- II. Overview of the Monthly Social Allowance (MSA) Scheme and the Heating Allowance

**Bulgaria maintains an extensive income support program system that protects households from income fluctuations and the risk of poverty, which aligns with the practices of many European countries.** Bulgaria manages a range of non-contributory social benefit schemes under three budget programs administered by the Agency for Social Assistance (ASA). These programs include (1) Social Assistance for Low-income families and persons, (2) Support for people with disabilities, and (3) Support for children and families (World Bank, 2020). This array of programs encompasses social insurance schemes, such as unemployment benefits, which provide a safety net for individuals facing income loss due to unemployment. Simultaneously, social assistance transfers, including universal child benefits and meanstested assistance, are designed to prevent financial hardship and offset increased expenditures for vulnerable households.

**Expenditure on social protection benefits increased from 2019-2021, reaching 18.3 % of GDP in 2021**<sup>**9**</sup> **, about ten percentage points below the EU average; mean-tested cash benefits represent a small share.** Consistent with EU patterns, most of Bulgaria's total expenditure on social protection was made in the form of cash payments. Overall, in 2021, total cash benefits (mean and non-means tested) represented 12.2 percent of GDP, significantly lower than the EU average of 18.7 percent.<sup>10</sup> . The ratio between meanstested and non-means-tested cash benefits was heavily skewed in favor of the latter, primarily due to pension benefits. In 2021, the value of cash benefits that were not means-tested was about 35 times as high as that for means-tested cash benefits. While this is the case for most EU member states, this ratio was only about eight times as high in the EU. Total mean-tested cash benefits were only 0.3 percent of GDP (Eurostat).

**The country has implemented various income-tested criteria within its social protection programs.** One

such criterion is the Guaranteed minimum income (GMI)-linked indicator, specifically designed for social inclusion programs. This applies to several schemes, including the monthly social allowance, the heating allowance, and the "Monthly benefit for bringing up children accommodated in families of relatives and friends" as part of the Family and Children benefits (Table 1). Another income-testing criterion is based on the poverty line, primarily used in disability programs. Furthermore, specific income-testing threshold amounts, determined by the government, are applied to specific family and children programs and scholarships.

**Table 1. Bulgaria's Income-tested social protection programs**

|||Inco|me testingc|riteria|
|---|---|---|---|---|
||Social protection program|Poverty<br>line|Specific<br>amount|GMI-<br>linked<br>Indicator|
|Disability|Targeted allowance for thepurchase of apersonal vehicle|X|||

9 Source: Eurostat.

<u>https://ec.europa.eu/eurostat/databrowser/view/spr_exp_sum__custom_10456049/default/table?lang=en</u> 10 Source: Eurostat. = = <u>https://ec.europa.eu/eurostat/databrowser/view/spr_exp_gdp/default/table?lang en&category spr.spr_expend. spr_exp_cur</u> 7