Economy of Bulgaria
Encyclopedia
The economy of Bulgaria
functions on the principles of the free market
, having a large private sector and a small, but strong public sector. Bulgaria is an industrialised upper-middle-income country according to the World Bank
with a gross national income per capita of US$ 5,490 in 2008. It has experienced rapid economic growth , even though its income level remains one of the lowest within the EU with an average monthly wage of 689 leva (354 euro).
Even though Bulgaria's economy continues to be plagued by corruption and an inefficient judiciary, after 2001 it has managed to attract considerable amounts of Foreign Direct Investment (FDI). During the Financial crisis of 2007–2010, Bulgaria marked a decline in its economy of 5.5% in 2009, but quickly restored its growth to 0.2% in 2010, in contrast to other Balkan countries.
The currency of the country is the lev
(plural leva), pegged to the euro
at a rate of 1.95583 leva for 1 euro. The lev is the strongest and most stable currency in Eastern Europe. The strongest sectors are energy
, mining
, metallurgy
, machine building, agriculture
and tourism
. Low productivity and competitiveness on the European and world markets alike due to inadequate R&D funding and a lack of a clearly defined development policy remain a significant obstacle for foreign investment and economic growth.
market, to which the country had been closely tied. The standard of living
fell by about 40%, and only regained pre-1989 levels by June 2004. In addition, UN
sanctions
against Serbia
(1992–95) and Iraq
took a heavy toll on the Bulgarian economy. The first signs of recovery emerged when GDP
grew 1.4% in 1994 for the first time since 1988, and 2.5% in 1995. Inflation, which surged in 1994 to 122%, fell to 32.9% in 1995. During 1996, however, the economy collapsed due to an unstable and decentralised banking system, a wave of hyperinflation throughout several countries of Eastern Europe, and slow reforms, which led to an inflation rate of 311% and the collapse of the lev
. When pro-reform forces came into power in the spring 1997, an ambitious economic reform package, including introduction of a currency board regime, was agreed to with the International Monetary Fund
and the World Bank
, and the economy began to stabilise. The 2000s saw a steady pace of growth and budget surpluses, but shaky inflation.
Successful foreign direct investment and successive governments have demonstrated a commitment to economic reforms and responsible fiscal planning have contributed greatly to the Bulgarian economy, with a historical growth rate average of 6% a year.
Corruption in the public administration and a weak judiciary have continued to be long-term problems, and the presence of organized crime remains very high.
A period of large trade deficits and improper real estate investment hit Bulgaria hard during the late-2000s recession, resulting in a 12% GDP decline in that period, a rise in unemployment, and spending at least five quarters in its worst recession since the early 1980s. However, this was not as severe compared to much of Europe
. Future prospects are tied to the country's increasingly important integration with the European Union member states. However, the country came out of a recession in 2010, and stagnated for a short period of time. It has been recently predicted that the economy would grow modestly by 2011. The country is expected to join the Eurozone
in 2013.
From the end of World War II until the widespread change of regime in Eastern Europe
in November 1989, the Bulgarian Communist Party
(BCP) exerted complete economic, social and political control in Bulgaria. The party's ascent to power in 1944 had marked the beginning of economic change towards planned economy
in Bulgaria. After World War II, Bulgaria followed the Soviet model of economic development more closely than any other East Bloc country with becoming one of the first members of Comecon
; the new regime shifted the economy from mainly agrarian type towards industrial economy and much of the labour force from the countryside to the city, providing workers for new large-scale industrial complexes. At the same time, the focus of Bulgarian international trade shifted from Central Europe to Eastern Europe and USSR.
These new policies resulted in impressive initial rates. Bulgarian economy closely resembled that of the Soviet Union. Soviet-style centralised planning in five-year blocks had more immediate benefits there than in the other European states where it was first applied in the early 1950s. Throughout the postwar period, economic progress also was assisted substantially by a level of internal and external political stability unseen in other East European countries during the same period, that was also a change in Bulgarian political scene was a lot of turbulence preceded the ascent to power of BCP
.
Nonetheless, beginning in the early 1960s low capital and labour productivity and expensive material inputs plagued the Bulgarian economy. With disappointing rates of growth came a high degree of economic experimentation. This experimentation took place within the socialist economic framework, however, and it never approached a market-based economy.
In the late 1980s, continuing poor economic performance brought new economic hardship. By that time, the misdirection and irrationality of BCP economic policies had become quite clear. Bulgaria's economy contracted dramatically after 1987 with the dissolution of the Comecon
, with which the Bulgarian economy had integrated closely. Finally, on 10 November 1989, at the November plenum of BCP Todor Zhivkov
was dismissed as a long-time party leader and head of state and the communist regime gave way to democratic elections and government. Unlike the communist parties in most other East European states, the BCP (changing its name to Bulgarian Socialist Party
) retained majority power after the transition in Bulgaria by winning the first free national elections in June 1990. That was made possible by changes in party leadership, programme, reduction of its power base and other which permitted economic reorientation toward a market system. This difficult transition combined with political vagueness, unpreparedness of people for the social and economic changes led to seriously worsen economic conditions during early 90s. The standard of living fell with nearly 40% and more and regain levels in the beginning of 2000's.
system and the loss of the Soviet
market, to which the country had been closely tied. The standard of living
fell by about 40%, and only regained pre-1989 levels by June 2004. In addition, UN
sanctions
against Serbia
(1992–95) and Iraq
took a heavy toll on the Bulgarian economy. The first signs of recovery emerged when GDP
grew 1.4% in 1994 for the first time since 1988, and 2.5% in 1995. Inflation, which surged in 1994 to 122%, fell to 32.9% in 1995. During 1996, however, the economy collapsed due to the Bulgarian Socialist Party's
slow and mismanaged economic reforms and an unstable and decentralised banking system, which led to an inflation rate of 311% and the collapse of the lev
. When pro-reform forces came into power in the spring 1997, an ambitious economic reform package, including introduction of a currency board regime, was agreed to with the International Monetary Fund
and the World Bank
, and the economy began to stabilise. The 2000s saw a steady pace of growth and budget surpluses, but shaky inflation.
upon taking office in January 1995 but were slow to act. United Nations
sanctions against Yugoslavia and Iraq
(1990–2003), two of the country's most significant trading partners, took a heavy toll on the Bulgarian economy. The first signs of recovery emerged in 1994 when the GDP
grew and inflation
fell. The first round of mass privatisation finally began in January 1996, and auctions began toward the end of that year. The second and third rounds were conducted in Spring 1997 under a new government. In July 1998, the UDF-led government and the IMF reached agreement on a 3-year loan worth about $800 million, which replaced the 14-month stand-by agreement that expired in June 1998. The loan was used to develop financial markets, improve social safety net programmes, strengthen the tax system, reform agricultural and energy sectors, and further liberalise trade. The European Commission
, in its 2002 country report, recognised Bulgaria as a functioning market economy, acknowledging the progress made by Prime Minister Ivan Kostov
's government toward market-oriented reforms.
(UDF) government won pre-term parliamentary elections and introduced an IMF currency board system which succeeded in stabilizing the economy. The triple digit inflation of 1996 and 1997 has given way to an official economic growth
, but forecasters are predicting accelerated growth over the next several years. The government's structural reform program includes: (a) privatization and, where appropriate, liquidation of state-owned enterprises (SOEs); (b) liberalization of agricultural policies, including creating conditions for the development of a land market; (c) reform of the country's social insurance programs; and (d) reforms to strengthen contract enforcement and fight crime and corruption. Despite reforms, weak control over privatization led many successful state enterprises to bankruptcy
. The UDF government also failed to stop the growing negative account balance, which has since then continued to increase, reaching a negative of $ 12.65 billion in 2008. The government elected in 2001 pledged to maintain the fundamental economic policy objectives adopted by its predecessor in 1997, specifically: retaining the Currency Board, implementing sound financial policies, accelerating privatisation, and pursuing structural reforms. Both governments failed to implement sound social policies.
