 school year (331). This raises 
concerns 
large-scale 
retirements.  To  improve  attractiveness,  salaries 
have  been  increased  significantly  over  the  last 
decade 
the  national  average 
wage (332),  with  salary  satisfaction  doubling 
between  2018  and  2024  (from  29.5%  to  64.6%; 
EU  average 
in  2024:  37.3%),  though  urban 
salaries still lag behind (333). The 2025 ‘Future for 
Talents’  programme 
teacher 
shortages  by  training  talented  students  and 
upskilling  STEM 
teachers.  Recruitment  and 
retention  of  novice  teachers  remain  challenging, 
particularly  in  rural  and  disadvantaged  schools, 
including  VET  schools.  In  2024,  only  43.6%  of 
novice  teachers  (down  16.4  pps  since  2018) 
reported teaching as their first career choice. Initial 
teacher  education  (ITE)  programmes  attract  few 
high-performing  upper-secondary  students  and 
many  of  those  who  have  completed  ITE  do  not 
enter  the  profession  (334).  To  boost  recruitment, 
Bulgaria  offers  scholarships  and  fee  waivers  for 
ITE  programmes,  and 
STEM  and  pedagogical 
alternative  pathways  for  second-career  teachers, 
of  which  Bulgaria  has  the  EU’s  highest  share 
(16.4%).  While  teachers’  induction  access  has 
significantly 
improved  since  2018  (46.9%  to 
73.8%),  only  24.5%  of  novice  teachers  have  an 
assigned  mentor. 
professional 
development (CPD) remains uneven: only 58.4% of 
teachers 
impactful, 
highlighting gaps in needs assessment and quality 
control for CPD and teaching quality. 

Continuous 

training 

recent 

found 

Despite  high  participation  and  strong  STEM 
focus,  the  VET  system  still  faces  challenges 

(331) NSI (National statistical Institute) - 

https://www.nsi.bg/en/statistical-data/197/616, 
https://www.nsi.bg/en/statistical-data/197/613.  

(332) The most recent 15% increase in teachers’ basic salaries 

came into effect on 1 March 2025. 

(333) OECD (2025), Results from TALIS 2024: The State of 

Teaching. This also applies to other data in this paragraph 
unless otherwise indicated. 

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

in  terms  of  quality  and 
labour-market 
relevance.  Enrolment  in  medium-level  VET  has 
remained stable over the last decade and is above 
the  EU  average  (57.2%  vs  52.9%  in  2024). 
However,  rather  than  reflecting  a  fully  informed 
student  choice,  this  is  largely  driven  by:  (i)  early 
tracking  after  grade  7,  which  disproportionately 
channels  disadvantaged  students 
into  VET; 
(ii) wide territorial  coverage;  and  (iii)  the  fact  that 
there  are  more  places  in  VET  than  in  general 
education. VET schools often lack specialised staff, 
modern  equipment  and  strong  employer  links, 
contributing to poor labour-market outcomes (335). 
The  employment 
those  who  have 
rate  of 
completed  VET  remains  below  the  EU  average 
(78.8% vs 80.2% in 2025). In 2025, almost half of 
those  who  had  completed  VET  (and  up  to  two 
thirds 
in  some  districts)  faced  no  employer 
demand,  while  some  low-demand  professions 
continued  to  attract  many  students  (336).  At  the 
same  time,  the  system  demonstrates  some 
strengths:  1 in 2  medium-level  VET  students  are 
enrolled  in  STEM  programmes  (50.3%  vs  an  EU 
average  of  36.3% 
female 
participation  reached  27.9%  in  2024.  Addressing 
the  challenges  mentioned  is  central  to  the  2021-
2030  Strategic  Framework  for  Education  and 
Training, 
funding.  New 
cooperation forms – Sector Skills Councils, Centres 
of  Vocational  Excellence  and  skills-anticipation 
mechanisms  –  are  emerging  with  RRF  and  ESF+ 
support. The 2024 amendment to the VET Act, part 
of  a  reform  under  Bulgaria’s  recovery  and 
resilience plan (RRP), introduced programmes with 
mandatory  green  and  digital  competences  and 
greater  curricular  flexibility  to  respond  to  local 
labour-market needs. The VET reform also includes 
a comprehensive update to the list of professions 
for  VET,  introducing  a  change  to  the  structure  of 
qualifications  –  moving  from  narrow  ‘specialisms’ 
to  broad-based  ‘professions’.  For  each  of  the 
professions,  new  state  educational  standards, 
examination  programmes  and  curriculum  are 
developed together with employer representatives 
to meet the needs of the labour market. 

supported  by  EU 

in  2024),  and 

Dual VET remains insufficiently attractive to 
both  schools  and  employers.  Despite  progress 
since the introduction of dual VET in 2014, uptake 

(335) OECD (2025), Education and Skills in Bulgaria, Reviews of 

National Policies for Education. 

(336) Institute for Market Economics, Education and employment 
2025, Index of the Correspondence between Vocational 
Education and Economic Profiles. 

112 

 
 
 
Graph A13.1: Share of students enrolled in STEM 
and ICT in BG vs EU and total tertiary enrolments 
in BG in 2015, 2018, 2023 

remains  low  (6.8%  in  the  2025/2026  school 
year) (337), mainly reflecting limited school capacity 
and  weak  employer  engagement.  In  April  2024, 
the  government  began  covering  health  and  social 
contributions  for  dual  VET  students.  However, 
towards 
more  efforts 
incentivising  employer  engagement  in  dual  VET 
and  promoting  greater  diversification  of  the  VET 
offer  in  line  with  local  economic  needs,  including 
through better use of skills intelligence. 

could  be  directed 

increase 

in  student  numbers 

Insufficient participation in higher education, 
particularly  among  disadvantaged  students, 
worsens  skills  gaps. 
In  2025,  41.2%  of 
Bulgarians  aged  25-34  had  a  tertiary  degree  (EU 
average: 44.8%), with men lagging behind women 
(34.6%  vs  48.1%)  and  rural  areas  behind  urban 
areas  (20.7%  vs  52.4%),  on  top  of  regional 
differences  (see  Annex  19).  Despite  a  6.8%  year-
on-year 
in  the 
2024/2025  year, the  enrolment  rate  has  declined 
by  8%  since  2020/2021  (338),  with  critically  low 
participation  of  disadvantaged  students  whose 
parents  have  secondary 
(37%)  or  primary 
education  or  lower  (2%)  (339).  Targeted  financial 
assistance  and  equity-focused  policies  may  help 
increase  their  participation.  Low  perceived  quality 
of  education  drives  high  outward  degree  mobility 
in  2023).  To  retain  talent,  Bulgaria 
(10.8% 
launched  the  ‘I  choose  to  study  in  Bulgaria’ 
programme in 2026, offering fee exemptions and 
monthly  scholarships  for  humanities  and  STEM 
bachelor’s studies. 

Source: Eurostat, [educ_uoe_enrt03]. 

Declining STEM enrolment in higher education 
poses  a  challenge  to  meeting  graduate 
demand. Only 23.7% of higher education students 
were  enrolled  in  STEM  in  2023  (EU  average: 
26.9%), below the proposed 2030 EU-level target 
of  32%,  with  women  under-represented  (31.5%). 
3.7%  of  PhD  students  study  information  and 
communications  technology  (ICT)  (EU  average: 
3.8%), with women making up 32.4% (EU average: 
24.3%). STEM tertiary enrolment declined by 8.6% 
between 2018 and 2023, though enrolment in ICT 
programmes increased by 18.8%. Bulgaria has one 
of  the  EU’s  lowest  shares  of  STEM  graduates 
(20.1%; EU average: 25.2%), while its share of ICT 
graduates  is  close  to  the  EU  average  (4.9%  vs 
4.7%).  

Despite  progress,  higher  education  remains 
insufficiently  aligned  with 
labour-market 
demands. Policy efforts focus on aligning tertiary 
education  with  labour-market  needs,  prioritising 
high-demand  study  programmes  and  improving 
regional  balance  via  the  Higher  Education  Map. 
(ERDF) 
European  Regional  Development  Fund 
funding  for  university  modernisation  and  ESF+ 
support  for  competence-based  learning  aim  to 
enhance  access  and  quality.  Nevertheless,  while 
the  share  of  graduates  working  in  positions 
requiring  higher  education  improved  to  61%  in 
2024  (up  from  46%  in  2014)  (340),  tertiary 
education  is  not  yet  sufficiently  diversified,  with 
insufficient  institutional  collaboration,  including 
with  the  business  sector,  limited  data  collection 
and uneven instructional quality (341). 

(337) Bulgaria, Ministry of Education and Science data.  

(338) National Statistical Institute: Edu_3.1.1_en.xlsx. 

(340) BURS (2024). Rating of universities in Bulgaria 2024. 

(339) BURS (2024). Rating of universities in Bulgaria 2024. 

(341) OECD (2025). Education and Skills in Bulgaria. 

113 

3.4%4.6%5.6%4.4%4.9%5.5%24.3%24.2%23.8%27.6%27.8%26.9%278,953236,335221,330 050 000100 000150 000200 000250 000300 000201520182023201520182023BulgariaEU0%5%10%15%20%25%30%35%% ICT% STEMTotal tertiary enrolments 
 
 
  
 
in 

of 

shortage 

rates (344). 

occupations 

unemployment 

(345) 
in  developing  skills 

Skills  shortages,  with  regional  variations, 
continue  to  undermine  competitiveness  and 
growth.  In  a  2025  national  survey,  47.5%  of 
employers  (compared  to  43%  in  2024)  cited  lack 
of skills as the main hiring challenge (342). Bulgaria 
is  among  the  Member  States  with  the  highest 
number 
(see 
Annex 11) (343).  The  north-east  faces  the  greatest 
finding  qualified  workers,  as 
difficulties 
suggested  by  high  labour  demand  and  above-
average 
Skills 
mismatches  persist  with  a  high  number  of 
occupations  simultaneously  in  surplus  and  in 
(see  Annex  11).  Bulgaria  has 
shortage 
advanced 
intelligence  by 
implementing  methodologies,  producing  labour-
market  analysis  and  prognoses,  and  establishing 
10  regional  competence  assessment  centres. 
Improving  skills  intelligence  could  also  include 
guidelines  for  the  use  of  big  data  and  artificial 
intelligence.  Bulgaria  benefited  from  technical 
support  under  the  TSI  for  the  development  of  a 
national  strategy  with  a  comprehensive  set  of 
skills  policy  actions.  The  support 
included  a 
proposal for a comprehensive action plan with key 
objectives  and  policy  actions,  relevant  activities, 
instruments, 
stakeholder 
engagement, but all these have not been adopted 
yet.  Bulgaria  uses  instruments  with  national  and 
EU  funding  (ESF+,  RRF,  Just  Transition  Fund, 
European Agricultural Fund for Rural Development 
and  ERDF)  to  support  skills  acquisition,  but  skills 
development  is  still  not  delivering  substantial 
improvements.  

timelines 

and 

(342) Bulgaria’s PES employer survey 2025. 

(343) European Labour Authority (2025), EURES Report on labour 
shortages and surpluses 2024, Publications Office of the 
European Union, Luxembourg. 

(344) See the 2025 PES employer survey report, table 13. 

(345) EURES, op. cit. 

Graph A13.2: Skills development in Bulgaria 

Source: Eurostat, [tepsr_sp410] and AES 

Bulgaria  faces  a  shortage  of  workers  with 
green and digital skills. The country has one of 
the  highest  emission  intensities  of  output  in  the 
EU,  so  it  needs  workers  with  green  skills  (see 
Annex  11). In 2025, the share of individuals aged 
16-74  with  at  least  basic  digital  skills  increased 
only  slightly  to  38.3%  (up  from  35.5%  in  2023), 
still  below  the  EU  average  of  60.4%.  The  RRF 
funds  digital  education  infrastructure  in  schools 
and  a  large-scale  investment  in  an  adult  learning 
platform  and  digital  skills  training.  By  end-2025, 
contracts had been signed for the creation of over 
1 300 digital clubs nationwide, nearly doubling the 
initial RRP target. The ESF+ ‘Programme Education’ 
allocated EUR 125 million in 2025 to support over 
200 000  students  and  212 000  parents  and 
education mediators in acquiring digital skills. The 
ESF+  also  provides  training  opportunities  for 
inactive 
204 000  employed,  unemployed  and 
people.  Employer  organisations  and  trade  unions 
have developed a framework to assess workforce 
digital  skills  by  analysing  the  needs 
in  key 
professions  and  occupations  across  economic 
sectors.  Nevertheless,  results  remain  modest  in 
view  of  the  scale  of  training  needs.  The  revised 
target for trained individuals under the RRP, halved 
from 500 000 to 260 000, highlights challenges in 
digital skills development. 