The economy really took off between 2003 and 2008 and growth figures quickly shot up, fluctuating between figures as high as 6.6% (2004) and 5.0% (2003). Even in the last pre-crisis year, 2008, the Bulgarian economy was growing rapidly at 6.0%, despite significantly slowing down in the last quarter.
entered the European Union
. This led to some immediate international trade liberalization, but there was no shock to the economy. The government is running annual surpluses of above 3%. This fact, together with annual GDP growth of above 5%, has brought the government indebtedness to 22.8% of GDP in 2006 from 67.3% five years earlier. This is to be contrasted with enormous current account deficits. Low interest rate
s guaranteed availability of funds for investment and consumption. For example, a boom in the real estate market started around 2003. At the same time annual inflation
in the economy was variable and during the last five years (2003–2007) has seen a low of 2.3% and high of 7.3%. Most importantly, this poses a threat to the country's accession to the Eurozone
. The Bulgarian government plans for the Euro
to replace the Lev
in 2010. However, experts predict that this might happen as late as in 2012. From a political point of view, there is a trade-off between Bulgaria's economic growth and the stability required for early accession to the monetary union. Bulgaria's per-capita PPP
GDP is still only about a third of the EU25 average, while the country's nominal GDP per capita is about 13% of the EU25 average. However, Bulgaria ranks 51st in the Ease of Doing Business rank list
, higher than most other Eastern European states, and 28th in the Economic Freedom of the World index, outperforming the Netherlands and South Korea. Bulgaria also has the lowest personal and corporate income tax rates in the EU, as well as the second lowest public debt of all European Union member states at 16.2% of GDP in 2010.
The country suffered a difficult start to 2009, after gas supplies were cut in the Russia-Ukraine gas dispute. Industrial output suffered, as well as public services, exposing Bulgaria being overdependent on Russia for raw materials.
The global financial crisis started to apply downward pressure on growth and employment in the last quarter of 2008. The real estate market, although not plummeting, ground to a halt and growth is expected to be significantly lower in the short-to-medium run.
During the course of 2009, the grim forecasts for the effects of the global crisis on the Bulgarian economy largely materialized. Although suffering less than the worst-hit countries, Bulgaria recorded its worst economic results since the 1997 meltdown. GDP shrank by around 5% and unemployment jumped. Consumer spending and foreign investment dropped dramatically and depressed growth in 2010 to 0.3%. Unemployment remains stubbornly high around 10%.
to receive positive upgrade that year. In January 2010 Moody's followed with an upgrade of its rating perspective from "stable" to "positive."
Bulgaria was expected to join the Eurozone
in 2013 but after the rise of some instability in the zone Bulgaria is withholding its possitions towards the Euro, combining together possitive and realistic attitudes. Since Bulgarian lev is anyway bounded to Euro Bulgaria is looking for more positive outcomes of the becoming a member of the Eurozone rather then risks.
Oil refining survived the shocks of the 1990s because of a continuing export market and the purchase of the Burgas refinery by the Russian oil giant LUKoil. The chemical industry has remained in good overall condition but is subject to fluctuating natural gas prices. Growth in ferrous metallurgy, which is dominated by the Kremikovtsi Metals Combine, has been delayed by a complex privatization process and by obsolete capital equipment. Non-ferrous metallurgy has prospered because the Pirdop copper smelting plant was bought by Union Minière of Belgium and because export markets have been favourable.
The end of the Warsaw Pact alliance and the loss of Third World markets were grave blows to the defence industry. In the early 2000s, the industry’s plan for survival has included upgrading products to satisfy Western markets and doing cooperative manufacturing with Russian
companies. The electronics industry, which also was configured in the 1980s to serve Soviet markets, has not been able to compete with Western computer manufacturers. The industry now relies on contract agreements with European firms and attracting foreign investment. The automotive industry has ceased the manufacture of cars, trucks, and buses. Manufacture of forklifts, a speciality in the communist era, also has stopped. In the early 2000s, shipbuilding has prospered at the major Varna and Ruse yards because of foreign ownership (Ruse) and privatization (Varna).
Only in recent years electronics and electric equipment production has regained higher levels. The largest centres include Sofia
, Plovdiv
and the surrounding area, Botevgrad
, Stara Zagora
, Varna
, Pravets
and many other cities. Household appliances, computer
s, CDs, telephone
s, medical
and scientific equipment are being produced.
Many factories producing transportation equipment still do not operate at full capacity. Plants produce train
s (Burgas
, Dryanovo
), tram
s (Sofia
), trolley
s (Dupnitsa), bus
es (Botevgrad
), truck
s (Shumen
), motor trucks (Plovdiv, Lom, Sofia, Lovech). Lovech has an automotive assembly plant. Rousse
serves as the main centre for agricultural machinery. Bulgarian arms production mainly operates in central Bulgaria (Kazanlak
, Sopot
, Karlovo
).
Construction output fell dramatically in the 1990s as industrial and housing construction declined, but a recovery began in the early 2000s. The sector, now dominated by private firms, has resumed the foreign building programs that led to prosperity in the communist era. The Glavbolgostroy firm has major building projects in Kazakhstan, Russia, and Ukraine as well as domestic contracts.
(in comparison, Romania
, which has a population nearly three times larger than Bulgaria, produced 51.7 billion kW·h in the same year). The domestic power-generating industry, which was privatized in 2004 by sales to interests from Europe, Japan, Russia, and the United States, suffers from obsolete equipment and a weak oversight agency. To solve the latter problem, in 2008 the government set up a state-owned energy holding-company (Bulgarian Energy Holding EAD
), composed of gas company Bulgargaz
, Bulgartransgaz
, power company NEK EAD
, Electricity System Operator EAD, Kozloduy nuclear power station
, Maritza-Iztok II thermal power station
, the Mini Maritza Iztok (Maritza Iztok mines), and Bulgartel EAD. The state holds a 100% stake in the holding company. Most of Bulgaria’s conventional power stations will require large-scale modernization in the near future. Bulgaria has some 64 small hydroelectric plants, which together produce 19 percent of the country’s power output.
The Kozloduy nuclear plant, which in 2005 supplied more than 40 percent of Bulgaria’s electric power, will play a diminishing role because two of its remaining four reactors (two were closed in 2002) must be closed by 2007 to comply with European Union (EU) standards. Kozloduy, which exported 14 percent of its output in 2006, was expected to cease all exportation in 2007. Construction of the long-delayed Belene nuclear plant resumed in 2006 but will not be complete until at least 2011. Belene, planned in the 1980s but then rejected, was revived by the safety controversy at Kozloduy.
Oil exploration is ongoing offshore in the Black Sea (the Shabla block) and on the Romanian border, but Bulgaria’s chief oil income is likely to come as a transfer point on east-west and north-south transit lines. Burgas is Bulgaria’s main oil port on the Black Sea. Bulgaria’s largest oil refinery, Neftochim, was purchased by Russian oil giant LUKoil in 1999 and underwent modernization in 2005. Bulgaria’s only significant coal resource is low-quality lignite, mainly from the state-owned Maritsa-Iztok and Bobov Dol complexes and used in local thermoelectric power stations.
Thermal power station
s (TPPs) provide a significant amount of energy, with most of the capacity concentrated in the Maritsa Iztok Complex
. The largest TPPs include:
A $1.4 bln. project for the construction of an additional block for the Maritza Iztok 1
Thermal Power Station is expected to be completed by the middle of 2010.
Bulgaria ranks as a minor oil producer (97th in the world) with a total production of 3,520 bbl/day.
Prospectors discovered Bulgaria's first oil field
near Tyulenovo
in 1951. Proved reserves amount to 15000000 bbl (2,384,809,425 l).
Natural gas
production halted in the late 1990s. Proved reserves of natural gas amount to 5.663 bln. cu m. The LUKOIL Neftochim
oil refinery is Bulgaria's largest refining facility with annual revenues amounting to more than 4 billion leva (2 billion euro).
have seen a steady increase in electricity production from renewable energy sources such as wind and solar power. Wind energy has large-scale prospects, with up to 3,400 MW of installed capacity potential. Bulgaria operates more than 70 wind turbine
s with a total capacity of 112.6 MW, and plans to increase their number nearly threefold to reach a total capacity of 300 MW in 2010.
After a decline in the 1990s, in the early 2000s the tourism industry has grown rapidly. In 2004 some 4 million foreigners visited Bulgaria, compared with 2.3 million in 2000. This trend is based on a number of attractive destinations, low costs, and restoration of facilities. Most of the industry had been privatised by 2004. Infrastructure items such as recreation facilities and booking services require improvement. Development of Bulgaria’s retail sales sector was slow until the early 2000s, when a large number of Western-style outlets began to appear, and Sofia developed as a retail center. By 2006 several major European retail chains had opened stores, and others planned to enter the Bulgarian market.
Bulgaria has attracted considerable investment from foreigners buying property either for their own use or for investment. In 2006, more than 29% of property deals were signed by foreigners, more than half of whom were UK citizens. Various companies, such as Bulgarian Dreams
, actively marketed Bulgarian properties to buyers overseas.
In 2007 Bulgaria was visited by 5,200,000 tourists, ranking 39th in the world. Tourists from Greece, Romania and Germany account for 40% of visitors. Significant numbers of British
(+300,000), Russian
(+200,000), Serbian
(+150,000), Polish
(+130,000) and Danish
(+100,000) tourists also visit Bulgaria. Most of them are attracted by the varying and beautiful landscapes, well-preserved historical and cultural heritage, and the tranquility of rural and mountain areas.
Main destinations include the capital Sofia
, coastal resorts Albena
, Sozopol
, Sveti Vlas
; winter resorts Pamporovo
, Chepelare
and Borovetz. Arbanasi
and Bozhentsi
are rural tourist destinations with well-preserved ethnographic traditions. Other popular attractions are the 10th century Rila Monastery
and the 19th century Euxinograd
château
.
producer and is the 3rd largest producer of tobacco
and 12th largest producer of raspberries
in Europe. Specialized equipment amounts to some 25,000 tractor
s and 5,500 combine harvester
s, with a fleet of light aircraft.
In 2004 an estimated one-third of Bulgaria’s land mass was covered by forests, of which about 40 percent was conifers. Between 1980 and 2000, the forested area increased by 4.6 percent. In 2002 a total of 4,800 tons of timber was harvested, 44 percent of which was fuel wood and 20 percent, pulpwood. Although nominal state timber standards are very strict, in 2004 an estimated 45 percent of Bulgaria’s timber harvest was logged illegally because of corruption in the forest service. Some 7.5 percent of forests are protected from all uses, and 65 percent are designated for ecological and commercial use. In 2005 about 70 percent of the total forest resource was rated economically viable.
Since Bulgaria stopped high-seas fishing in 1995, the country has imported increasing amounts of fish. The fish farming industry (particularly sturgeon) has expanded in the early 2000s, and some environmental improvements in the Black Sea and the Danube River, the principal sources of fish, may increase the take in future years. However, the catch from those sources has decreased sharply in recent decades, yielding only a few species of fish for domestic markets in 2004. Between 1999 and 2001, Bulgaria’s total fish harvest, wild and cultivated, dropped from 18,600 tons to 8,100 tons, but in 2003 the harvest had recovered to 16,500 tons.
Production of the most important crops (according to the FAO
) in 2006 (in '000 tons) amounted to: wheat
3301.9; sunflower
1196.6; maize
1587.8; grapes 266.2; tobacco
42.0; tomato
es 213.0; barley
546.3; potato
es 386.1; peppers
156.7; cucumber
s 61.5; cherries 18.2; watermelon
s 136.0; cabbage
72.7; apple
s 26.1; plums 18.0; strawberries 8.8.
Despite the poor performance of the mining sector, productivity has increased in recent years. Mining remains one of the most important sources of export earnings and is still a significant contributor to economic growth. The mining industry is worth $760 mln, and, along with related industries, employs 120,000 people. The rising global prices of gold
, lead and copper in 2010, as well as investments in zinc
and coal production, have boosted economic growth in the mining sector after the late-2000s financial crisis. As of 2010 Bulgaria ranks as the 19th largest coal
producer in the world, 9th largest bismuth
producer, 19th largest copper
producer, and the 26th largest zinc
producer.
The "Elatsite" copper mine and reprocessing facility, built during Vulko Chervenkov
's rule, takes its place as one of the largest in South-Eastern Europe. It extracts 13 million tonnes of ore annually, producing about 42,000 tonnes of copper
, 1.6 tonnes of gold
and 5.5 tonnes of silver
.
Ferrous metallurgy
has major importance. Much of the production of steel
and pig iron
takes place in Kremikovtsi
and Pernik
, with a third metallurgical base in Debelt
. In production of steel and steel products per capita the country heads the Balkans
. the fate of Kremikovtsi steel factories has come under debate because of serious pollution in the capital, Sofia.
The largest refineries for lead
and zinc
operate in Plovdiv
(the biggest refinery between Italy and the Ural mountains), Kardzhali
and Novi Iskar
; for copper
in Pirdop
and Eliseina (now defunct); for aluminium
in Shumen
. In production of many metals per capita, such as zinc and iron, Bulgaria ranks first in Eastern Europe
.
and public opinion is strongly in support of nuclear energy development. have seen a rapid increase in electricity production from renewable energy sources such as wind and solar power, making Bulgaria one of the fastest-growing wind energy producers in the world. The country aims at producing 16 % of its electricity from renewable energy sources by 2020.
Bulgaria's national road network has a total length of 40231 kilometres (24,998.4 mi), of which 39587 kilometres (24,598.3 mi) are paved, but nearly half of them fall into the lowest international rating for paved roads. Motorways, such as Trakiya
, Hemus
and Struma
, have a total length of 441 km (274 mi). Railroads are a major mode of freight transportation, although highways carry a progressively larger share of freight. Bulgaria also has 6238 kilometres (3,876.1 mi) of railway track and plans to construct a high-speed rail
way by 2017, at a cost of €3 bln. Sofia and Plovdiv are major air travel hubs, while Varna and Burgas are the principal maritime trade ports.
Bulgaria has an extensive, but antiquated telecommunications network which requires substantial modernization. Telephone
service is available in most villages, and a central digital trunk line connects most regions. Currently there are three actitve mobile phone operators - Mtel
, GLOBUL
and Vivacom. Since 2000, a rapid increase in the number of Internet users has occurred – from 430,000 they grew to 1,545,100 in 2004, and 3.4 million (48% penetration rate) in 2010. Bulgaria has the fastest average Broadband Internet speed in the world after Romania and South Korea.
Chronic underinvestment in the sector since 1990 forced many scientific professionals to leave the country. As a result, Bulgaria's economy scores low in terms of innovation, competitiveness and high added value exports.
The Bulgarian Academy of Sciences
(BAS) is the leading scientific institution in the country and employs most of Bulgaria's researchers in its numerous branches. The principal areas of research and development are energy, nanotechnology
, archaeology
and medicine. With major-general
Georgi Ivanov
flying on Soyuz 33
in 1979, Bulgaria became the 6th country in the world to have an astronaut in space. Bulgaria has deployed its own experiments on various missions, such as the RADOM-7
dosimeters on the International Space Station
and Chandrayaan-1 and the space greenhouse
(a Bulgarian invention) on the Mir space station. In 2011 the government announced plans to reboot the space program by producing a new microsatellite and joining the European Space Agency
.
Due to its large-scale computing technology exports to COMECON
states, in the 1980s Bulgaria became known as the Silicon Valley
of the Eastern Bloc
. The country ranked 8th in the world in 2002 by total number of ICT
specialists, outperforming countries with far larger populations, and it operates the only supercomputer in the Balkan region, an IBM Blue Gene
/P, which entered service in September 2008.
(pl., leva). In October 2006, the U.S. dollar was worth 1.57 leva. In 1999 the value of the lev was pegged to that of the German deutsch-mark, which was replaced by the euro in 2001. Following Bulgaria’s admission to the European Union, the lev is scheduled to be replaced by the euro.
In 2003 Bulgaria’s inflation rate was estimated at between 2.3 and 3 percent. The rate was 6 percent in 2004 and 5 percent in 2005.
for all citizens is set to a flat rate of 10%. This flat tax
is one of the lowest income rates in the world and the lowest income rate in the European Union
. The reform was done in pursue for higher GDP growth and greater tax collection rates. Some called it a "revolution" in taxation, but the changes were met with mild discussions and some protests by affected working classes. The proposal was modified to allow for compensating the perceived losers from the changes in the tax formula. The corporate income tax is also 10% as of 1 January 2007 which is also among the lowest in Europe. Currently this taxation is kept while other countries highered their taxes during the crisis.
For 2005 Bulgaria’s estimated state revenues totaled US$11.2 billion, and its estimated state expenditures, including capital expenditures, were US$10.9 billion, yielding a surplus of US$300 million. In 2004 revenues totaled US$10.1 billion and expenditures US$9.7 billion, for a surplus of US$400 million.