Adult  participation  in  learning  remains  low, 
hindering  workers’  adaptability  to  labour-
market  changes.  In  2022,  based  on  the  adult 
education  survey,  participation  was  9.5%,  less 
than in 2016 and still significantly below the 2030 
national  target  of  35.4%  and  the  EU  average 

114 

010203040506070202120232025201620222030 targetIndividuals with at least basic digital skillsAdults participating in learning% of total populationBGEU 
 
   
(39.5%) (346). Annually collected data showed that 
participation  in  education  and  training  during  the 
four weeks preceding the survey more than tripled 
in 2025, from 1.8% to 6.1%, but remained among 
the  lowest  in  the  EU  (13.7%). Women,  young 
people  and  those  with  higher  education  are  more 
likely to participate in training, though participation 
rates  are  still  much  lower  than  the  EU  averages. 
Unemployed people are less likely to participate in 
training  partly  due  to  the  focus  of  active  labour 
market  policies  on  subsidised  employment. 
Participation  is  further  undermined  by  labour-
market dynamics: a tight labour market with rising 
wages amid a shrinking workforce means that job 
opportunities  are  often  easily  available,  and 
increased  demand 
low-skilled  workers 
for 
alleviates  pressure  to  upskill  and  reskill.  Training 
accessibility  is  an  issue  due  to  administrative 
burdens and insufficient availability of courses and 
learning  options.  Bulgaria  relies  heavily  on  EU 
funding  to  support  training,  often  coupled  with 
subsidised  employment,  which 
to 
programming  cycles  and  undercuts  sustainability. 
A  pilot  project  on  individual  learning  accounts 
could provide insights on the way forward, but its 
launch  has  been  delayed  and  is  now  expected  in 
2026.  As  part  of  the  European  Qualifications 
Framework  Recommendation’s 
implementation, 
Bulgaria  has  yet  to  put  in  place  the  national 
qualifications database and connect it to Europass. 

links 

it 

(346) Data from the 2022 adult education survey, special 
extraction excluding guided on-the-job training. 

115 

 
 
 
 
 
ANNEX 14: SOCIAL SCOREBOARD 

Table A14.1:Social Scoreboard for Bulgaria 

Update of 4 May 2026. 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 2026 for details on the methodology 
(https://employment-social-affairs.ec.europa.eu/joint-employment-report-2026_en). 
Source: Eurostat 

116 

9.58.638.313.87.46.9477.03.51.529.033.126.933.26.922.11.0Critical situationTo watchWeak but improvingGood but to monitorOn averageAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Equal opportunities and access to the labour marketBest performersBetter than averageEarly leavers from education and training(% of  the population aged 18-24, 2025)Young people not in employment, education or training(% of the population aged 15-29, 2025)Gender employment gap(percentage points, population aged 20-64, 2025)Income quintile ratio (S80/S20, 2025)At risk of poverty or social exclusion (AROPE) rate (% of the total population, 2025)Employment rate(% of the population aged 20-64, 2025)Unemployment rate(% of the active population aged 15-74, 2025)Long term unemployment(% of the active population aged 15-74, 2025)Gross disposable household income (GDHI) per capita growth(index, 2008=100)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2025)Dynamic labour markets and fair working conditionsSocial protection and inclusionShare of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2025)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2025)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2025)Self-reported unmet need for medical care (% of the population aged 16+, 2025)Disability employment gap (percentage points, population aged 20-64, 2025)Housing cost overburden (% of the total population, 2025) 
 
 
 
   
 
 
ANNEX 15: HEALTH AND HEALTH SYSTEMS 

resulting 

life  expectancy, 

Bulgaria’s  health  system  faces  significant 
challenges  that  need  to  be  addressed  to 
improve  the  health  of  its  population,  social 
fairness  and  productivity.  Challenges  include 
from  high 
low 
preventable  and  treatable  mortality,  and  limited 
access to care. These issues are mainly caused by 
(i) an insufficient focus on disease prevention and 
(ii) shortages  of  healthcare 
outpatient  care; 
workers; 
geographical 
distribution  of  healthcare  resources.  The  2025 
country-specific 
(CSRs) 
highlighted  the  access  challenges,  in  particular 
those 
(OOP) 
payments  and 
shortages  and  uneven 
distribution of health professionals. 

to  high  out-of-pocket 

recommendations 

uneven 

related 

(iii) an 

and 

to 

Graph A15.1: Treatable mortality 

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

Life expectancy at birth in Bulgaria was still 
one  of  the  lowest  in  the  EU  in  2024,  and 
2023  avoidable  mortality  –  preventable  or 
treatable  –  was  among  the  highest.  In  2023, 
treatable  mortality  was  one  of  the  highest  in  the 
EU,  suggesting  shortcomings  in  the  effectiveness 
of the health system. Moreover, Bulgaria is one of 
the  EU  countries  that  have  seen  only  small 
decreases in mortality from treatable causes over 
the last 10 years, which stood at more than twice 
the  EU  average  in  2023  –  and  the  gap  worsened 
during  the  pandemic  (see  Graph A15.1).  Diseases 
of 
the  circulatory  system  –  cardiovascular 
diseases  (CVDs)  –  and  cancer  remain  the  leading 
causes  of  death  in  Bulgaria,  with  the  former 
accounting  for  more  than  62%  of  all  deaths  in 
2023,  the  latter  17%.  Standardised  death  rates 
from  CVDs  were  particularly  high  in  Bulgaria 
(about  three  times  the  EU  average).  Under 
EU4Health,  Bulgaria  benefits  from  several  grants 
and  participates  in  joint  actions  targeted  at  CVDs 

and  other  non-communicable  diseases  (NCDs), 
and 
PreventNCD, 
including 
CARE4DIABETES (347). 

CURTAIN 

JA 

low 

Preventable  mortality  was  also  very  high  in 
2023, only 10% lower than 10 years earlier. 
In  view  of  these  health  outcomes,  investment  in 
disease  prevention  remains 
in  Bulgaria, 
despite  a  slight  increase  over  the  last  10 years, 
from a 2.8% share of healthcare spending in 2014 
to  2.9%  in  2023.  A  key  investment  in  prevention 
was approved in April 2025 through a 2025-2030 
low 
programme  addressing  the  exceptionally 
vaccination  rate  against  human  papillomavirus. 
The  programme  is  broadening  access  through 
expanded coverage and reimbursement.  

Preventable  mortality  in  Bulgaria  is  closely 
linked  to  environmental  factors  (such  as  air 
pollution,  see  Annex 8)  and  to  behavioural 
risk  factors  (348).  Bulgarian  adults  consume 
relatively  little  fruit  and  vegetables  and  have  one 
of  the  lowest  levels  of  physical  activity  outside 
working  time  of  all  EU  countries  (62%  of  the 
population  reported  never  practising  such  activity 
in  2022  vs  31.6%  for  the  EU).  Both  adults  and 
adolescents  also  report  high  levels  of  alcohol 
consumption  and  smoking  rates,  which  have  not 
decreased over the last decade and are among the 
highest  smoking  rates  in  the  EU  (almost  29%  of 
adults were smokers in 2022 vs 18% in the EU on 
average).  To  support  less risky  lifestyle  choices,  it 
would be beneficial to follow up on health literacy 
activities,  such  as  those  put  forward  by  the 
2012-2027 Plan for Health Education in Bulgarian 
schools,  which  forms  part  of  the  Bulgarian 
recovery  and  resilience  plan  (RRP).  In  October 
2025  an  ordinance  on  healthy  nutrition  for 
students was adopted. 

These  poor  health  outcomes  negatively 
affect Bulgaria’s workforce, productivity and 
competitiveness. 
In  Bulgaria,  mortality  at 
working  age  as  a  proportion  of  total  mortality  is 
among  the  highest  in  the  EU,  exacerbating  the 

(347) JA PreventNCD - Reducing Europe’s cancer and NCD burden 
through coordinated strategies on health determinants; 
CURTAIN - Beating Cancer Inequalities through Literacy in 
Europe;  CARE4DIABETES - Reducing the burden of non-
communicable diseases by providing a multi-disciplinary 
lifestyle treatment intervention for type 2 diabetes. 

(348) OECD/European Observatory on Health Systems and Policies 
(2025), Country Health Profile 2025: Bulgaria. State of 
Health in the EU. 

117 

200.8189.0213.0225.1194.1185.394.889.291.793.389.786.8201420192020202120222023per 100 000 populationBulgariaEU 
 
        
 
 
 
for 

the  EU) 

effects of population ageing on a shrinking labour 
force (see Annex 11). Indeed, Bulgaria’s workforce 
is  expected  to  drop  by  12%  between  2022  and 
2040  due  to  demographic  ageing  of  the  2022 
(349).  Further 
population 
(7% 
in  prevention  could  alleviate  this 
investment 
impact. As regards NCDs, it is estimated that up to 
80%  of  CVDs  and  type  2  diabetes,  up  to  half  of 
cancer  cases  and  most  chronic  lung  diseases  can 
be  prevented  (350).  Preventing  all  deaths  from 
NCDs  in  Bulgaria  –  in  particular  CVDs  –  would 
result  in  a  2.3%  gain  in  working-life  years  from 
(vs  0.9%  for  the  EU,  see 
2022  to  2040 
Graph A15.2). This is the highest potential increase 
across  Member  States  and  would  save  about 
1 324 500 life years in Bulgaria over the period.  

Graph A15.2: Potential gains in working-life years 
from prevention, between 2022 and 2040 

Source: EC/OECD, State of Health in the EU: 2025 Synthesis 
Report. 

As  regards  healthcare  delivery  settings,  the 
share of outpatient care in Bulgaria’s health 
spending is still one of the lowest in the EU, 
despite  Bulgaria’s  ongoing  investment  in 
expanding  outpatient  care  access.  While  it 
rose  significantly  over  the  preceding  decade, 
expenditure  on  health  per  capita  in  Bulgaria  (see 
Table A15.1) remained one of the lowest in the EU 
in 2023. Bulgaria’s health system remains strongly 
hospital-centred  with  the  largest  share  of  its 
health  spending  (more  than  a  third)  on  hospital 
services,  and  one  of  the  EU’s  lowest  shares  (less 
than  a  fifth)  on  outpatient  care.  Medical  goods 
therapeutic 
(retail 
appliances)  accounted  for  a  third  of  health 
spending, also one of the highest in the EU. 

pharmaceuticals 

and 

Yet  Bulgaria’s  pharmaceutical  sector  is  of 
limited  economic  significance.  Employment  in 
pharmaceutical manufacturing remains among the 
lowest  in  the  EU,  and industry investment in  R&D 
in  euro  per  capita  trails  most  EU  countries  (351) 
(see  Annex 4  and  Annex 5).  However,  the  country 
stands  out  as  a  significant  hub  for  clinical 
research.  In  2024,  Bulgaria  was  the  Eastern 
European  country  reporting  the  highest  number 
(21)  of  clinical  trials  per million  population,  which 
was  also  above  the  EU  average  of  18.3  (352).  The 
industry also maintains a modest but fairly stable 
share of extra-EU exports (4.5% in 2025 vs 13.9% 
for  the  EU  average).  However,  it  has  not  yet 
mirrored  the  rapid  growth  observed 
in  the 
top-improving Member States. 

Relative to population size, Bulgaria had the 
highest number of hospital beds in the EU in 
2023. In addition, their number increased over the 
last  decade,  while  the  EU  average  decreased. 
Meanwhile,  the  trend  of  low  investment  in  the 
health  sector  continued,  with  the  lowest  level  of 
health infrastructure investment per capita among 
Member  States  in  2023  and  on  average  since 
2015.  The  Bulgarian  RRP  nonetheless  includes 
investments  aimed  at  modernising  hospitals  and 
medical  facilities.  Despite  one  of  the  highest 
numbers  of  hospital  discharges  per  1 000 
inhabitants in the EU, the occupancy rate and the 
average length of stay are among the lowest (353), 
which could point to a potential mismatch between 
hospital  stays  and 
the  assessed  need  for 
hospital-based  care.  The  payment  model  could 
help  explain  the  high  hospital  admission  rates: 
hospital  providers  are  currently  remunerated  on 
completed  clinical  pathways  only,  which  are  fixed 
in content and not tailored to patients’ history. This 
may  encourage  maximising  pathway  volumes  to 
secure  revenue.  The  number  of  beds  in  intensive 
care units was also one of the highest in the EU in 
2023.  It  could  represent  an  asset  for  Bulgaria’s 
resilience,  provided  that  the  units  are  equipped 
with  high-quality  medical  equipment  and  staffed 
with  the  necessary  medical  personnel.  Yet  the 
estimated  domestic  spending  per  capita  by 

(349) EC/OECD, State of Health in the EU: 2025 Synthesis Report. 

(352) US National Library of Medicine, https://clinicaltrials.gov. 

(350) NCD Alliance (2025), NCDs overview | NCD Alliance. 

(353) Country Health Profile 2025: Bulgaria – see earlier footnote. 

(351) The Pharmaceutical Industry in Figures, EFPIA (European 

Federation of Pharmaceutical Industries and Associations). 

118 

0.7%0.5%1.5%0.3%0.1%0.1%0.0%0.5%1.0%1.5%2.0%2.5%BulgariaEUCancerCVDDiabetes and chronic lower respiratory disease 
        
 
 
Table A15.1: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 2023 data (or latest available). 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 
Portugal (licensed to practice) and Slovakia (professionally active). Latest data update on nurses for Belgium and Sweden: 2022; for France: 2021; 
for Luxembourg: 2017. 
** latest available 10-year trend: ratio 2023/2014 or 2024/2013; a factor of 2.00 means that it has doubled in 10 years. 
***‘Available hospital beds’ covers somatic care, not psychiatric care. 
Source: Eurostat 

Bulgaria  on  prevention,  preparedness  and 
response is one of the lowest in the EU (354). 

challenge, 

particularly 

Antimicrobial  resistance  (AMR)  and  related 
multi-resistant  infections  represent  another 
significant 
for 
hospitals.  Having  steadily  increased  since  2019, 
the  consumption  of  antibiotics 
in  Bulgaria 
decreased  slightly  between  2023  and  2024  but 
remained  above  the  EU  average.  More  efforts 
would  be  needed  to  keep  on  track  with  the  2030 
target (355).  Bulgaria 
recommended 
benefits  under  EU4Health  from  a  direct  grant  for 
implementation of AMR measures and participates 
in a joint action on the matter (356).  

national 

Hospital  statistics  and  spending  allocation 
underline  room  for  improving  effectiveness, 
in particular by shifting resources to primary 
and preventive care, and to increasing access 
to  outpatient  care.  The  lack  of  outpatient  care 
hinders access to healthcare, as highlighted by the 
2025  CSR,  in  particular  primary  healthcare  and 
prevention.  The  completion  and  continuation  of 
RRP  measures  such  as  the  construction  or 
renovation  of  outpatient  care  units  with  the 
necessary  staff  and  equipment  could  be  a 

(354) OECD Health Statistics 2025. 