In the early 2000s, hydrocarbon fuels remained an important import, although beginning in the late 1990s those commodities’ share of total imports decreased significantly, from 29 percent in 1996 to 13 percent in 2004. During that period, the diversification of imported products
improved as the volume of machinery and equipment, consumer products, and automobiles increased. A large percentage of imports is accounted for by raw materials such as cloth, metal ore, and petroleum, which are processed and re-exported. The most important imports in 2005 were machinery and equipment, metals and ores, chemicals and plastics, fuels, and minerals. The major sources of imports, in order of volume, were Germany, Russia, Italy, Turkey, and Greece. In 2005 Bulgaria’s largest export markets, in order of volume, were Italy, Germany, Turkey,
Greece, and Belgium. The most important export commodities were clothing, footwear, iron and steel, machinery and equipment, and fuels. In 2005 Bulgaria’s exports totaled US$11.7 billion and its imports totaled US$15.9 billion, incurring a trade deficit of US$4.2 billion. The trade deficit is especially severe with Russia, where markets for Bulgarian goods have shrunk drastically in the early 2000s.
In the first half of 2006, Bulgaria had a current account deficit of US$2.3 billion, a substantial increase over the deficit for the same period of 2005, which was some US$1.4 billion. Its trade deficit was US$2.78 billion, foreign direct investment totaled US$1.8 billion, and the financial account balance was US$2.29 billion. In mid-2006 the overall balance of payments was US$883 million, compared with US$755 million for the same period of 2005.
Bulgaria’s large foreign debt has been an economic burden throughout the postcommunist era. At the end of 2005, Bulgaria reported an external debt of US$15.2 billion, an increase in value but a decrease as a percentage of gross domestic product (GDP) compared with 2002 and previous years. As a percentage of GDP, the external debt remained constant between 2004 and 2005.
Beginning in the late 1990s, investment from the West and from Russia has contributed significantly to recovery from the economic crisis of 1996–97, but the rate of investment has remained lower than that in other countries of Eastern Europe. In 2003 the largest national sources of foreign direct investment, in order of volume, were Austria, Greece, Germany, Italy, and the Netherlands. In 1997 the Belgian Solve company bought the Deny Soda Combine, and in 1999 LUKoil of Russia bought the Neftochim Oil Refinery at Burgas. Union Minière, a Belgian mining company, bought the large Pirdop copper-smelting plant, giving an important boost to Bulgarian nonferrous metallurgy. A number of foreign companies have invested in the chemical fertilizer and food-processing industries In the early 2000s, China invested in the Bulgarian electronics industry. Some cooperative agreements have been made for manufacture of vehicle components. Daimler-Chrysler of Germany has a contract to update Bulgaria’s military transport vehicles between 2003 and 2015. The French Eurocopter company has a bilateral protocol involving a variety of machinery, computer software, and other industrial products. In 2004 Bulgarian oil reserves attracted interest from Melrose Resources of Edinburgh. Russia’s natural gas giant, Gazprom, has pledged investment in Bulgaria’s natural gas infrastructure in exchange for increased purchase of its product. A three-company Israeli consortium agreed in 2004 to work with the domestic Overgas company (which is half-owned by Gazprom) on a major natural-gas distribution network in Bulgaria. In 2005 three European consortia submitted bids for construction of the Belene nuclear power plant. One such investor is the Italian ENEL energy consortium, which also owns the Maritsa–Iztok–3 thermal power plant. In 2006 Russia’s Gazprom company bid against several European energy companies for ownership of newly privatized regional heating utilities, and the Austrian Petromaxx Energy Group invested US$120 million in a new oil refinery at Silistra.
In December 1996, Bulgaria joined the World Trade Organization
. In the early 90's Bulgaria's slow pace of privatization, contradictory government tax and investment policies, and bureaucratic red tape kept foreign investment among the lowest in the region. Total direct foreign investment from 1991 through 1996 was $831 million. In the years since 1997, however, Bulgaria has begun to attract substantial foreign investment. In 2004 alone over 2.72 billion Euro (3.47 billion US dollars) were invested by foreign companies. In 2005 economists observed a slowdown to about 1.8 billion euros (2.3 billion US dollars) in FDI
which is attributed mainly to the end of the privatization of the major state owned companies. After joining the EU in 2007 Bulgaria registered a peak in foreign investment of about 6 billion euros.
Broadband penetration rate
Individuals using computer and internet
Bulgaria
Bulgaria , officially the Republic of Bulgaria , is a parliamentary democracy within a unitary constitutional republic in Southeast Europe. The country borders Romania to the north, Serbia and Macedonia to the west, Greece and Turkey to the south, as well as the Black Sea to the east...
functions on the principles of the free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
, having a large private sector and a small, but strong public sector. Bulgaria is an industrialised upper-middle-income country according to the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
with a gross national income per capita of US$ 5,490 in 2008. It has experienced rapid economic growth , even though its income level remains one of the lowest within the EU with an average monthly wage of 689 leva (354 euro).
Even though Bulgaria's economy continues to be plagued by corruption and an inefficient judiciary, after 2001 it has managed to attract considerable amounts of Foreign Direct Investment (FDI). During the Financial crisis of 2007–2010, Bulgaria marked a decline in its economy of 5.5% in 2009, but quickly restored its growth to 0.2% in 2010, in contrast to other Balkan countries.
The currency of the country is the lev
Bulgarian lev
The lev is the currency of Bulgaria. It is divided in 100 stotinki . In archaic Bulgarian the word "lev" meant "lion".It is speculated that Bulgaria, as a member of the European Union will adopt the Euro in 2015 .- First lev, 1881–1952 :...
(plural leva), pegged to the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
at a rate of 1.95583 leva for 1 euro. The lev is the strongest and most stable currency in Eastern Europe. The strongest sectors are energy
Energy
In physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems...
, mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
, metallurgy
Metallurgy
Metallurgy is a domain of materials science that studies the physical and chemical behavior of metallic elements, their intermetallic compounds, and their mixtures, which are called alloys. It is also the technology of metals: the way in which science is applied to their practical use...
, machine building, agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
and tourism
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
. Low productivity and competitiveness on the European and world markets alike due to inadequate R&D funding and a lack of a clearly defined development policy remain a significant obstacle for foreign investment and economic growth.
History
The economy declined dramatically during the 1990s with the collapse of the Council for Mutual Economic Assistance (COMECON) system and the loss of the SovietSoviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
market, to which the country had been closely tied. The standard of living
Standard of living
Standard of living is generally measured by standards such as real income per person and poverty rate. Other measures such as access and quality of health care, income growth inequality and educational standards are also used. Examples are access to certain goods , or measures of health such as...
fell by about 40%, and only regained pre-1989 levels by June 2004. In addition, UN
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
sanctions
Economic sanctions
Economic sanctions are domestic penalties applied by one country on another for a variety of reasons. Economic sanctions include, but are not limited to, tariffs, trade barriers, import duties, and import or export quotas...
against Serbia
Serbia
Serbia , officially the Republic of Serbia , is a landlocked country located at the crossroads of Central and Southeast Europe, covering the southern part of the Carpathian basin and the central part of the Balkans...
(1992–95) and Iraq
Iraq
Iraq ; officially the Republic of Iraq is a country in Western Asia spanning most of the northwestern end of the Zagros mountain range, the eastern part of the Syrian Desert and the northern part of the Arabian Desert....
took a heavy toll on the Bulgarian economy. The first signs of recovery emerged when GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
grew 1.4% in 1994 for the first time since 1988, and 2.5% in 1995. Inflation, which surged in 1994 to 122%, fell to 32.9% in 1995. During 1996, however, the economy collapsed due to an unstable and decentralised banking system, a wave of hyperinflation throughout several countries of Eastern Europe, and slow reforms, which led to an inflation rate of 311% and the collapse of the lev
Bulgarian lev
The lev is the currency of Bulgaria. It is divided in 100 stotinki . In archaic Bulgarian the word "lev" meant "lion".It is speculated that Bulgaria, as a member of the European Union will adopt the Euro in 2015 .- First lev, 1881–1952 :...
. When pro-reform forces came into power in the spring 1997, an ambitious economic reform package, including introduction of a currency board regime, was agreed to with the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
and the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, and the economy began to stabilise. The 2000s saw a steady pace of growth and budget surpluses, but shaky inflation.
Successful foreign direct investment and successive governments have demonstrated a commitment to economic reforms and responsible fiscal planning have contributed greatly to the Bulgarian economy, with a historical growth rate average of 6% a year.
Corruption in the public administration and a weak judiciary have continued to be long-term problems, and the presence of organized crime remains very high.