(355) 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. 

(356) EU-JAMRAI 2 - Joint Action Antimicrobial Resistance and 

Healthcare-Associated Infections 2. 

step 

significant 
towards  boosting  primary 
healthcare.  Via the  digital  platform  that  would  be 
provided, the units would also allow for increased 
use  of 
telemedicine  solutions.  By  covering 
underserved and/or remote areas, they would help 
reduce  geographical  disparities 
in  accessing 
healthcare. For example, the percentage of people 
living within a 10-minute drive of a hospital varies 
markedly across Bulgarian regions and is very low 
in  rural  areas  (see  Annex 18).  Bulgaria  is  also 
working on access to palliative and long-term care 
and on the reallocation of hospital beds for active 
treatment  to  long-term  treatment  beds.  It  entails 
an evidence-based identification of what could be 
carried  out  as  outpatient  rather  than  inpatient 
care.  

Significant 
challenges  hamper  optimal 
access to healthcare, in particular in remote 
areas.  Besides  the  lack  of  outpatient  care,  a  key 
is  financial.  Public  spending  as  a 
obstacle 
proportion of total health expenditure was among 
the  lowest  in  the  EU  in  2023  (see  Table A15.1). 
This, together with long waiting times that prompt 
many  people  to  pay  for  private  healthcare 
providers, translates into the highest proportion of 
households’  OOP  payments  for  healthcare  in  the 
EU  (35.5%  in  2023,  almost  2.5 times  the  EU 
average), although it has decreased somewhat (by 
almost  five  percentage  points  between  2014  and 
2023). While inpatient care is publicly funded to a 
large  extent  (92%  of  costs  in  2023),  there  is  a 
particularly  high  share  of  private  spending  in 
outpatient 
Furthermore, 
pharmaceuticals account for more than two thirds 

services 

(43%). 

119 

2020202120222023202410-year change**EU average* (latest year) Cancer mortality per 100 000 population245.3229.4217.3221.3n.a.0.91233.1 (2023)Mortality due to circulatory diseases per 100 000 population1 119.71 211.01 074.3 923.1n.a.0.82313.0 (2023)Current expenditure on health, purchasing power standards, per capita1 5561 8221 8502 074n.a.1.973834.9 (2023)Public share of health expenditure, % of current health expenditure 63.1 65.0 63.5 63.0n.a.1.0880.6 (2023)Spending on prevention, % of current health expenditure 2.83.93.12.9n.a.1.023.7 (2023)Available hospital beds per 100 000 population*** 768 777 785 803n.a.1.15440 (2023)Doctors per 1 000 population*4.54.54.64.6n.a.1.074.3 (2023)*Nurses per 1 000 population* 4.5 4.4 4.5 4.4n.a.0.937.6 (2023)*Mortality at working age (20-64 years), % of total mortality20.019.818.719.519.70.9614.3 (2023)Consumption of antibiotics in the community and hospital sectors,      defined daily doses per 1 000 inhabitants 22.7 24.4 25.7 26.3 23.41.1620.3 (2024) 
 
 
        
 
(67%)  of  OOP  payments,  as  only  23%  of 
pharmaceutical expenses are publicly covered (357). 

from 

reasons 

financial 

inequality. 

(358).  While 

poverty 
the 

Beyond  its  direct  impact  on  health  status, 
healthcare  coverage  is  also  a  powerful  tool 
This 
and 
against 
underscores 
importance  of  addressing 
inequalities  in  access,  as  highlighted  in  the  2025 
that  healthcare 
CSR.  Analyses  have  shown 
coverage reduces poverty and income inequality in 
all  Member  States 
the  overall 
proportion  of  the  Bulgarian  population  reporting 
unmet  needs  for  medical  care  was  below  the  EU 
average  in  2025,  these  unmet  needs  primarily 
stem 
(affordability), 
followed  by 
travelling  distance.  Moreover, 
comparatively  high  unmet  medical  needs  are 
reported  in  rural  areas,  and  people  below  the 
poverty  threshold  report  unmet  medical  needs 
(3.1%)  and  unmet  dental  needs  (13.8%)  in  much 
higher  proportions.  In  Bulgaria,  40%  of  Roma 
report  not  being  covered  by  the  national  health 
insurance 
insurance 
scheme  or  additional 
schemes,  and  6%  report  unmet  medical  needs 
(359).  As  a  measure  that  addresses  the  2025  CSR 
on improving access […] including by reducing out-
of-pocket payments, the National Health Insurance 
Fund  (NHIF)  has  been  expanding  several  types  of 
reimbursement.  Since  2024  the  NHIF  reimburses 
fully  over  400 medicines  for  the  home  treatment 
of  chronic  CVDs,  which  aims  to  increase  equality 
of access and adherence to prescribed therapies. 

There  are  not  enough  nurses  and  general 
practitioners  (GPs),  and  shortages  are  more 
severe  in  some  rural  and  remote  areas. 
Employment  in  healthcare  in  Bulgaria  dropped 
between Q1-2020 and Q2-2025 (compared with a 
9.9% increase for the EU as a whole). The number 
and  age  profile  of  practising  nurses  and  doctors 
still poses a significant challenge to the long-term 
accessibility of health services (see 2025 Country 
Report), as pointed out in the 2025 CSR. Moreover, 

(357) Country Health Profile 2025: Bulgaria – see earlier footnote. 

(358) European Commission: Directorate-General for Health and 
Food Safety, Cruces et al. (2025), The role of healthcare in 
reducing inequalities and poverty in the EU. As regards health 
coverage, poverty and income refer in the present analysis to 
a different measure than the one usually reported, which is 
defined for instance in Annex 12. Here, it also estimates the 
impact of benefits in kind, while the standard measure only 
accounts for cash transfers. 

(359) Roma Survey 2024 | European Union Agency for 

Fundamental Rights. 

the  number  of  GPs  has  fallen  over  the  past 
decade, and their share is very low compared with 
specialists.  The  situation  is  worse  in  rural  and 
hard-to-reach  areas  (see  Annex 18):  as  in  2023, 
the  number  of GPs  relative  to  the  population  size 
varied  more  than  two-fold  across  regions,  from 
3.1 to 8.4 GPs per 10 000 people (360).  

workforce 

implementation  would 

Bulgaria  has  taken  several  measures  whose 
help 
successful 
address  the  2025  CSR  on  tackling  the 
shortages  and  uneven  distribution  of  health 
professionals.  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 the 
reform  measures  aimed  at 
country.  Other 
addressing 
include 
shortages 
scholarships,  more  university  places,  better 
remuneration and increased reimbursement by the 
NHIF, 
in 
hard-to-reach  and/or  remote  areas.  In  2025,  over 
100 contracts  were  signed  with  young  medical 
specialists, financially incentivising them to work in 
less densely populated locations facing shortages. 
As  a  first  step  to  addressing  the  shortage  of 
nurses,  tuition  fees  for  nursing  studies  were 
abolished  in  2025.  However,  poor  remuneration 
and  working  conditions  are  discouraging  young 
people  from  entering  nursing  studies,  prompting 
them to drop out of the course before completion 
or  emigrate 
seek  better  opportunities 
(approximately  one  third  of  nursing  graduates 
leave the country shortly after qualifying (361). 

in  particular  for  medical  personnel 

to 

to  boost 

Investments 

Bulgaria  has  yet  to  fully  embrace  e-health 
opportunities,  especially  for  hard-to-reach 
the  digital 
areas. 
transformation  of  Bulgaria’s  health 
sector, 
potentially  improving  the  effectiveness  of  and 
access  to  healthcare,  are  planned  under  the 
2021-2027 cohesion policy or as part of the RRP. 
This has led to the roll-out of the National Health 
Information  System.  Another  measure  seeks  to 
develop  a  platform  for  medical  diagnostics. 
Bulgaria  has  also  launched  a  project  aimed  at 
integrating 
the  healthcare 
system. Meanwhile, the digitalisation of Bulgaria’s 

telemedicine 

into 

(360) Country Health Profile 2025: Bulgaria – see earlier footnote. 

(361) Country Health Profile 2025: Bulgaria – see earlier footnote. 

120 

 
 
 
health  system  (see  Annex 7)  and  its  uptake  of 
e-health still lag behind other Member States and 
are  unevenly  distributed  across  the  population, 
varying  according  to  people’s  socio-economic 
background  (see  2025  Country  Report).  In  2024 
and  2025,  Bulgaria  carried  out  a  national 
campaign  with  info  points,  focused  on  supporting 
the  installation  of  the  e-health  application.  To 
date,  their  impact  on  people’s  actual  use  of  the 
app is still modest (362). 

(362) See also Annex 13 on general digital skills. 

121 

 
 
ANNEX 16: HOUSING 

Bulgaria continues to face challenges related 
to  housing  quality  and  affordability  that 
need  well-targeted  policies.  While  the  housing 
cost overburden has decreased, vulnerable people 
face  unaffordability  in  a  disproportionate  way. 
Inadequate housing conditions are still widespread 
among  the  most  vulnerable,  especially  Roma. 
Young Bulgarians are highly affected by prolonged 
dependence on family and their inability to afford 
a  house.  Lack  of  support  and  lack  of  accessibility 
in  their  own  homes  continues  to  cause  persons 
with  disabilities  to  be  institutionalised,  posing  a 
barrier  for  the  deinstitutionalisation  process  in 
Bulgaria.  

Increasing  housing  demand  results  in  rising 
house prices, weighing on affordability. At the 
same  time,  delivery  of  supply  is  slow,  making  it 
difficult to meet demand. Construction prices have 
increased  sharply  since  the  pandemic,  and  the 
construction sector is facing labour shortages. 

responsible 

The country lacks a long-term social housing 
system  with  dedicated  public  funding  and 
integrated  measures  for  the  homeless  and 
for  other  groups  in  need,  such  as  persons 
with  disabilities.  Municipal  housing  does  not 
exceed  0.8%  of  the  total  housing  stock  and  is 
shrinking.  Municipalities  are 
for 
providing  social  housing  for  those 
in  need, 
including accessible  housing. However, there is no 
strategic  framework  and  a  lack  of  coordination 
between national and local administrations. Due to 
political  instability  and  uncertainty,  the  long-term 
housing strategy is still being adopted. There is no 
updated  monitoring  system  to  count  people 
experiencing homelessness, nor statistical data on 
the housing needs of persons with disabilities. The 
legislation  on  social  services 
lacks  concrete 
for  homelessness  prevention  and 
services 
reintegration. 

A  significant  portion  of  the  housing  stock 
remains vacant – despite the strong demand 
–  with  a  higher  proportion  in  some  rural 
areas.  Policy  plans  to  mobilise  vacant  housing  in 
the market (e.g. as social housing) are limited. 

remains 

rental  market 

The 
relatively 
is 
unregulated  and  small.  Discrimination 
widespread  and  tenant  protection  measures  are 
limited.  The  national  programme  for  accessible 
housing is restricted to homeowners and does not 
cover tenants  

Bulgaria  faces  capacity  and  coordination 
challenges in terms of land-use planning and 
zoning procedures. Restrictive and slow planning 
procedures as well as regulatory clearance stages 
need significant improvement.  

Housing Market developments 

Recent  data  show  that nominal  house prices 
–  while  accelerating  –  grew 
less  than 
domestic  incomes,  resulting  in  negative  house-
price-to-income growth. Annual growth in nominal 
house  prices  reached  16.5%  in  2024  (Graph 
A16.1),  and  14.6%  in  2025 (363)  with  prices  now 
showing  signs  of  overvaluation  of  around  19% 
(based  on  the  standard  European  Commission 
methodology).  The  price  growth  is  explained  by 
strong  demand  from  buyers,  fuelled  by  rising 
incomes, accommodative financing conditions and 
somewhat 
in  housing  supply. 
Despite  rising  house  prices,  the  price-to-income 
ratio  continues  to  trend  downwards  (in  2025,  it 
stood  around  15%  below  long-term  average), 
owing to the sustained double-digit annual income 
growth  observed 
recent  years.  Regional 
differences in house price growth are notable, with 
the  bulk  of  growth  being  concentrated  in  urban 
areas,  especially  in  Sofia  and  Varna (364).  The 
rental  market 
is  relatively  small,  an  owner 
occupancy  rate  of  about  86  (365).  Rental  prices 
(including  existing and new rental  contracts) grew 
at a rate of 9.6% in 2025 (up from 5.6% in 2024). 

limited  growth 

in 

(363) Source: Eurostat dataset [prcp_hpi_q]. 

(364) According to the regional House Price Indices published by 

the Bulgarian National Statistical Institute.  

(365) Eurostat ([ilc_lvho02] Distribution of population by tenure 

status, type of household and income group). 