A period of large trade deficits and improper real estate investment hit Bulgaria hard during the late-2000s recession, resulting in a 12% GDP decline in that period, a rise in unemployment, and spending at least five quarters in its worst recession since the early 1980s. However, this was not as severe compared to much of Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
. Future prospects are tied to the country's increasingly important integration with the European Union member states. However, the country came out of a recession in 2010, and stagnated for a short period of time. It has been recently predicted that the economy would grow modestly by 2011. The country is expected to join the Eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
in 2013.
From the end of World War II until the widespread change of regime in Eastern Europe
Eastern Europe
Eastern Europe is the eastern part of Europe. The term has widely disparate geopolitical, geographical, cultural and socioeconomic readings, which makes it highly context-dependent and even volatile, and there are "almost as many definitions of Eastern Europe as there are scholars of the region"...
in November 1989, the Bulgarian Communist Party
Bulgarian Communist Party
The Bulgarian Communist Party was the communist and Marxist-Leninist ruling party of the People's Republic of Bulgaria from 1946 until 1990 when the country ceased to be a communist state...
(BCP) exerted complete economic, social and political control in Bulgaria. The party's ascent to power in 1944 had marked the beginning of economic change towards planned economy
Planned economy
A planned economy is an economic system in which decisions regarding production and investment are embodied in a plan formulated by a central authority, usually by a government agency...
in Bulgaria. After World War II, Bulgaria followed the Soviet model of economic development more closely than any other East Bloc country with becoming one of the first members of Comecon
Comecon
The Council for Mutual Economic Assistance , 1949–1991, was an economic organisation under hegemony of Soviet Union comprising the countries of the Eastern Bloc along with a number of communist states elsewhere in the world...
; the new regime shifted the economy from mainly agrarian type towards industrial economy and much of the labour force from the countryside to the city, providing workers for new large-scale industrial complexes. At the same time, the focus of Bulgarian international trade shifted from Central Europe to Eastern Europe and USSR.
These new policies resulted in impressive initial rates. Bulgarian economy closely resembled that of the Soviet Union. Soviet-style centralised planning in five-year blocks had more immediate benefits there than in the other European states where it was first applied in the early 1950s. Throughout the postwar period, economic progress also was assisted substantially by a level of internal and external political stability unseen in other East European countries during the same period, that was also a change in Bulgarian political scene was a lot of turbulence preceded the ascent to power of BCP
Bulgarian Communist Party
The Bulgarian Communist Party was the communist and Marxist-Leninist ruling party of the People's Republic of Bulgaria from 1946 until 1990 when the country ceased to be a communist state...
.
Nonetheless, beginning in the early 1960s low capital and labour productivity and expensive material inputs plagued the Bulgarian economy. With disappointing rates of growth came a high degree of economic experimentation. This experimentation took place within the socialist economic framework, however, and it never approached a market-based economy.
In the late 1980s, continuing poor economic performance brought new economic hardship. By that time, the misdirection and irrationality of BCP economic policies had become quite clear. Bulgaria's economy contracted dramatically after 1987 with the dissolution of the Comecon
Comecon
The Council for Mutual Economic Assistance , 1949–1991, was an economic organisation under hegemony of Soviet Union comprising the countries of the Eastern Bloc along with a number of communist states elsewhere in the world...
, with which the Bulgarian economy had integrated closely. Finally, on 10 November 1989, at the November plenum of BCP Todor Zhivkov
Todor Zhivkov
Todor Khristov Zhivkov was a communist politician and leader of the People's Republic of Bulgaria from March 4, 1954 until November 10, 1989....
was dismissed as a long-time party leader and head of state and the communist regime gave way to democratic elections and government. Unlike the communist parties in most other East European states, the BCP (changing its name to Bulgarian Socialist Party
Bulgarian Socialist Party
The Bulgarian Socialist Party is social-democratic political party in Bulgaria and successor to the Bulgarian Communist Party. The BSP is a member of the Party of European Socialists and Socialist International, and is currently led by Sergei Stanishev....
) retained majority power after the transition in Bulgaria by winning the first free national elections in June 1990. That was made possible by changes in party leadership, programme, reduction of its power base and other which permitted economic reorientation toward a market system. This difficult transition combined with political vagueness, unpreparedness of people for the social and economic changes led to seriously worsen economic conditions during early 90s. The standard of living fell with nearly 40% and more and regain levels in the beginning of 2000's.
1990-2000
The economy declined dramatically during the 1990s with the collapse of the ComeconComecon
The Council for Mutual Economic Assistance , 1949–1991, was an economic organisation under hegemony of Soviet Union comprising the countries of the Eastern Bloc along with a number of communist states elsewhere in the world...
system and the loss of the Soviet
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
market, to which the country had been closely tied. The standard of living
Standard of living
Standard of living is generally measured by standards such as real income per person and poverty rate. Other measures such as access and quality of health care, income growth inequality and educational standards are also used. Examples are access to certain goods , or measures of health such as...
fell by about 40%, and only regained pre-1989 levels by June 2004. In addition, UN
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
sanctions
Economic sanctions
Economic sanctions are domestic penalties applied by one country on another for a variety of reasons. Economic sanctions include, but are not limited to, tariffs, trade barriers, import duties, and import or export quotas...
against Serbia
Serbia
Serbia , officially the Republic of Serbia , is a landlocked country located at the crossroads of Central and Southeast Europe, covering the southern part of the Carpathian basin and the central part of the Balkans...
(1992–95) and Iraq
Iraq
Iraq ; officially the Republic of Iraq is a country in Western Asia spanning most of the northwestern end of the Zagros mountain range, the eastern part of the Syrian Desert and the northern part of the Arabian Desert....
took a heavy toll on the Bulgarian economy. The first signs of recovery emerged when GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
grew 1.4% in 1994 for the first time since 1988, and 2.5% in 1995. Inflation, which surged in 1994 to 122%, fell to 32.9% in 1995. During 1996, however, the economy collapsed due to the Bulgarian Socialist Party's
Bulgarian Socialist Party
The Bulgarian Socialist Party is social-democratic political party in Bulgaria and successor to the Bulgarian Communist Party. The BSP is a member of the Party of European Socialists and Socialist International, and is currently led by Sergei Stanishev....
slow and mismanaged economic reforms and an unstable and decentralised banking system, which led to an inflation rate of 311% and the collapse of the lev
Bulgarian lev
The lev is the currency of Bulgaria. It is divided in 100 stotinki . In archaic Bulgarian the word "lev" meant "lion".It is speculated that Bulgaria, as a member of the European Union will adopt the Euro in 2015 .- First lev, 1881–1952 :...
. When pro-reform forces came into power in the spring 1997, an ambitious economic reform package, including introduction of a currency board regime, was agreed to with the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
and the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, and the economy began to stabilise. The 2000s saw a steady pace of growth and budget surpluses, but shaky inflation.
Reforms of the 1990s and early 2000s
Members of the government promised to move forward on cash and mass privatizationPrivatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
upon taking office in January 1995 but were slow to act. United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
sanctions against Yugoslavia and Iraq
Iraq sanctions
The Iraq sanctions were a near-total financial and trade embargo imposed by the United Nations Security Council on the nation of Iraq. They began August 6, 1990, four days after Iraq's invasion of Kuwait, stayed largely in force until May 2003 , and certain portions including reparations to Kuwait...
(1990–2003), two of the country's most significant trading partners, took a heavy toll on the Bulgarian economy. The first signs of recovery emerged in 1994 when the GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
grew and inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
fell. The first round of mass privatisation finally began in January 1996, and auctions began toward the end of that year. The second and third rounds were conducted in Spring 1997 under a new government. In July 1998, the UDF-led government and the IMF reached agreement on a 3-year loan worth about $800 million, which replaced the 14-month stand-by agreement that expired in June 1998. The loan was used to develop financial markets, improve social safety net programmes, strengthen the tax system, reform agricultural and energy sectors, and further liberalise trade. The European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....
, in its 2002 country report, recognised Bulgaria as a functioning market economy, acknowledging the progress made by Prime Minister Ivan Kostov
Ivan Kostov
Ivan Yordanov Kostov was Prime Minister of Bulgaria from May 1997 to July 2001 and leader of the Union of Democratic Forces between December 1994 and July 2001....
's government toward market-oriented reforms.