122 

 
 
 
 
 
Graph A16.1: House prices, rents and price-to-
income evolution in BG and EU27 since 2005 

Graph A16.2: House supply indicators in BG since 
2005 

Source: Eurostat 

Source: Eurostat 

interest 

into  near-zero 

Rising house prices were mostly the result of 
strong demand for housing. Rising incomes and 
an  underdeveloped  capital  market  contributed  to 
the  robust  demand.  Strong  competition  between 
banks and abundant liquidity in the banking sector 
translated 
rates  on 
deposits.  This  in  turn  led  to  low  lending  rates, 
which,  together  with  rising  incomes  and  a  low 
(though growing) level of household indebtedness, 
fuelled  housing  demand.  Looking  forward,  the 
outlook  for  house  prices  is  unclear,  given  the 
presence  of  counteracting 
to 
influence  housing  market  dynamics.  On  the  one 
hand, wage growth is expected to cool down, and 
borrower-based 
policies 
introduced 
limit  further 
late  2024  could 
acceleration  of  credit  growth.  This  could  exert  a 
downward pressure on house prices. On the other 
hand, the changeover to the euro in 2026 reduces 
reserve  requirements 
in  the  banking  sector, 
increasing  the  available  liquidity  in  the  sector, 
which  could  stimulate  credit  and  house  price 
growth. 

macroprudential 

factors 

likely 

in 

Construction  prices  have  increased  sharply 
since  the  pandemic.  The  cumulative  growth  in 
the  Bulgarian  construction  price  index  between 
2021 and 2024 was 87.3%, much above the EU-
27  average  of  22.6% (366).  This  increase  reflects 
both  the  higher  costs  of  inputs  and  rising  wage 
costs, which are partly driven by labour shortages.  

report 

The  construction  sector  lacks  workers.  Since 
2023,  construction  workers  are  regularly  included 
among the 20 professions for which employers in 
Bulgaria 
In 
addition,  the  Commission’s  business  survey (368) 
shows that 42.3% of employers in the construction 
sector  expect 
labour  shortages  to  constrain 
production,  compared  with  an  EU  average  of 
27.5%. 

the  highest  demand (367). 

Structural policies 

Residential  investment  has  been  increasing 
in  recent  years,  but  not  enough  to  contain 
house  price  increases  given  growing  housing 
demand.  Investment  in  dwellings  was  3.9%  of 
GDP  in  2024,  reaching  levels  similar  to  its  pre-
financial crisis peak. Investment increased further, 
reaching close to  4% in Q3 2025, which suggests 
a  potential  easing  of  supply  constraints  in  future. 
The  residential  permits  by  residential  area  built 
has  substantially 
increased  from  their  post-
financial crisis low but remain lower than pre-crisis 
levels (see Graph A16.2). 

Political  instability  and  uncertainty  made  it 
difficult  to  implement  long-term  housing 
strategies  in  Bulgaria.  The  national  housing 
strategy  2018-2030,  which  has  never  been 
adopted,  was  an  attempt  to  create  a  coherent 
housing  policy.  It  provided  a  framework  for  the 

(366) See Eurostat [STS_COPI_A] dataset. 

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

potrebnosti-2025/.    

(368) Source: European Business and Consumer Surveys, data until 

October 2025.  

123 

2550751001251501752002252502753003250507091113151719212325Index (2005 = 100)Nominal prices BGNominal prices EU27Rental prices BGRental prices EU27Price-to-income ratio BGPrice-to-income ratio EU27012345670501001502002503003504000507091113151719212325% of GDPIndex (2005 = 100)Residential building permits in m2, indexResidential buildings producer prices, indexInvestment in dwellings (right-hand side axis) 
     
      
 
development  of  the  housing  sector,  containing  a 
package  of  public  housing  policy  objectives,  the 
means  to  achieve  them  and  the  respective 
responsibilities  of  stakeholders,  including  citizens, 
the state, municipalities, and the private and non-
governmental sectors.  

In  Bulgaria,  about  86%  of  households  are 
owner-occupiers  and  14%  are  tenants (369). 
This  overwhelming  majority  of  home  owners  is 
partly as a the privatisation carried out after 1989 
as  part  of  the  country’s  transition  into  a  market-
oriented  economy.  This  trend  has  been  reinforced 
by  the  absence  of  a  robust  rental  market  and 
limited state intervention in housing (370). 

The 

sector 

others, 

instead 

people  with 

Bulgaria  does  not  have  an  official  definition 
of  social  housing, 
relying  on 
municipal  housing,  which  is  available  to, 
among 
housing 
needs (371).  There  are  no  national  criteria  on 
determining  these  needs,  with  rules  differing 
across  municipalities. 
appears 
underdeveloped,  with  the  OECD  estimating  that 
only  about  1.5%  of  households  rely  on  municipal 
housing units. In Bulgaria, social/public housing is a 
competence  and  responsibility  of  municipalities, 
but  no  state  funding  is  dedicated  to  municipal 
housing.  Local  governments  are  required  to  have 
their  own  housing  policy  and  criteria  (in  line  with 
the  Municipal  Property  Act)  to  provide  social 
housing  for  those  in  need,  but  public  social 
housing  policy  is  inadequate  both  in  terms  of 
quality  and  quantity(372).  The  sector  has  no 
lacks  coordination 
strategic 
local  administrations. 
between  national  and 
Municipalities have the responsibility  for investing 
in housing with few resources available to achieve 
this goal, but can rely on financing from EU funds. 

framework  and 

(369) Eurostat data [ilc_lvho02]. 

(370) ESPON european-compendium-of-housing-policies.pdf.    

(371) Municipal Property Act, Articles 43-45, available at: 

https://www.lex.bg/laws/ldoc/2133874691. Municipal 
housing is housing owned by a municipality, which can be 
used for either social housing, reserve housing (in the event 
of temporary accommodation due to natural disasters for 
example), or general property for the municipality to sell. As 
a result, Bulgaria does not have social housing officially. 

(372) UNDA Report ‘Lessons learned from the OPRG 2014-2020 
and recommendations for the PDR 2021-2027 and other 
relevant plans’ (2021)- 11 Tranche Project ‘Strengthening 
the capacities of national and local governments to 
formulate and implement evidence-based and participatory 
housing policies and strategies’.  

A  significant  portion  of  the  housing  stock  is 
vacant  (38.9%  as  of  2021),  with  a  higher 
proportion  in  some  rural  areas.  Sofia 
is 
affected  by  a  high  level  of  vacant  property  (over 
25%), despite the high housing demand. The many 
competing  explanations  are  dominated  by 
depopulation  and  migration  from  rural  areas,  as 
well  as  ownership  disputes  and  the  purchase  of 
remains 
new  housing 
unoccupied  in  the  main  urban  areas.  Policy  plans 
to use vacant housing in the market (e.g. as social 
housing)  are  missing  and  have  emerged  only  in 
advocacy activities of the NGO sector (e.g. Habitat 
for Humanity Bulgaria). 

investment 

that 

for 

Since  2007,  significant  EU  funding  has  been 
provided  for  energy  efficiency  renovation 
and  other  measures.  Over  EUR 300 million  of 
European  Structural  and  Investment  Funds  have 
been  provided  for  energy  efficiency  renovation 
in  public  and  residential  buildings, 
measures 
including  structural  (and  seismic)  strengthening, 
heating  and  air  conditioning  systems,  integrated 
renewable  energy 
installations,  and  building 
digitalisation.  The  Recovery  and  Resilience  Facility 
alone  provides  financing  of  EUR 612 million  for 
these  purposes.  It  also  includes  a  commitment  to 
set  up  a  national  decarbonisation  fund  to  offer 
grants  and  financial  and  technical  assistance, 
combined  with  financial  instruments  including 
loans  and  guarantees,  for  energy  efficiency 
renovations.  There  are  no  targets  for  renovating 
existing housing on the private market to make it 
accessible,  for  accessible  newbuild  housing  or  for 
accessible  social  housing,  whether  newbuild  or 
existing. 

remains 

rental  market 

The 
relatively 
unregulated and small – less than 5% of the 
housing stock is leased on the formal rental 
market  –  leaving  many  households  that 
cannot  afford  to  buy  with  limited  quality 
rental  options (373).  Tenants  often  face  difficult 
dwelling  conditions,  insecure  contracts  and  a  lack 
of  protection  against  evictions.  The  absence  of 
affordable  housing  programmes  and  the  limited 
initiatives  pose  significant 
scope  of  current 
challenges  for  addressing  Bulgaria’s  affordability 
challenges. 

(373) World Bank Document 2025. 

124 

 
 
 
complex 

planning, 

Land-use 
re-zoning 
procedures  and  uneven  local  administrative 
capacity limit housing supply responsiveness, 
particularly in high-demand urban areas, and 
incentives  for  densification  and 
weaken 
redevelopment.  Bulgaria’s 
spatial  planning 
instruments  –  including  the  national  concept  for 
spatial  development  and  municipal  detailed  plans 
– are frequently slow in responding to market and 
demographic  trends,  limiting  the  availability  of 
residential  land  in  high-demand  urban  areas.  The 
wide  gap  between  permits  and  the  subsequent 
in 
construction  activity  suggests  bottlenecks 
planning  and  regulatory  clearance  stages.  The 
number  of  building  permits  has  increased  sharply 
in  the  last  decade  (nearly  quadrupling  between 
2010  and  2022),  but  has  not  fully  translated 
into an 
housing 
completions.)  Delays  in  implementation  can  be 
linked  to  planning  and  infrastructure  challenges. 
Bulgaria  has  taken  steps  to  improve  regulatory 
management,  especially  via 
its  recovery  and 
resilience plan, by introducing building information 
modelling  to  increase  administrative  capacity  and 
by  setting  up  the  unified  information  system  for 
spatial  planning  to  digitalise  procedures  and 
increase  transparency.  Capacity  and  coordination 
improve  effective 
efforts  should  continue  to 
implementation  of  regulations  across  sectors, 
including land use and housing policy. 

equivalent 

number 

of 

Vulnerable groups 

32 225 

approximately 

Municipal  housing  represents  0.8%  of  the 
total  housing  stock  of  Bulgaria  and  it  is 
shrinking.  This  suggests  a  total  municipal  stock 
dwellings, 
of 
accommodating a total of 82 240 people (1.2% of 
the  population  (374).  Most  municipalities,  216  of 
265,  offer  municipal  housing,  but  27.5%  of  the 
regional 
dwellings  are 
disparities.  The  quality  of  housing  is  critical,  with 
50% of stock deemed in a bad condition, and 9% 
characterised as uninhabitable. 

in  Sofia, 

indicating 

(374) Habitat for Humanity Bulgaria and the Ministry of Regional 

Development and Public Works, 2023. Първо проучване на 
общинския жилищен фонд в България - Habitat for 
Humanity - Bulgaria. 

Public expenditure in the housing sector, and 
especially  funding  targeted  to  lower  income 
and vulnerable groups, is less than 2% of the 
overall  annual  state  budget.  According  to 
available  data  on  government  expenditure  by 
function (375),  while 
on 
supporting  housing  development  amounted  to 
1.7%  of  the  total  government  budget  in  2019, 
expenditure  related  to  housing  as  part  of  social 
protection  represented  only  0.2%  of  the  total 
budget.  For  2020-2024,  no  data  are  available  on 
overall  housing  expenditure,  only  data  on  social 
protection expenditure. The social housing benefits 
paid out in this period were very small. 

expenditure 

public 

and 

severe  material 

The  Bulgarian  population  faces  a  significant 
overcrowding  issue  and  severe  material  and 
social  deprivation.  16.6%  of  Bulgarians 
experience 
social 
deprivation (376)  while  32.5% (377)  of  Bulgarians 
also  live  in  overcrowded  homes.  These  rates  are 
significantly  higher  among  Roma.  Severe  housing 
deprivation  affects  5.5%  of  the  population (378). 
The repair and upgrade of buildings is a challenge, 
due  to  households’  limited  financial  resources, 
which  has  significant  economic,  environmental, 
health and demographic repercussions.  

Housing  affordability  and  quality  concerns 
are  disproportionally  more  prevalent  among 
lower  income  and  rural  households.  The 
overall  housing  cost  overburden  rate  markedly 
decreased  by  3.3 percentage  points  (pps)  in  2024 
vs  only  0.6 pps  in  the  EU,  due  to  strong  income 
growth  (379).  Yet,  around  30%  of  the  poorest 
quintile of households and 9.3% of rural residents 
were  affected  by  housing  cost  overburden 
compared with only 8% of the general population 
in  2024.  In  a  similar  vein,  housing  deprivation 
(leaking  roof,  damp  walls,  etc.)  is  much  more 
widespread  for  households  at  risk  of  poverty 

(375) Eurostat, General government expenditure by function 

(COFOG) Government expenditure by function – COFOG - 
Statistics Explained - Eurostat.     

(376) Eurostat 2024 Severe material & social deprivation rate in 

EU: 6.4% - News articles - Eurostat . 

(377) Eurostat 2025 [ilc_lvho05a] Overcrowding rate by age, sex 

and poverty status - total population.  

(378) Eurostat 2025 [ilc_mdho06c] Severe housing deprivation 

rate by tenure status.  

(379)The overburden rate should be read together with the tenure 
structure (homeowner, tenants), that may differ across 
country and regions. 

125 

 
 
 
also 

the  general  population 
disproportionally 

(18%) 
than 
(8.4%). 
affects 
Overcrowding 
households at risk of poverty (42.9%), but the rate 
is  also  very  high  among  all  households  (33.8%), 
one of the highest in the EU (EU average: 16.9%). 