Rebound from the February 1997 crisis
In April 1997, the Union of Democratic ForcesUnion of Democratic Forces (Bulgaria)
The Union of Democratic Forces is a political party in Bulgaria, founded in 1989 as a union of several political organizations in opposition to the communist government. In February 1997 the Union was transformed into a single unified party with the same name...
(UDF) government won pre-term parliamentary elections and introduced an IMF currency board system which succeeded in stabilizing the economy. The triple digit inflation of 1996 and 1997 has given way to an official economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
, but forecasters are predicting accelerated growth over the next several years. The government's structural reform program includes: (a) privatization and, where appropriate, liquidation of state-owned enterprises (SOEs); (b) liberalization of agricultural policies, including creating conditions for the development of a land market; (c) reform of the country's social insurance programs; and (d) reforms to strengthen contract enforcement and fight crime and corruption. Despite reforms, weak control over privatization led many successful state enterprises to bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
. The UDF government also failed to stop the growing negative account balance, which has since then continued to increase, reaching a negative of $ 12.65 billion in 2008. The government elected in 2001 pledged to maintain the fundamental economic policy objectives adopted by its predecessor in 1997, specifically: retaining the Currency Board, implementing sound financial policies, accelerating privatisation, and pursuing structural reforms. Both governments failed to implement sound social policies.
The economy really took off between 2003 and 2008 and growth figures quickly shot up, fluctuating between figures as high as 6.6% (2004) and 5.0% (2003). Even in the last pre-crisis year, 2008, the Bulgarian economy was growing rapidly at 6.0%, despite significantly slowing down in the last quarter.
Part of the European Union
On 1 January 2007 BulgariaBulgaria
Bulgaria , officially the Republic of Bulgaria , is a parliamentary democracy within a unitary constitutional republic in Southeast Europe. The country borders Romania to the north, Serbia and Macedonia to the west, Greece and Turkey to the south, as well as the Black Sea to the east...
entered the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
. This led to some immediate international trade liberalization, but there was no shock to the economy. The government is running annual surpluses of above 3%. This fact, together with annual GDP growth of above 5%, has brought the government indebtedness to 22.8% of GDP in 2006 from 67.3% five years earlier. This is to be contrasted with enormous current account deficits. Low interest rate
Interest rate
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...
s guaranteed availability of funds for investment and consumption. For example, a boom in the real estate market started around 2003. At the same time annual inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
in the economy was variable and during the last five years (2003–2007) has seen a low of 2.3% and high of 7.3%. Most importantly, this poses a threat to the country's accession to the Eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
. The Bulgarian government plans for the Euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
to replace the Lev
Lev
Lev may refer to:*Lev and LEV are common shortenings for Leviticus, the third book of the Hebrew Bible and of the Torah.*Lev means "heart" in Hebrew.*It is also a Hebrew name, as in the Bar Lev Line....
in 2010. However, experts predict that this might happen as late as in 2012. From a political point of view, there is a trade-off between Bulgaria's economic growth and the stability required for early accession to the monetary union. Bulgaria's per-capita PPP
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
GDP is still only about a third of the EU25 average, while the country's nominal GDP per capita is about 13% of the EU25 average. However, Bulgaria ranks 51st in the Ease of Doing Business rank list
Ease of Doing Business Index
The Ease of Doing Business Index is an index created by the World Bank. Higher rankings indicate better, usually simpler, regulations for businesses and stronger protections of property rights...
, higher than most other Eastern European states, and 28th in the Economic Freedom of the World index, outperforming the Netherlands and South Korea. Bulgaria also has the lowest personal and corporate income tax rates in the EU, as well as the second lowest public debt of all European Union member states at 16.2% of GDP in 2010.
Economic downturn following the international financial crisis
The global financial crisis started to apply downward pressure on growth and employment in the last quarter of 2008. The real estate market, although not plummeting, ground to a halt and growth is expected to be significantly lower in the short-to-medium run.
During the course of 2009, the grim forecasts for the effects of the global crisis on the Bulgarian economy largely materialized. Although suffering less than the worst-hit countries, Bulgaria recorded its worst economic results since the 1997 meltdown. GDP shrank by around 5% and unemployment jumped. Consumer spending and foreign investment dropped dramatically and depressed growth in 2010 to 0.3%. Unemployment remains stubbornly high around 10%.
New Government and fiscal discipline
The government of Boiko Borisov elected in 2009 undertook steps to restore economic growth, while attempting to maintain a strict financial policy. The fiscal discipline set by Finance Minister Djankov proved successful and together with reduced budget spending it placed Bulgarian economy on the stage of steadily though slowly growing in the mids of world crisis. On December 1, 2009, Standard&Poors upgraded Bulgaria's investment outlook from "negative" to "stable," which made Bulgaria the only country in the European UnionEuropean Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
to receive positive upgrade that year. In January 2010 Moody's followed with an upgrade of its rating perspective from "stable" to "positive."
Bulgaria was expected to join the Eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
in 2013 but after the rise of some instability in the zone Bulgaria is withholding its possitions towards the Euro, combining together possitive and realistic attitudes. Since Bulgarian lev is anyway bounded to Euro Bulgaria is looking for more positive outcomes of the becoming a member of the Eurozone rather then risks.
Economic Statistics
- Economic StatisticsStatistics about the Economy of BulgariaMost up-to-date economic data for the Republic of Bulgaria is gathered and presented by government agencies, like the National Statistical Institute, and various supernational organizations:* ; graphs are available at * and * and...
Industry and construction
Much of Bulgaria’s communist-era industry was heavy industry, although biochemicals and computers were significant products beginning in the 1980s. Because Bulgarian industry was configured to Soviet markets, the end of the Soviet Union and the Warsaw Pact caused a severe crisis in the 1990s. After showing its first growth since the communist era in 2000, Bulgaria’s industrial sector has grown slowly but steadily in the early 2000s. The performance of individual manufacturing industries has been uneven, however. Food processing and tobacco processing suffered from the loss of Soviet markets and have not maintained standards high enough to compete in Western Europe. Textile processing generally has declined since the mid-1990s, although clothing exports have grown steadily since 2000.Oil refining survived the shocks of the 1990s because of a continuing export market and the purchase of the Burgas refinery by the Russian oil giant LUKoil. The chemical industry has remained in good overall condition but is subject to fluctuating natural gas prices. Growth in ferrous metallurgy, which is dominated by the Kremikovtsi Metals Combine, has been delayed by a complex privatization process and by obsolete capital equipment. Non-ferrous metallurgy has prospered because the Pirdop copper smelting plant was bought by Union Minière of Belgium and because export markets have been favourable.
The end of the Warsaw Pact alliance and the loss of Third World markets were grave blows to the defence industry. In the early 2000s, the industry’s plan for survival has included upgrading products to satisfy Western markets and doing cooperative manufacturing with Russian
companies. The electronics industry, which also was configured in the 1980s to serve Soviet markets, has not been able to compete with Western computer manufacturers. The industry now relies on contract agreements with European firms and attracting foreign investment. The automotive industry has ceased the manufacture of cars, trucks, and buses. Manufacture of forklifts, a speciality in the communist era, also has stopped. In the early 2000s, shipbuilding has prospered at the major Varna and Ruse yards because of foreign ownership (Ruse) and privatization (Varna).
Only in recent years electronics and electric equipment production has regained higher levels. The largest centres include Sofia
Sofia
Sofia is the capital and largest city of Bulgaria and the 12th largest city in the European Union with a population of 1.27 million people. It is located in western Bulgaria, at the foot of Mount Vitosha and approximately at the centre of the Balkan Peninsula.Prehistoric settlements were excavated...
, Plovdiv
Plovdiv
Plovdiv is the second-largest city in Bulgaria after Sofia with a population of 338,153 inhabitants according to Census 2011. Plovdiv's history spans some 6,000 years, with traces of a Neolithic settlement dating to roughly 4000 BC; it is one of the oldest cities in Europe...
and the surrounding area, Botevgrad
Botevgrad
Botevgrad ; pre-1866: Samundzhievo ), is a town in western Bulgaria. It is located in Sofia Province and is close to Pravets. Botevgrad is situated at a 47-km-distance from Sofia.-Geography:...
, Stara Zagora
Stara Zagora
Stara Zagora is the sixth largest city in Bulgaria, and a nationally important economic center. Located in Southern Bulgaria, it is the administrative capital of the homonymous Stara Zagora Province...
, Varna
Varna
Varna is the largest city and seaside resort on the Bulgarian Black Sea Coast and third-largest in Bulgaria after Sofia and Plovdiv, with a population of 334,870 inhabitants according to Census 2011...