Bulgaria  faces  a  severe  energy  poverty 
crisis. One fifth (20.7%) of households in Bulgaria 
(1.8 million  people)  cannot  afford  to  keep  their 
dwelling  adequately  warm.  This  is  the  highest 
share  among  EU  Member  States (380).  The 
government 
introducing 
mechanisms  for  the  energy  poor  households, 
introducing  schemes  to  tackle  them  and  monitor 
the progress. 

behind 

lags 

in 

Limited  housing  affordability  and  low  job 
mobility are trapping many young Bulgarians 
in  prolonged  dependence  on  family.  48.8%  of 
Bulgarians  aged  25–34  are  unable  to  afford  a 
house  and  are  therefore  still  living  with  their 
parents or other family (381). 

people, 

There  are  no  targeted  policies  to  tackle 
homelessness  or  monitoring  systems (382). 
Shelters  and  temporary  accommodation  centres 
are  available  as  dedicated  social  services  for  the 
homeless  with  a  total  capacity  of  885  people  for 
the country as a whole (383). There are no specific 
measures  to  prevent  homelessness  or  with  a 
specific  focus  on  the  social  reintegration  of 
temporary 
homeless 
accommodation centres and shelters, which are at 
full capacity in winter. The Law on Social Services 
adopted 
is  setting  up  a  broader 
framework of social services to support vulnerable 
people from 2021. However, by design, this service 
is  not  intended  to  address  long-term  housing 
needs or to resolve structural housing problems of 
homeless  persons.  Its  primary  purpose  is  to 
provide  immediate  protection,  crisis  support,  and 
short-term stabilization. 

in  2019 

except 

for 

(380) Eurostat 2024. 

(381) Eurostat 2019. 

(382) Ministry of Labour and Social Policy, 2025. 

(383) Agency 

for 

Social 

Assistance, 

available 

at 

https://asp.government.bg/bg/deynosti/sotsialni-
uslugi/sotsialni-uslugi-za-palnoletni-litsa/registar-na-
vidovete-sotsialni-uslugi-finansirani-ot-darzhavniya-
byudzhet/.  

Beyond  the  above-mentioned  social  services 
for homeless people, Bulgaria does not have 
stand-alone  policy  instruments  to  tackle 
housing  deprivation  and  affordability  issues. 
Social  assistance  for  rent  is  available  solely  to 
tenants  of  municipal  dwellings  who  are  over  70 
years  old  and  living  alone,  or  who  are  single 
parents (384).  According  to  the  Agency  of  Social 
Assistance,  only  37  people  received  such  support 
throughout  2024,  illustrating  the  low  coverage. 
Nevertheless,  Bulgaria  has  incorporated  housing 
and homelessness as a priority in its broader goal 
of  reducing  poverty.  Under  the  national  strategy 
for  poverty  reduction  and  promotion  of  social 
the 
inclusion  2030,  measures 
development  of 
for 
homeless  adults  and  children,  housing  stock 
assessments,  provision  of  modern  affordable 
municipal  housing  (including  for  Roma),  were 
outlined  as  essential  for  addressing  housing 
difficulties and homelessness. The latest two-year 
action  plan  (2025-2026)  includes  a  new  concept 
of  housing  mediators,  but  their  role  in  practice 
remains unclear.  

as 
services 

cross-sectoral 

such 

in 

terms 

especially 

The  situation  for  persons  with  disabilities  is 
more  precarious  than  for  the  general 
of 
population, 
accessibility  and 
institutionalisation.  The 
national  strategy  for  persons  with  disabilities 
(2021–2030)  emphasises  the  need  for  accessible 
housing,  but  there  are  no  binding  targets.  The 
2025-2026 action plan for the implementation of 
the strategy introduced a specific target for new or 
modernised social housing for 1 247 persons with 
disabilities  in  2029,  to  be  financed  with  close  to 
EUR 32.4 million under the development of regions 
programme  (Placeholder  for  REGIO  to  confirm]. 
The  national  programme 
for  an  accessible 
is  also 
environment  and  personal  mobility 
providing around EUR 1.3 million annually to build 
accessible  environments  in  residential  buildings, 
with a target of 100 facilities by the end of 2026. 
However,  the  allocated  resources  do  not  appear 
commensurate  to  the  challenge,  as  82.4%  of  all 
buildings  were  estimated  to  be  inaccessible  in 
2021 (385).  The 
lack  of  sufficient  accessible 
affordable  and  social  housing  and  of  housing 

(384) Art 14 of the Implementing Act of the Social Assistance Act 

(https://www.lex.bg/laws/ldoc/-13038592.  

(385) A crisis on the horizon: Ensuring affordable, accessible 
housing for people with disabilities, OECD, 2021. 

126 

 
 
 
 
Graph A16.3: Housing affordability selected indicators 

Source: Eurostat and European Commission calculations.  The overburden rate should be read together with the tenure structure 
(homeowner, tenants), that may differ across country and regions. 

support in the community is stalling the process of 
deinstitutionalisation of adults with disabilities.(386)   

Inadequate  housing  conditions  are  still 
widespread  among  the  Roma  population. 
According  to  the  EU  Fundamental  Rights  Agency’s 
Roma  Survey  2024 (387),  more  than  half  of  Roma 
in Bulgaria live in inadequate housing, almost one 
fifth still live in houses without water supply, close 
to  half  of  Roma  houses  are  not  connected  to  the 
central  sewerage  system,  and  one  third  have  no 
bathrooms inside. Access to housing is one of the 
seven  priorities  outlined  in  the  national  strategy 
for  Roma  inclusion  2021-2030,  but,  despite  the 
improving  trend  in  recent  years,  in  2024,  57%  of 
Roma  still  lived  in  unsuitable  accommodation, 
indicating  housing  deprivation.  In  four  years,  the 
share  of  Roma  living  in  overcrowded  dwellings 
increased by 7 pps to 79% in 2024. One in three 
Roma  has  no  flushing  toilet,  shower  or  bathroom 
available.  Between  2019  and  2024,  2%  of  Roma 
in Bulgaria were forced to leave due to eviction or 
in  municipal 
distraint 
housing 
each 
municipality  and  may  include  requirements  such 
as  having  completed  a  certain  level  of  education, 
which  can  exclude  vulnerable  groups,  including 
Roma. 

(388).  Eligibility  criteria 
are 

independently 

set 

by 

(386) EDE, Accessible and sustainable housing for persons with 

disabilities Bulgaria, 2026; EDE disability expertise Semester 
reports, several years; UN Committee on the rights of 
persons with disabilities, initial review of Bulgaria, 2018. 

(387) FRA 2024; https://fra.europa.eu/en/publications-and-

resources/data-and-maps/2025/roma-survey-2024.   

(388) FRA Roma survey 2024. 

127 

 
 
 
HORIZONTAL 
ANNEX 17: 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 needs 
to  catch  up  with  the  EU  average  on 
regarding  decent  work  and 
indicators 

Graph A17.1: Progress towards the SDGs in Bulgaria 

developed 

Indicators  under  SDG 4 
economic  growth. 
(Quality 
positively, 
education) 
particularly  on  basic  education.  Participation  of 
children  aged  3+  and  over  in  early  childhood 
education 
to  89.3% 
increased  from  87.6% 
between  2019  and  2024  (EU  average:  95%). 
Moreover,  Bulgaria  has 
improved  significantly 
regarding  the  percentage  of  early  leavers  from 
education  and  training.  It  now  performs  better 
than  the  EU  average,  reducing  its  percentage  of 
early  leavers aged 18-24 from 13.9% in 2019 to 
8.6%  in  2025  (EU  average:  9.1%).  On  SDG 8 
(Decent  work  and  economic  growth),  Bulgaria’s 
employment rate of people aged 20 to 64 climbed 
from 76.8% in 2024 to 77.0% in 2025, exceeding 
the  EU  average  of  76.1%  in  2025.  Similarly,  the 
percentage of young people neither in employment 
nor  in  education  and  training  (NEET)  decreased 
from  16.6%  in  2019  to  13.8%  in  2025  (EU 
average 
long-term 
11  %). 
unemployment  rate  decreased  to  1.5%  in  2025, 
below the EU average of 1.9%. However, Bulgaria 

2025: 

The 

For a detailed progress assessment towards the various SDGs, see the annual Eurostat report ‘Sustainable development in the 
European Union’; for extensive data on the short-term SDG progress of EU countries, see Key findings – Sustainable development 
indicators; for an interactive visualization of SDG progress of EU countries, see SDG country overview. 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 or six 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 29 April 2026. Data refer mainly to the period 2019-2024 or 2019-2025. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

128 

 
 
 
 
 
 
is regressing on indicators related to decent work, 
with the in-work at-risk-of-poverty rate rising from 
8.9%  (2019)  to  11.8%  (2024),  above  the  EU 
average (8.2%). Bulgaria has made some progress 
on  R&D  and  innovation  indicators  (SDG 9),  with 
41.2%  of  the  population  aged  25  to  34  having 
tertiary educational attainment in 2025, compared 
to 32.6% in 2019, thereby reducing the gap to the 
EU  average  of  44.8%.  Regarding  sustainable 
infrastructure indicators, both Bulgaria and the EU 
average  have  worsened 
In 
Bulgaria,  the  share  of  buses  and  trains  as  a 
transport 
percentage  of 
decreased  from  14.2%  to  11.2%  between  2018 
and  2023  (EU:  17.0%  to  16.9%).  Similarly,  the 
share  of  rail  and  inland  waterways  in  Bulgaria’s 
freight  transport  decreased  from  53.2%  in  2019 
to 39.9% in 2024 (EU: 24% to 21.8%). 

in  recent  years. 

passenger 

inland 

level 

the  average  nitrate 

Bulgaria  is  improving  on  several  indicators 
related  to  sustainability  (SDGs 7,  9,  11,  12, 
13,  14)  but  often  remains  below  the  EU 
average.  Indicators  under  SDGs 2,  6,  and  15 
still  have  room  for  improvement.  Bulgaria  is 
progressing on some of the indicators under SDG 2 
(Zero  hunger).  While  the  use  and  risk  of  chemical 
pesticides decreased by 45% between 2015-2017 
in 
and  2023, 
groundwater  increased  from  27.5 mg NO₃/l  to 
29.2 mg  between  2018  and  2023  (EU  average: 
18.1 mg).  On  SDG 6  (Clean  water  and  sanitation) 
Bulgaria  is  improving  on  water  quality,  but  the 
percentage  of  areas  experiencing  drought-related 
ecosystem  stress increased  significantly  (up  1.4% 
to  20.1%  between  2019  and  2024).  Bulgaria  is 
advancing on affordable and clean energy (SDG 7). 
Final energy consumption in households per capita 
fell from 327 kilograms of oil equivalent (kgoe) in 
2019 to 305 kgoe in 2024, below the EU average 
of  507 kgoe.  Energy  poverty  also  declined.  The 
percentage of the  population  unable  to keep their 
homes warm enough fell significantly from 30.1% 
to  19.1%  between  2019  and  2024,  although  the 
rate is still double the EU average of 9.2%. Under 
SDG 9 (Industry, innovation, and infrastructure) the 
air  emission  intensity  of  fine  particulate  matter 
(PM2.5) from industrial output in Bulgaria fell from 
0.19  to  0.17 g/EUR  between  2018  and  2023,  but 
was  still  over  three  times  higher  than  the  EU 
average of 0.05 g/EUR. Bulgaria needs to catch up 
regarding  sustainable  cities  and  communities 
(SDG 11), as the recycling rate of municipal waste 
reduced  significantly  from  31.5%  in  2018  to 
16.7%  in  2023  (EU  average:  47.9%).  Bulgaria  is 
progressing on SDG 12 (Responsible consumption): 

energy  productivity  of  economic  output  increased 
from  2.5  to  3.0 EUR/kgoe,  still  behind  the  EU 
average  of  10 EUR/kgoe.  The  cost  of  climate-
related economic losses decreased from EUR 31.3 
per  inhabitant  in  2019  to  EUR 29.2  in  2024 
the 
(SDG 13).  On  ocean  health 
percentage of coastal bathing water with excellent 
quality  significantly  increased  from  67  to  97.8% 
between 2019 and 2024, above the EU average of 
88.8%. Life on land (SDG 15) shows stable trends 
with  the  exception  of  the  increase  in  drought 
impact (see SDG 6). 