, Pravets
Pravets
Pravets is a town in central western Bulgaria, located approximately 60 km from the capital Sofia.Pravets has a population of 4,512 people. Mountains surround it, which allows for a mild climate with rare winds. In the outskirts there is a small lake used for fishing and recreation...
and many other cities. Household appliances, computer
Computer
A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...
s, CDs, telephone
Telephone
The telephone , colloquially referred to as a phone, is a telecommunications device that transmits and receives sounds, usually the human voice. Telephones are a point-to-point communication system whose most basic function is to allow two people separated by large distances to talk to each other...
s, medical
Medical equipment
Medical equipment is designed to aid in the diagnosis, monitoring or treatment of medical conditions.-Types:There are several basic types:* Diagnostic equipment includes medical imaging machines, used to aid in diagnosis...
and scientific equipment are being produced.
Many factories producing transportation equipment still do not operate at full capacity. Plants produce train
Train
A train is a connected series of vehicles for rail transport that move along a track to transport cargo or passengers from one place to another place. The track usually consists of two rails, but might also be a monorail or maglev guideway.Propulsion for the train is provided by a separate...
s (Burgas
Burgas
-History:During the rule of the Ancient Romans, near Burgas, Debeltum was established as a military colony for veterans by Vespasian. In the Middle Ages, a small fortress called Pyrgos was erected where Burgas is today and was most probably used as a watchtower...
, Dryanovo
Dryanovo
The town of Dryanovo is situated at the northern foot of the Balkan Mountains in Gabrovo Province, Bulgaria, amphitheatrically along the two banks of Dryanovo River, a tributary to the Yantra River. The town is a centre of the homonymous Dryanovo Municipality, which is composed of 62 villages,...
), tram
Tram
A tram is a passenger rail vehicle which runs on tracks along public urban streets and also sometimes on separate rights of way. It may also run between cities and/or towns , and/or partially grade separated even in the cities...
s (Sofia
Sofia
Sofia is the capital and largest city of Bulgaria and the 12th largest city in the European Union with a population of 1.27 million people. It is located in western Bulgaria, at the foot of Mount Vitosha and approximately at the centre of the Balkan Peninsula.Prehistoric settlements were excavated...
), trolley
Tram
A tram is a passenger rail vehicle which runs on tracks along public urban streets and also sometimes on separate rights of way. It may also run between cities and/or towns , and/or partially grade separated even in the cities...
s (Dupnitsa), bus
Bus
A bus is a road vehicle designed to carry passengers. Buses can have a capacity as high as 300 passengers. The most common type of bus is the single-decker bus, with larger loads carried by double-decker buses and articulated buses, and smaller loads carried by midibuses and minibuses; coaches are...
es (Botevgrad
Botevgrad
Botevgrad ; pre-1866: Samundzhievo ), is a town in western Bulgaria. It is located in Sofia Province and is close to Pravets. Botevgrad is situated at a 47-km-distance from Sofia.-Geography:...
), truck
Truck
A truck or lorry is a motor vehicle designed to transport cargo. Trucks vary greatly in size, power, and configuration, with the smallest being mechanically similar to an automobile...
s (Shumen
Shumen
Shumen is the tenth-largest city in Bulgaria and capital of Shumen Province. In the period 1950–1965 it was called Kolarovgrad, after the name of the communist leader Vasil Kolarov...
), motor trucks (Plovdiv, Lom, Sofia, Lovech). Lovech has an automotive assembly plant. Rousse
Rousse
Ruse is the fifth-largest city in Bulgaria. Ruse is situated in the northeastern part of the country, on the right bank of the Danube, opposite the Romanian city of Giurgiu, from the capital Sofia and from the Bulgarian Black Sea Coast...
serves as the main centre for agricultural machinery. Bulgarian arms production mainly operates in central Bulgaria (Kazanlak
Kazanlak
Kazanlak, formerly Kazanlık is a Bulgarian town in Stara Zagora Province, located in the middle of the plain of the same name, at the foot of the Balkan mountain range, at the eastern end of the Rose Valley...
, Sopot
Sopot
Sopot is a seaside town in Eastern Pomerania on the southern coast of the Baltic Sea in northern Poland, with a population of approximately 40,000....
, Karlovo
Karlovo
Karlovo is a picturesque and a historically important town in central Bulgaria located in a fertile valley along the river Stryama at the southern foot of the Balkan Mountains...
).
Construction output fell dramatically in the 1990s as industrial and housing construction declined, but a recovery began in the early 2000s. The sector, now dominated by private firms, has resumed the foreign building programs that led to prosperity in the communist era. The Glavbolgostroy firm has major building projects in Kazakhstan, Russia, and Ukraine as well as domestic contracts.
Energy
Bulgaria relies on imported oil and natural gas (most of which comes from Russia), together with domestic generation of electricity from coal-powered and hydro plants, and the Kozloduy nuclear plant. The economy remains energy-intensive because conservation practices have developed slowly. The country is a major regional electricity producer. Bulgaria produced 38.07 billion kWh of electricity in 2006(in comparison, Romania
Romania
Romania is a country located at the crossroads of Central and Southeastern Europe, on the Lower Danube, within and outside the Carpathian arch, bordering on the Black Sea...
, which has a population nearly three times larger than Bulgaria, produced 51.7 billion kW·h in the same year). The domestic power-generating industry, which was privatized in 2004 by sales to interests from Europe, Japan, Russia, and the United States, suffers from obsolete equipment and a weak oversight agency. To solve the latter problem, in 2008 the government set up a state-owned energy holding-company (Bulgarian Energy Holding EAD
Bulgarian Energy Holding EAD
Bulgarian Energy Holding EAD is a state owned energy holding company in Bulgaria. It was incorporated on 18 September 2008 after renaming Bulgargaz Holding EAD...
), composed of gas company Bulgargaz
Bulgargaz
Bulgargaz is a Bulgarian natural gas distributing company, the largest in the country. It is a subsidiary of Bulgarian Energy Holding EAD. The holding company was established on 18 September 2008 and Bulgargaz became its daughter company. In November 2009, the Bulgarian Government decided to list...
, Bulgartransgaz
Bulgartransgaz
Bulgartransgaz EAD is a natural gas transmission and storage system operator of Bulgaria. It is a subsidiary of Bulgarian Energy Holding EAD. Bulgartransgaz was created on 15 January 2007 in Sofia. In November 2009, the Bulgarian Government decided to list the company at the Bulgarian Stock...
, power company NEK EAD
NEK EAD
Natsionalna Elektricheska Kompania NEK is the Bulgarian national electricity distributing company also being the second largest company in Bulgaria...
, Electricity System Operator EAD, Kozloduy nuclear power station
Kozloduy Nuclear Power Plant
The Kozloduy Nuclear Power Plant is a nuclear power plant in Bulgaria situated north of Sofia and east of Kozloduy, a town on the Danube river, near the border with Romania. It is the country's only nuclear power plant and the largest in the region...
, Maritza-Iztok II thermal power station
Maritsa Iztok Complex
The Maritsa Iztok Complex is the largest energy complex in South Eastern Europe. It is located in Stara Zagora Province, south-central Bulgaria. It consists of three lignite-fired thermal power stations. The complex is located in a large lignite coal basin, which includes several mines, enrichment...
, the Mini Maritza Iztok (Maritza Iztok mines), and Bulgartel EAD. The state holds a 100% stake in the holding company. Most of Bulgaria’s conventional power stations will require large-scale modernization in the near future. Bulgaria has some 64 small hydroelectric plants, which together produce 19 percent of the country’s power output.
The Kozloduy nuclear plant, which in 2005 supplied more than 40 percent of Bulgaria’s electric power, will play a diminishing role because two of its remaining four reactors (two were closed in 2002) must be closed by 2007 to comply with European Union (EU) standards. Kozloduy, which exported 14 percent of its output in 2006, was expected to cease all exportation in 2007. Construction of the long-delayed Belene nuclear plant resumed in 2006 but will not be complete until at least 2011. Belene, planned in the 1980s but then rejected, was revived by the safety controversy at Kozloduy.
Oil exploration is ongoing offshore in the Black Sea (the Shabla block) and on the Romanian border, but Bulgaria’s chief oil income is likely to come as a transfer point on east-west and north-south transit lines. Burgas is Bulgaria’s main oil port on the Black Sea. Bulgaria’s largest oil refinery, Neftochim, was purchased by Russian oil giant LUKoil in 1999 and underwent modernization in 2005. Bulgaria’s only significant coal resource is low-quality lignite, mainly from the state-owned Maritsa-Iztok and Bobov Dol complexes and used in local thermoelectric power stations.