(SDG 14), 

the 

Bulgaria  continues  to  improve  on  the  SDGs 
related  to  social  fairness  (SDGs 1,  3,  5,  7, 
10),  but a  significant gap to  the  EU  average 
indicators  for  quality 
remains  on 
education  (SDG 4)  and  decent  work  and 
economic  growth  (SDG 8).  There  has  been  an 
overall  improvement  towards  SDG 1  (No  poverty), 
with  most  indicators  showing  positive  trends. 
Bulgaria further reduced its rate of persons at risk 
of poverty or social exclusion from 33.2% in 2019 
to  30.3%  in  2024  (EU  average  2024:  21%).  It  is 
also improving  on SDG 5 (Gender equality), where 
the  gender  employment  gap  was  7.4  percentage 
points in 2025 compared to 8.1 in 2019. On SDG 7 
(Affordable  and  clean  energy)  most  indicators 
have  improved  or  stalled  compared  to  2019.  The 
percentage  of  renewable  energy  in  gross  final 
energy  consumption  increased  from  21.5%  in 
2019  to  23.2%  in  2024.  The  country  is  also 
improving  on  SDG  10  (Reduced  inequalities).  For 
instance, the urban-rural gap for risk of poverty or 
social  exclusion  dropped  from  25  percentage 
points  difference  in  2019  to  18.7  percentage 
points in 2024. Bulgaria needs to catch up with the 
EU  average  on  SDG 3  (Good  health  and  well-
being):  while  indicators  like  the  share  of  unmet 
needs for medical care (1.1% compared to 2.5% in 
the  EU  in  2024)  show  targeted  improvements, 
others  show  a  need  for  further  action.  These 
include 
(71.3 years 
compared  to  75.3 years  in  the  EU  in  2023)  and 
premature  deaths  due  to  exposure  to  fine 
particulate  matter  (104  per  100 000  people 
compared  to  41  in  the  EU  in  2023).  At  the  same 
time, SDG 4 (quality education) and SDG 8 (decent 
work  and  economic  growth)  show  a  more  mixed 
picture:  the  share  of  adults  with  at  least  basic 
digital  skills  increased  from  31.2%  in  2021  to 
38.3%  in  2025  but  is  significantly  behind  the  EU 
average  (60.4%).  The  Bulgarian  European  Social 
Fund  Plus  (ESF+)  and  RRP  include  measures  to 
address  most  of  these  challenges.  In  particular, 

life  expectancy  at  birth 

129 

 
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. 

stability 

Bulgaria  continues  to  perform  well  on 
SDG 17 (Partnerships for SDGs). It is stalling 
indicators 
on  macroeconomic 
(SDGs 8 and 16), where it still needs to catch 
up  with  the  EU  average.  Bulgaria  performs 
26.9%  better  than  the  EU  average  on  SDG 17 
indicators.  The 
the  goals) 
(Partnerships  for 
Bulgarian debt-to-GDP ratio for 2025 was 29.9%, 
which  is  well  below  the  EU  average  of  81.7%. 
While  the  percentage  of  the  population  reporting 
crimes (SDG 16) has dropped from 21.8% in 2018 
to  15.6%  in  2023,  the  country  is  lagging  behind 
the  EU  average  (10%).  The  percentage  of  the 
population  with  a  very  good  or  fairly  good 
perception  of  the  independence  of  the  justice 
system  decreased  from  34%  in  2019  to  27%  in 
2025.  Regarding  sustainable  economic  growth 
(SDG 8),  the  country  still  needs  to  catch  up  with 
the  EU  on  real  GDP  per  capita,  although  it 
increased from EUR 9 650 in 2019 to EUR 11 710 
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. 

130 

 
ANNEX 18: COMPETITIVE REGIONS 

Regional development trends 

Since  joining  the  EU  in  2007,  Bulgaria’s 
regions  have  shown  strong  convergence 
towards the EU average in terms of GDP per 
head  (in  purchasing  power  standard,  PPS). 
Bulgaria’s GDP per head has risen markedly  since 
2007,  increasing  from  41%  of  the  EU  average  to 
66%  in  2024.  Within  Bulgaria,  all  six  NUTS  2 
regions  improved  their  relative  GDP  per  head 
positions  vis  à  vis  the  EU  average.  The  region 
where the capital of Sofia is located, Yugozapaden, 
saw  an  increase  from  66%  of  the  EU  average  in 
2007  to  nearly  108%  in  2024.  The  gap  between 
Yugozapaden and the least developed region over 
this  period  has  grown  from  38  percentage  points 
to  66.  All  regions  remain  below  75%  of  the  EU 
average GDP per head,  except Yugozapaden (Map 
A18.1) (389). 

Map A18.1:  GDP per head compared with the EU 
average. 

2021-2023 average GDP per head in purchasing power 
standard compared with the EU average. 
Source: Commission calculations based on Eurostat 16 July 
2025 data 

Economic  activity  in  Bulgaria  remains  highly 
concentrated in  the  capital,  which  generates 

(389) A territorial reorganisation of the Bulgarian NUTS 2 regions is 
under way, without affecting eligibility categorisation as per 
Map A18.1. 

(i) 

in: 

labour  productivity; 

about  half  the  national  GDP,  and  there  are 
strong disparities between the other regions. 
These  disparities  in  GDP  per  head  between  and 
within  the  Bulgarian  regions  are  reflected  in 
differences 
(ii) 
demographics;  (iii)  education  and  training;  (iv) 
employment;  (v)  wages;  (vi)  poverty  and  social 
exclusion; (vii) infrastructure; (viii) competitiveness; 
and  (ix)  research  and  innovation  performance. 
These  indicators  are  all  typically  worse  in  the 
north-west  of  the  country,  but  also  in  some 
municipalities  in  southern  Bulgaria,  with  a  clear 
divide between urban and rural areas. 

regions  have 

recorded 
Though  several 
population  growth  since 
the  COVID-19 
pandemic,  the  country’s  overall  population 
continues  to  decline,  exacerbating  territorial 
divergence.  Between  2015  and  2024, 
the 
population  of  all  Bulgarian  regions  shrank,  with 
Severozapaden and Severen tsentralen particularly 
affected. After the pandemic, migration patterns in 
Bulgaria  reversed,  bringing  significant  changes  to 
level (390). 
demographic 
Improved migration dynamics have led not only to 
positive net inflows but also to population growth 
in  certain  areas.  In  2024,  all  southern  planning 
regions,  as  well  as  the  north-east,  reported 
population growth – a first in over 30 years. Only 
the Severozapaden and Severen tsentralen regions 
continued  to  see  a  fall in  their  populations,  albeit 
on a smaller scale than before. 

indicators  at  regional 

Labour  productivity  has  steadily  increased 
but  regional  disparities  persist.  Bulgarian 
regions rank among the bottom 20% of EU regions 
for  labour  productivity  (Graph  A18.1).  However, 
labour  productivity 
the 
Yugozapaden  region  at  72%.  This  contrasts 
sharply  with  Yuzhen  tsentralen  and  Severen 
tsentralen, the least productive regions, at 39-41% 
of 
two  regions, 
In 
manufacturing and industry as well as agriculture 
are the dominant sectors. 

the  EU  average. 

the  highest 

these 

in 

is 

(390) Institute for Market Economics (2024): White Paper: 

Unlocking Growth.; Adrian Nikolov (2025): Positive migration 
continues, but the demographic problem is far from solved.; 
Adrian Nikolov (2025): Demographic processes in 
municipalities are normalizing, but with more migration.  

131 

 
 
 
 
 
 
 
 
 
Table A18.1:Main development trends, challenges and the concentration of resources 

Source: European Commission based on Eurostat data; categories of regions based on Map A18.1 

132 

Main development trendsLess developed regions(population 4.4 million)Bulgaria has five less developed regions, which are ranked among the least competitive in the EU. They are predominantly located in the northern and south-eastern parts of the country. Severozapaden is the most consistently underdeveloped region and one of the poorest in the entire EU. Less developed regions tend to have a larger share of employment and output in value-added activities, such as agriculture, traditional manufacturing and basic services, which limits growth potential relative to more diversified or knowledge-intensive regions. All less developed regions show gradual convergence towards EU averages over time, but gaps between these regions have barely narrowed.The significant regional disparities in Bulgaria have led to ongoing discussions and proposals for redrawing the NUTS 2 map to better implement EU cohesion policies and ensure more balanced development and access to EU funds.Transition region(population 2 million)Since the 2021-2027 programming period, Yugozapaden region has been a transition region. With the capital Sofia located here, Yugozapaden is by far the most economically developed region in Bulgaria, exhibiting a wide gap compared with the country’s other five regions. The region produces approximately half of Bulgaria’s GDP, driven mainly by activity centred in Sofia. This includes services, high-tech, finance, logistics and manufacturing industries. However, there are also severe internal disparities in Yugozapaden, and the region suffers from labour market mismatches, demographic pressure and challenges to social inclusion.Specific territoriesThere is a clear divide between dynamic urban cores and peripheral and rural regions, especially in north-west Bulgaria and other parts of the north. In these regions, GDP per capita, income levels, employment opportunities and access to services remain significantly lower than the national averages. Many small towns and rural areas face ongoing population loss, ageing and out-migration, leading to ‘demographic deserts’, with shrinking labour forces outside major cities.Bulgaria’s coastal areas combine high economic potential and strategic importance with environmental sensitivity and seasonal, spatial and social imbalances, making integrated and sustainable territorial development particularly critical. Roughly 70% of tourism revenue is generated in the summer months, the highest share in the EU. Regions on the south-eastern coast are particularly exposed to tourism’s high seasonality. While tourism is a major contributor to national GDP and employment, it also creates economic vulnerabilities, such as revenue instability, short-term jobs, labour shortages in peak season, and underused infrastructure in the off-season.National cohesion aspectsBulgaria’s transport system remains one of the critical structural bottlenecks to competitiveness and balanced regional development. Despite gradual modernisation along the main axes of the Trans-European Transport Network (TEN-T), significant disparities in road and rail quality and accessibility remain across the country. The north–south divide is particularly striking: northern regions continue to lag behind the better-connected southern part of the country, with outdated infrastructure, incomplete motorways, and limited maintenance of secondary roads. In addition, parts of the national road network and sections of the TEN-T corridors are increasingly exposed to climate-related risks. These risks include flooding, landslides and extreme heat, which all pose growing challenges for infrastructure resilience and long-term service reliability. Investments in connectivity, climate-resilient design and transport infrastructure are key to unlocking the potential of the regions.Priority allocation of funds is needed for sustainable transport infrastructure and connectivity in northern Bulgaria, ensuring horizontal and vertical connectivity across the entire northern territory, and breakthrough links to southern Bulgaria. Additionally, boosting investments in the country’s railway network and sustainable urban transport will be crucial.Bulgaria’s water and sewerage infrastructure faces persistent structural weaknesses that threaten service reliability, environmental compliance and climate resilience. Despite gradual progress in modernisation, the sector continues to struggle with ageing assets, high leakage rates and uneven investment capacity across regions. It could be beneficial to prioritise investments in access to clean and reliable water supplies, especially in municipalities with frequent restrictions, poor quality and high network losses. Replacing and modernising water supply and sewerage systems needs particular attention, including the adoption of smart monitoring and leakage detection technologies. 
 
 
   
 
Table A18.2:Key regional indicators (at NUTS 2 level) for Bulgaria 

Dark green – the indicator is at least 120% the EU average. 
Light green – the indicator is at least 100% but less than 120% of the EU average. 
Yellow - the indicator is at least 90% but less than 100% of the EU average.   
Light red – the indicator is at least 75% but less than 90% of the EU average. 
Dark red – the indicator is less than 75% of the EU average. 
This colour scale applies to ‘positive’ indicators where higher values are favourable. 
For ‘negative’ indicators (where higher values are unfavourable), the colours are reversed. 
Source:  Eurostat and JRC 

Graph A18.1: Labour productivity growth (2013-
2023) and labour productivity (2023), Bulgaria 
(NUTS 2 regions) 

Key challenges for regional 
competitiveness 

Map A18.2:  Competitiveness in Bulgarian regions, 
2022 

Source: Calculations by the Directorate-General for Regional 
and Urban Policy (REGIO) based on Joint Research Centre 
(JRC) (ARDECO) data. Note: productivity growth is measured 
as average annual change 

Source: Bulgaria, Regional Competitiveness Index 2.0, 2022 
edition 

R&D  expenditure  remains  low  and  is  mainly 
concentrated  in  the  Yugozapaden  region, 
reflecting  significant  disparities  linked  to 

133 

0.72.42.72.52.22.22.02.010055445248724139EUBulgariaSeverozapadenYugoiztochenSeveroiztochenYugozapadenSeveren tsentralenYuzhen tsentralenAverage annual growth2013-2023 (%)Productivity in 2023GDP/hour, EU27 = 100GDP per head (PPS, index)Population growthNet migrationReal GDP per head growthReal productivity growth (per hour worked)Employed with high educational attainmentEmployment in high-technology sectorsUnemployment rateAt-risk-of-poverty or social exclusion rate (AROPE)R&D expenditureEU27=100Average annual change per 1000 residentsAverage annual change per 1000 residentsAverage annual % changeAverage annual % change% of employed aged 25-64% of total employment% of labour force% of population% of GDP20242015-20242015-20242014-20242013-202320252025202520252023EU1001.83.51.40.741.55.16.021.02.24Bulgaria66-8.8-0.73.82.440.85.33.529.00.77Severozapaden42-18.1-4.13.92.734.01.87.333.50.26Severen tsentralen43-17.0-4.72.82.036.92.74.033.80.34Severoiztochen51-9.7-1.82.82.243.63.03.927.70.39Yugoiztochen57-8.0-1.03.82.536.72.44.635.80.27Yugozapaden107-3.41.94.02.247.410.21.919.81.25Yuzhen tsentralen43-7.80.13.52.034.93.23.234.40.41  
 
  
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
sectors 

increasing  public  R&D 

differing  regional  economic  structures (391). 
Aggregate R&D expenditure in 2023 was between 
0.3%  and  0.4%  of  GDP  in  all  regions,  except 
Yugozapaden,  where  it  was  1.2%  due  to  the 
capital’s  higher  investment  levels  However,  this 
figure is still only about half the EU  average (see 
Annex 4 and the country-specific recommendation 
on 
investment  and 
commercialisation).  Lower  business  R&D  intensity 
outside  Yugozapaden  region  is  largely  due  to 
structural factors, including smaller firm sizes and 
lower  uptake  of  advanced  technologies,  which 
constrain  innovation  capacity.  The  high  share  of 
employment in less R&D-intensive sectors outside 
the  capital  plays  a  particularly  significant  role. 
Agriculture  accounts  for  more  than  19%  of 
employment  outside  Yugozapaden  and  reaches 
26.6%  in  Severozapaden.  Employment  in  high-
technology  sectors  remains  limited,  despite  some 
increases  over  the  past  decade.  In  Yugoiztochen, 
Severozapaden  and  Severoiztochen,  only  between 
1.4% and 2.1% of workers were employed in high-
technology 
in  2024.  Strengthening 
linkages  with  multinational  companies  could  help 
improve  domestic  firms’  integration  into  their 
value chains and generate knowledge transfer and 
spillover  effects  (see  Annex  5).  Cohesion  policy 
investments, aligned with the smart specialisation 
strategy, aim to strengthen regional innovation by 
harnessing  local  strengths,  supporting  technology 
linkages  between 
transfer  and 
businesses  and 
institutions.  These 
investments help improve innovation performance 
and reduce regional competitiveness gaps through 
targeted  and  strategic  funding.  This  funding 
centres  of 
supports,  among  other 
competence  and  centres  of  excellence  with  a 
strategic regional role, digital innovation hubs and 
established  regional  innovation  clusters.  These 
structures  play  a  key  role  in  fostering  innovation 
by:  (i)  promoting  collaboration  between 
local 
businesses, 
research 
universities 
organisations;  (ii)  facilitating  knowledge  transfer; 
innovation 
and 
ecosystems.  Their 
remains 
uneven  across  regions,  pointing  to  the  need  for 
further efforts to strengthen cooperation, increase 
business participation and ensure a more effective 
translation  of  research  results  into  marketable 
innovations, beyond contract research. 

enhancing 
research 

impact,  however, 

strengthening 

regional 

things, 

and 

(iii) 

(391) European innovation scoreboard 2025 - Research and 

innovation. 

High-speed  network  coverage  in  rural  areas 
the 
remains  very  uneven,  hampering 
integration  of  peripheral  regions  into  the 
country’s  digital  economy.  Rural,  remote  and 
sparsely populated areas still lack adequate high-
speed  networks, largely because there are limited 
commercial  incentives  for  private  operators  to 
invest  there.  Rural  very  high-capacity  network 
(VHCN)  coverage  is  widest  (above  95%)  in  Sofia 
and  Blagoevgrad,  while  Vidin  and  Montana  fail  to 
reach  65% (392).  These  imbalances  limit  equal 
access to digital services and slow the integration 
of peripheral regions into Bulgaria’s broader digital 
economy (393). 

Yuzhen 

tsentralen 

Low  levels  of  tertiary  education  attainment 
limit  the  capacity  of  regions  lagging  behind 
to  develop  a  knowledge-based  economy.  In 
Severozapaden, 
and 
Yugoiztochen,  only  about  one  out  of  four  people 
aged  25-64  had  a  tertiary  degree  in  2024.  By 
contrast,  in  the  Yugozapaden  region,  the  share 
(43%)  was  higher  than  the  EU  average  (36%).  In 
general,  tertiary  educational  attainment  is  higher 
in  cities  (48%),  where  it  is  comparable  to  the  EU 
average  for  cities,  and  much  lower  in  rural  areas 
(13.6%),  where  it  is  even  much  lower  than  the 
respective EU average (26.6%). Accessibility is the 
main bottleneck to participation in regions lagging 
behind,  in  particularly  Severozapaden.  The  region 
has  a  considerably  lower  number  of  tertiary 
institutions  relative  to  its  population  than,  for 
instance,  Yugozapaden.  These  institutions  also 
have  a  significantly  lower  number  of  fields  of 
study to choose from (394) (see Annex 13). 

regional 

development 

Bulgaria’s 
and 
competitiveness  are  constrained  by  the  low 
capacity  of  local  governments.  The  European 
Quality of Government Index is uneven across the 
country but lower than the EU  average in general 
(Table  A18.3).  The  lowest  values  for  the  main 

(392) OMDIA and Point Topic (2025) Broadband Coverage in 
Europe 2024: Mapping progress towards the coverage 
objectives of the Digital Decade. 

(393) Invest Sofia and Institute for Market Economics (2024): 

Economic and Investment Profile of Sofia 2024; Institute for 
Market Economics (2023): Economic Centres; Republic of 
Bulgaria, Ministry of Finance (2023): National Development 
Programme Bulgaria 2030; OECD (2023): OECD Skills 
Strategy Bulgaria 2023; World Bank (2024): Country 
partnership framework for Bulgaria; World Bank (2021): 
Systematic Country Diagnostic. 

(394) OECD (2025) Education and Skills in Bulgaria, p. 161. 

134 

 
 
 
to 

found 

index  are 
in  Severozapaden,  Yuzhen 
tsentralen and the Yugozapaden region. Moreover, 
in  Yuzhen  tsentralen,  the  index  has  decreased 
substantially over the last 15 years (see Annex 7). 
The lack of capacity of local governments to plan, 
is  a  major 
implement  projects 
design  and 
bottleneck 
regional  competitiveness  and 
impacts  the  quality  of  local  services (395).  This 
limited  capacity  is  driven  by  several  factors, 
including  the  difficulty  in  attracting  skilled  staff 
(see  Annex  7)  and  regions’  reliance  on  dedicated 
transfers,  which  undermines  the  efficiency  and 
fairness of local  public finance. There is a lack of 
financial autonomy at local level and a lack of own 
resources 
policy 
implementation.  Financial  disparities  between 
municipalities are striking and remain a core driver 
of regional inequalities. As a result of depopulation 
and  the  subsequent  reduced  economic  activity, 
most  small  and  rural  municipalities  rely almost 
entirely on  central  transfers,  with  own  revenues 
often  below  10%  of  their  budgets. The  current 
equalisation  transfer  system  is  overly  complex, 
fosters dependency and discourages municipalities 
improving  their  revenue  collection  and 
from 
attracting  investment,  undermining  the  efficiency 
and fairness of local public finance (396). 

investment 

and 

for 

Table A18.3:European Quality of Government index 
(2024) 

Source: European Quality of Government at the subnational 
level, 2024 edition  

Regions  and  regional  development  councils 
have limited capacity for effective territorial 
planning  and  coordination.  The  regions  are 
served  by  units  within  the  Ministry  of  Regional 
Development  and  Public  Works.  At  the  Ministry’s 
level,  regional  planning  does  not  take  territorial 
needs sufficiently into account. This can partly be 
attributed 
practical 
difficulties 
implementation  of  strategic  documents  and  not 
effective  integration  of  priorities  across  levels. 
Regional  development  councils  are  largely  formal 
structures  and  not  active  drivers  of  policy 
programming. 
coordination 
Therefore, regional perspectives and priorities tend 
to  be  overshadowed  by  national  and  municipal 
needs (397). 

investment 

and 

to 

in 

Inter-municipal  cooperation  remains  under-
developed  in  both  urban  and  rural  areas, 
especially for joint investments and services, 
e.g.  in  education,  transport and  health.  There 
are  successful  examples  of  partnerships  and 
cooperation between municipalities, with a view to 
implementing  integrated  territorial  investments. 
There  are  few  examples  of  effective 
inter-
municipal coordination (beyond what is mandated 
for  waste,  water  and  sewerage)  despite  a 
conducive  legal  framework  that  provides  for  a 
range  of  governance  and  funding  mechanisms. 
Strategic  planning  remains  fragmented  across 
overlapping frameworks, and the current system is 
overly complex and slow (398). 

(397) Parashkekova et al. (2021): Administrative Capacity for ITI 
implementation; OECD (2021): Decentralisation and 
Regionalisation in Bulgaria: Towards Balanced Regional 
Development. 

(398) OECD (2021): Reducing Regional Disparities for Inclusive 

Growth in Bulgaria; Institute for Market Economics (2025): 
The state of municipal budgets in Bulgaria and opportunities 
for expanding the financial autonomy of local authorities; 
Foundation for Local Government Reform & Centre of 
Expertise for Good Governance, Council of Europe (2023): 

(395) OECD (2023) Economic Surveys: Bulgaria; World Bank (2021) 

Systematic Country Diagnostic: Bulgaria. 

(396) Republic of Bulgaria (2021): Bulgarian Decentralisation 
Strategy 2016-2025; Centre of Expertise for Good 
Governance, Council of Europe (2023): Fiscal autonomy and 
financial management of local administrations in Bulgaria; 
Centre of Expertise for Good Governance, Council of Europe 
(2024): Developing fiscal decentralisation and improving 
local financial management in Bulgaria; World Bank (2025): 
Rethinking Municipal Finance: Bulgaria Subnational Public 
Finance Review; Institute for Market Economics (2025): The 
state of municipal budgets in Bulgaria and opportunities for 
expanding the financial autonomy of local authorities; OECD 
(2021): Decentralisation and Regionalisation in Bulgaria: 
Towards Balanced Regional Development; Institute for 
Market Economics (2022): Equalisation mechanisms in local 
finances: Sharing income tax revenues and models for 
‘smoothing’ regional imbalances through targeted transfers; 
Ganev (2023): The New Horizon for Local Authorities. 

135 

Overall indexCorruptionQuality and accountabilityImpartialitySeverozapaden-2.4-2.6-2.7-1.6Severen tsentralen-0.6-0.1-1.4-0.1Severoiztochen-1.0-1.0-1.4-0.3Yugoiztochen-1.3-1.2-1.7-0.9Yugozapaden-1.9-1.8-2.2-1.5Yuzhen tsentralen-2.3-1.5-2.7-2.3 
 
 
   
 
 
 
urban-rural  divide  (see  Annex  13).  This  is 
clearly  apparent  in  the  dramatic  differences  in 
PISA  scores  between  urban  and  rural  areas, 
reaching  93  points  for  reading  scores.  These 
differences  are  further  influenced  by  students’ 
learning 
socio-economic  backgrounds.  Poorer 
outcomes  outside  Yugozapaden  and  large  urban 
centres, such as Plovdiv and Varna, also contribute 
to  students  in  these  regions  being  less  likely  to 
complete  upper  secondary  education.  Underlying 
include  a  prevalence  of  smaller 
bottlenecks 
schools  and  a 
lack  of  sufficient  tools  and 
incentives  to  support  and  attract  teachers  in 
peripheral  areas.  In  addition,  there  is  limited 
access  to  early  childhood  education  and  care 
services in rural settlements. Participation rates in 
kindergarten  vary  significantly  across  regions. 
Bottlenecks  include  poor  transportation,  a  lack  of 
available  places in educational  facilities, and  poor 
accessibility (402). 
of 
municipalities have only one or two kindergartens, 
but  larger  urban  centres  are  also  struggling  to 
keep up with demand. 

example, 

40% 

For 

Limited access to key local public services is 
a  challenge to the  right  to  stay,  particularly 
in  less  developed  regions,  and  hampers  the 
growth  prospects  of  areas  lagging  behind. 
Bulgarian  municipal  responsibilities  fall  into  two 
categories: 
(i)  shared  functions  –  such  as 
education,  social  protection  and  healthcare  – 
managed  jointly  with  the  national  government; 
and  (ii)  exclusive  responsibilities,  including  for 
housing,  water 
environmental 
protection (399).  The  provision  of  key  local  public 
services, 
long-term  care, 
infrastructure  and  water 
education,  transport 
supply  remains  highly  uneven  across  the  country, 
with  the  largest  gaps  in  the  least  developed 
regions,  particularly  in  the  north.  Given  their 
central  role  in  shaping  regional  competitiveness 
and  quality  of  life,  persistent  deficits  in  public 
service 
the 
development 
disadvantaged 
regions (400). 

including  healthcare, 

supply  and 

significantly 

prospects 

provision 

limit 

of 

in 

to  81% 

in  Severozapaden 

Access  to  healthcare 
is  uneven  across 
regions and is especially problematic in rural 
areas.  The  share  of  people  with  access  to  a 
hospital  within  a  10-minute  drive  ranges  from 
59% 
the 
Yugozapaden  region.  The  situation  is  far  worse  in 
rural  areas  in  NUTS  2  regions:  only  9%  of  people 
in Severoiztochen and 18% in Yugoiztochen have a 
hospital  within  a  10-minute  drive (401).  This  figure 
is  below  the  EU  average  of  30%  in  other  regions 
too.  In  addition,  physicians  are  concentrated  in 
urban  areas  and  near  medical  universities,  which 
creates  an  uneven  distribution  of  healthcare 
professionals  and  shortages  in  rural  regions.  The 
number  of  people  per  general  practitioner  also 
varies significantly (see Annex 15).  

There  are  large  regional  disparities  in  the 
quality  of  education  coupled  with  a  strong 

Training Nees Analysis of Local Government in Bulgaria; 
Council of Europe (2023): Comprehensive Analysis of the 
Current Legal, Administrative, and Operational Framework of 
Municipalities.  

(399) SNG-WOFI Country profile: Bulgaria. 

(402) Institute for Market Economics (2024): White Paper: 

(400) OECD (2023) Economic Surveys: Bulgaria; OECD (2025) 
Education and Skills in Bulgaria; World Bank (2021) 
Systematic Country Diagnostic: Bulgaria. 

(401) Institute for Market Economics (2022): Integrated Social 
Assistance in Bulgaria; Institute for Market Economics 
(2016): Poverty in Bulgaria: Education and Employment: Key 
Drivers of Income and Inequality. 

Unlocking Growth; OECD (2023): PISA 2022 Results; OECD 
(2025): Education and Skills in Bulgaria; OECD (2022): 
Reviews of Evaluation and Assessment in Education Bulgaria; 
European Commission (2024): Education and Training 
Monitor 2024; Institute for Market Economics (2025): 
Education Without Direction: A Study of National Secondary 
School Performance with Emphasis on the Lowest-
Performing Institutions. 

136 

 
 
 
 
Graph A18.2: Share of population with a hospital 
within 10 minutes by car in Bulgaria, 2023, (NUTS 
2 regions) 

Source: REGIO calculations based on Eurostat data 

Rural and remote regions are constrained by 
limited  access  to  water  and  high  water 
losses in the water supply network. Territorial 
differences  in  water  availability  reflect  significant 
regional  disparities  in  water  infrastructure.  Rural 
and  remote  regions,  in  particular,  face  persistent 
challenges related to ageing networks and limited 
investment  in  modernisation.  For  instance,  Pleven 
in  the  north  of  Bulgaria,  one  of  Bulgaria’s  10 
largest  cities,  had  only  limited  access  to  water  in 
the  summer  of  2025.  Wastewater  treatment  for 
agglomerations  with  a  population  of  over  10 000 
has yet to be fully achieved (403).  

the 

Transport  connectivity  remains  a  significant 
challenge  that  hampers  northern  Bulgaria’s 
growth  prospects.  The  persistent  imbalance  in 
development  between  the  north  and  south  is 
lack  of  high-quality, 
exacerbated  by 
leaves 
interoperable 
northern  Bulgaria  poorly  connected 
the 
country’s  main  growth  centres  and  European 
networks (404). The situation is most  acute in rural 
areas and towns, since only 40% of the population 
within  a  120 km  radius  can  be  reached  within  a 
90-minute  drive.  Rail  transport  also  suffers  from 
the uneven distribution of rail infrastructure across 

transport  corridors.  This 

to 

level (405).  Delays 

regions, with varying levels of network length and 
in 
density  at  NUTS  2 
implementing  sustainable  transport  investments 
effectively  point  to  constraints  in  administrative 
is  highlighted  by  the  delayed 
capacity.  This 
infrastructure 
completion  of  major 
projects 
funding. 
Institutional  capabilities,  including  qualified  staff 
and  appropriate  digital  tools,  are  crucial  for 
effective  project  planning,  coordination  and 
delivery across regions. 

transport 
cohesion  policy 

receiving 

Table A18.4:Renewable energy production in 
Bulgaria and the EU by degree of urbanisation 
(MWh per head), 2023 

Source: Rural Observatory 

to 

just 

transition 

clean  energy 
The 
generation  and  infrastructure  poses  specific 
challenges  for  transition  regions.  These 
challenges are most acute in the regions of Stara 
Zagora,  Kyustendil  and  Pernik,  where  coal  power 
production  is  to  be  phased  out  by  2038  at  the 
latest.  To  meet  this  goal,  the  regions  face 
transition needs linked to: (i) expanding renewable 
(ii)  promoting  energy  efficiency  and 
energy; 
decarbonisation; (iii) developing storage capacities 
(iv) 
and 
economic 
diversification, 
creation  and  workforce 
retraining; and (v) preparing degraded mining sites 
for  other  economic  activities.  All  three  regions 
currently  benefit  from  the  EU’s  Just  Transition 
Fund.  However,  the  delayed  adoption  of  the 
territorial  just  transition  plans  in  December  2023 
reflects 
capacity, 
governance  mechanisms,  project  pipelines  and 
prioritisation.  

administrative 

technology; 

fostering 

gaps 

job 

in 

(403) Supreme Advisory Council on Water, Water Management 

Policy (2024): Problems with Water Scarcity; Nova (2025): 
Water Shortage in Pleven: The City Remains Under Severe 
Water Restrictions. 

Bulgaria’s  transition  regions  face  some  of 
the EU's most severe air pollution challenges. 
The  Maritsa  Iztok  lignite  complex  in  Stara  Zagora 

(404) European Commission (2025): TENtec Map. 

(405) Eurostat, [tgs00113] Rail network by NUTS 2 region.  

137 

020406080100EU27BulgariaYugozapadenYuzhen tsentralenSeveroiztochenYugoiztochenSeveren tsentralenSeverozapadenAll areasRural areasIndicatorTotalCitiesTowns / suburbsRural areasOnshore windBG0.280.010.910.18EU-270.770.050.382.38BG3.380.692.468.03EU-273.290.121.4110.59Solar PVBG0.450.170.920.50EU-270.560.140.581.17BG62.7918.0973.86119.25EU-2724.842.4413.1874.20Technical potentialTechnical potentialProductionProduction 
   
 
 
 
     
 
 
ranks  among  the  EU's  largest  single-site  emitters 
of  SO₂  and  NOₓ.  Meanwhile, 
in  Pernik,  the 
benzo(a)pyrene 
recorded  are 
concentrations 
among the highest measured anywhere in the EU, 
driven by widespread residential solid fuel burning. 
Kyustendil  frequently  exceeds  PM10  and  PM2.5 
limits,  particularly  during  the  winter  heating 
season. 

Bulgaria’s territories face specific challenges 
and  untapped  potential  in  renewable  energy 
deployment.  In  2023,  Bulgaria  performed  below 
the  EU  average  for  onshore  wind  production  and 
solar PV production (Table A18.4). Production also 
falls  far  short  of  the  country’s  total  technical 
potential,  which  is  much  larger  than  the  EU 
average  for  solar  PV  production,  in  particular  in 
rural areas. There is also a need for investment in 
the electricity networks as the lack of grid capacity 
is  a  critical  bottleneck  for 
the  roll-out  of 
renewables  (see  Annex  9).  Settlements  in  the 
municipality  of  Troyan,  for  example,  were  left 
without electricity in winter 2025 (406). 

Map A18.3:  Percentage of GDP loss by 2050 due to 
climate change under the +2°C scenario in 
Bulgaria (NUTS 3 regions) 

Source: JRC 

The Bulgarian blue economy, concentrated in 
the  country’s  coastal  regions,  faces  several 
challenges.  Bottlenecks  include:  (i)  (green)  port 
infrastructure  and  hinterland  connectivity  issues; 
(ii) limited value-added maritime activities; and (iii) 
weak  research–innovation  capacity,  particularly  in 
port  modernisation; 
fisheries 
productivity;  and  (v)  sustainability  challenges  in 
the  Black  Sea  coastal  areas  (Varna,  Dobrich  and 
Burgas).  

(iv)  declining 

(406) Republic of Bulgaria (2024): National Report on the State 
and Protection of the Environment in the Republic of 
Bulgaria; Energy and Water Regulatory Commission (EWRC) 
Bulgaria (2024): Annual Report and Comparative Analysis of 
the State of the Water Supply and Sewerage Sector in the 
Republic of Bulgaria for 2023; Nova (2025): Water Shortage 
in Pleven: The City Remains Under Severe Water Restrictions; 
ESO EAD: Bulgaria's Electricity Transmission Network 
Development Plan 2025-2034; Republic of Bulgaria (2024): 
National Energy and Climate Plan 2021-2030; Mediapool 
(2024): Record Power Outages Hit Troyan Villages; Energy 
Minister Calls Urgent Meeting. 

138 

 
 
 
 
 
ANNEX 19: TRANSPORT 

This  Transport  Annex  presents  the  state  of  play 
and  the  challenges  Bulgaria  faces  with  the 
implementation  of  the  trans-European  transport 
network  (TEN-T),  the  European  railway  traffic 
management system (ERTMS), and road safety. 

As  of  late  2024 (409),  the  ERTMS  was  only 
operational  on  9%  of  the  Bulgarian  rail 
network.  To  meet  its  national  plan’s  ERTMS  roll-
out  target  by  2035,  Bulgaria  aims  to  deploy 
ERTMS on an additional 500 km.  

Public 

projects. 

for  works  and 

Project  preparation  and  implementation  are 
hampered  by  a 
lack  of  administrative 
capacity  at  all  levels.  This  is  reflected  in  an 
insufficient pipeline of mature projects and a lack 
of  specialised  expertise  to  manage  large-scale 
infrastructure 
procurement 
procedures  are  lengthy  and  often  trigger  appeals. 
land 
Permitting  procedures 
acquisition  as  well  as  environmental 
impact 
assessment  processes  are  protracted.  Combined 
with  planning  weaknesses,  this  leads  in  many 
cases to implementation delays and cost overruns. 
Moreover,  for  Bulgaria,  would  be  of  great  benefit 
to  give  the  National  Safety  Authority  the  powers 
and independence required to operate in full, as it 
still  faces  challenges  related  to  commitment  and 
resources,  staff  retention,  the  effectiveness  of 
supervision, and the smooth functioning of vehicle 
authorisation. 

project 

Agreeing on joint priorities, aligned timelines 
and  technical  specifications  would  improve 
cross-border 
coordination  with 
neighbouring  EU  and  non-EU  countries. 
Bulgaria  also  lacks  capability  in  the  authorisation 
of rolling stock and certification process of railway 
undertakings  for  train  operations  to  Romania  and 
Greece in line with the rules of the single European 
railway  area  and  could  reduce  come  of  the 
national rules impeding efficient operations. 

The  Bulgarian  TEN-T  rail  network  comprises 
2 437 km  and  is  one  of  the  oldest  railway 
networks  in  the  European  Union.  The  TEN-T 
road network covers 2 753 km (804 of which form 
part of the core network). In addition, Bulgaria has 
469 km of inland waterways, eight ports (including 
three  core  ports),  five  airports  (including  one  core 
airport), and seven urban nodes (407).  Three TEN-T 
corridors cross the country: the Baltic Sea  – Black 
Sea  –  Aegean  Sea  (BBA)  corridor,  the  Western 
Balkans – Eastern Mediterranean corridor and the 
Rhine  –  Danube  corridor  solely  along  the  Danube 
river,  positioning  Bulgaria  as  a  transit  country  in 
south-eastern Europe.   

rail 

providing 

The  two  north-south  routes  of  the  BBA 
corridor  have  high  geopolitical  and  strategic 
relevance, 
connectivity 
between  Aegean  and  Black  Sea  ports  and 
Ukraine  and  Moldova.  This  was  highlighted  in 
the memorandum of understanding (408), signed by 
the  Bulgarian,  Greek  and  Romanian  transport 
ministers in December 2025. The west-east axis of 
the  Western  Balkans–Eastern  Mediterranean 
corridor  constitutes  the  principal  rail  link  towards 
Türkiye  and  subsequent  connections  to  Asia,  with 
significant  potential  for  modal  shift  from  road  to 
rail.  EU-funded 
investments  are  supporting 
infrastructure  upgrades  to  meet  TEN-T  standards 
in terms of capacity, safety, and speed. 

The  ERTMS  is  essential  to  digitalising  the 
railways and to modernising and harmonising 
railway  operations  across  Europe.  The  ERTMS 
ensures the safety of rail networks by providing a 
unified signalling system that significantly reduces 
the 
It  also  provides 
interoperability  between  national  rail  systems, 
improving  cross-border  train  movements.  Finally, 
the  ERTMS  enhances  network  capacity  and 
the 
operational 
competitiveness of the rail sector.  

risk  of  accidents. 

efficiency, 

increasing 

(407) TENtec Information System, according to Reg. 2024/1679. 

(408) Memorandum of Understanding between Bulgaria, Greece 
and Romania on Enhanced Cross-Border Cooperation in the 
Framework of the Black Sea – Aegean Sea Corridor Platform.  

(409) Based on ERTMS – Third work plan of the European 

coordinator Matthias Ruete. 

139 

 
 
 
 
 
 
Table A19.1:ERTMS deployment in Bulgaria. 

Source: Based on ERTMS – Third work plan of the European Coordinator Matthias Ruete. 

Map A19.1:  TEN-T Cross-Border & National Priority Sections in Bulgaria. 

140 

 
 
 
 
 
 
 
 
 
 
Graph A19.1: Bulgaria's road fatalities per million, 
2024 

Source: Report at the Mid-Point - Bulgaria, SWD(2026) 35 
final. 

roads  where 
The  map below  presents 
infrastructure  safety  is  poor  and  urgent  action  is 
required.  

the 

Map A19.2:  Bulgaria's road safety map 

Source: TENtec Information System and TEN-T map library – 
European Commission 

Road  crashes  impose  an  enormous  social, 
economic  and  health  burden  on  the  EU 
economy.  The  external  socio-economic  costs  of 
fatal,  serious  and  minor  injuries  have  remained 
persistently  high  despite  the  progress  made  in 
reducing  crash  frequency  and  severity.  These 
resources 
innovation, 
education,  healthcare  and  other  crucial  public 
investments (410). 

could  otherwise 

fuel 

In  2024,  Bulgaria  recorded  478  road 
fatalities. While the number has fallen in recent 
limited  progress  – 
years  – 
Bulgaria  still  has the  second  highest  fatality  rate 
in the EU, with 74 fatalities per million inhabitants 
compared with the EU average of 45 per million. 

indicating  some 

Compared  with  the  EU  average  (53%),  the 
distribution of fatalities in Bulgaria shows a 
relatively high proportion (62%) of fatalities 
occurring on rural roads.  

Given  the  Bulgarian  road  fatality  rate  is 
64% higher than the EU average, it needs to 
take  action  to  improve  its  road  safety 
performance  and  reduce  the  gap  with  other 
EU  Member  States.  Possible  ways  to  address 
this include  exploring  new  financial  resources  for 
the 
implementation  of  delayed  road  safety 
measures  in  the  national  road  safety  strategy, 
with  a  focus  on  road  infrastructure  works  both 
inside  and  outside  urban  areas;  resolving  any 
legislative  obstacles  preventing  or  delaying  the 
implementation  of  the  strategy,  and  speeding  up 
the 
implementation  of  planned  road  safety 
measures. Any other relevant activities should be 
explored,  with  an  emphasis  on  those  relating  to 
the prevention of serious injuries(411).  

(410) Report on the implementation of the EU Road Safety Policy 

framework at the Mid-Point, COM(2026) 77 final. 

(411) More details in Report on the implementation of the EU 

Road Safety Policy framework at the Mid-Point – Bulgaria, 
SWD(2026) 35 final. 

141