Thermal power station
Thermal power station
A thermal power station is a power plant in which the prime mover is steam driven. Water is heated, turns into steam and spins a steam turbine which drives an electrical generator. After it passes through the turbine, the steam is condensed in a condenser and recycled to where it was heated; this...
s (TPPs) provide a significant amount of energy, with most of the capacity concentrated in the Maritsa Iztok Complex
Maritsa Iztok Complex
The Maritsa Iztok Complex is the largest energy complex in South Eastern Europe. It is located in Stara Zagora Province, south-central Bulgaria. It consists of three lignite-fired thermal power stations. The complex is located in a large lignite coal basin, which includes several mines, enrichment...
. The largest TPPs include:
- "Maritsa Iztok 2" - 1,450 MW
- "VarnaVarna Power PlantVarna Thermal Power Plant is located on the northern shore of the Lake Varna near the village of Ezerovo at 12 km to the west of Varna, eastern Bulgaria. It was bought by the Czech energy company CEZ Group....
" - 1,260 MW - "Maritsa Iztok 3" - 870 MW
- "Bobov DolBobov Dol Power PlantBobov Dol Thermal Power Plant is a coal-fired power plant situated in the lands of the village Golemo Selo near the town of Bobov Dol, Kyustendil Province in western Bulgaria....
" - 630 MW - "Ruse IztokRuse Iztok Power PlantRuse Iztok Thermal Power Plant is a power plant situated near the city of Ruse, Bulgaria. It has an installed capacity of 400 MW. It is owned by Holding Slovenske elektrarne....
" - 600 MW - "Maritsa Iztok 1" - 500 MW
A $1.4 bln. project for the construction of an additional block for the Maritza Iztok 1
Maritsa Iztok Complex
The Maritsa Iztok Complex is the largest energy complex in South Eastern Europe. It is located in Stara Zagora Province, south-central Bulgaria. It consists of three lignite-fired thermal power stations. The complex is located in a large lignite coal basin, which includes several mines, enrichment...
Thermal Power Station is expected to be completed by the middle of 2010.
Bulgaria ranks as a minor oil producer (97th in the world) with a total production of 3,520 bbl/day.
Prospectors discovered Bulgaria's first oil field
Oil field
An oil field is a region with an abundance of oil wells extracting petroleum from below ground. Because the oil reservoirs typically extend over a large area, possibly several hundred kilometres across, full exploitation entails multiple wells scattered across the area...
near Tyulenovo
Tyulenovo
Tyulenovo is a village and seaside resort on the north Bulgarian Black Sea Coast, part of Shabla Municipality, Dobrich Province. "Tyulen" means seal in Bulgarian, but seals hadn't been seen in the area since the 1980s...
in 1951. Proved reserves amount to 15000000 bbl (2,384,809,425 l).
Natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
production halted in the late 1990s. Proved reserves of natural gas amount to 5.663 bln. cu m. The LUKOIL Neftochim
LUKOIL Neftochim Burgas
LUKOIL Neftochim Burgas , based in Burgas, Bulgaria, is the largest oil refinery in Southeastern Europe and the largest industrial enterprise in Bulgaria. Owned by Russian oil giant LUKOIL, the refinery has the biggest contribution among the privately owned enterprises to the country's GDP and to...
oil refinery is Bulgaria's largest refining facility with annual revenues amounting to more than 4 billion leva (2 billion euro).
have seen a steady increase in electricity production from renewable energy sources such as wind and solar power. Wind energy has large-scale prospects, with up to 3,400 MW of installed capacity potential. Bulgaria operates more than 70 wind turbine
Wind turbine
A wind turbine is a device that converts kinetic energy from the wind into mechanical energy. If the mechanical energy is used to produce electricity, the device may be called a wind generator or wind charger. If the mechanical energy is used to drive machinery, such as for grinding grain or...
s with a total capacity of 112.6 MW, and plans to increase their number nearly threefold to reach a total capacity of 300 MW in 2010.
Services and tourism
Although the contribution of services to gross domestic product (GDP) has more than doubled in the post-communist era, a substantial share of that growth has been in government services, and the qualitative level of services varies greatly. The Bulgarian banking system, which was weak in the first post-communist years, was fully reformed in the late 1990s, including stronger oversight from the National Bank of Bulgaria and gradual privatisation. In 2003 the banking system was fully privatised, and substantial consolidation began making the system more efficient in 2004. Several smaller banks grew substantially between 2004 and 2006. These processes increased public confidence in the banks. Although the system still requires consolidation, loan activity to individuals and businesses increased in the early 2000s. The insurance industry has grown rapidly since a market reform in 1997, with the help of foreign firms. An example is the Bulgarian Insurance Group (BIG), a pension-fund and insurance management company owned by the Dutch-Israeli TBI Holding Company and the European Bank for Reconstruction and Development (EBRD). The introduction of health and pension insurance plans has expanded the private insurance industry. A series of reform laws in the early 2000s enabled the Bulgarian Stock Exchange to begin regular operation. As of 2005, stock market activity was limited by lack of transparency, although the growth rate increased beginning in 2004.After a decline in the 1990s, in the early 2000s the tourism industry has grown rapidly. In 2004 some 4 million foreigners visited Bulgaria, compared with 2.3 million in 2000. This trend is based on a number of attractive destinations, low costs, and restoration of facilities. Most of the industry had been privatised by 2004. Infrastructure items such as recreation facilities and booking services require improvement. Development of Bulgaria’s retail sales sector was slow until the early 2000s, when a large number of Western-style outlets began to appear, and Sofia developed as a retail center. By 2006 several major European retail chains had opened stores, and others planned to enter the Bulgarian market.
Bulgaria has attracted considerable investment from foreigners buying property either for their own use or for investment. In 2006, more than 29% of property deals were signed by foreigners, more than half of whom were UK citizens. Various companies, such as Bulgarian Dreams
Bulgarian Dreams
Bulgarian Dreams was a UK-registered property sales agent, specialising in the sale of off plan properties in Bulgaria to buyers mainly from the UK and Ireland. It operated from several offices with headquarters at 120 Moorgate, London, UK, EC2M 6SS...
, actively marketed Bulgarian properties to buyers overseas.
In 2007 Bulgaria was visited by 5,200,000 tourists, ranking 39th in the world. Tourists from Greece, Romania and Germany account for 40% of visitors. Significant numbers of British
British people
The British are citizens of the United Kingdom, of the Isle of Man, any of the Channel Islands, or of any of the British overseas territories, and their descendants...
(+300,000), Russian
Russians
The Russian people are an East Slavic ethnic group native to Russia, speaking the Russian language and primarily living in Russia and neighboring countries....
(+200,000), Serbian
Serbs
The Serbs are a South Slavic ethnic group of the Balkans and southern Central Europe. Serbs are located mainly in Serbia, Montenegro and Bosnia and Herzegovina, and form a sizable minority in Croatia, the Republic of Macedonia and Slovenia. Likewise, Serbs are an officially recognized minority in...
(+150,000), Polish
Poles
thumb|right|180px|The state flag of [[Poland]] as used by Polish government and diplomatic authoritiesThe Polish people, or Poles , are a nation indigenous to Poland. They are united by the Polish language, which belongs to the historical Lechitic subgroup of West Slavic languages of Central Europe...
(+130,000) and Danish
Danes
Danish people or Danes are the nation and ethnic group that is native to Denmark, and who speak Danish.The first mention of Danes within the Danish territory is on the Jelling Rune Stone which mentions how Harald Bluetooth converted the Danes to Christianity in the 10th century...
(+100,000) tourists also visit Bulgaria. Most of them are attracted by the varying and beautiful landscapes, well-preserved historical and cultural heritage, and the tranquility of rural and mountain areas.
Main destinations include the capital Sofia
Sofia
Sofia is the capital and largest city of Bulgaria and the 12th largest city in the European Union with a population of 1.27 million people. It is located in western Bulgaria, at the foot of Mount Vitosha and approximately at the centre of the Balkan Peninsula.Prehistoric settlements were excavated...
, coastal resorts Albena
Albena
Albena is a major Black Sea resort in northeastern Bulgaria, situated 12 km from Balchik and 30 km from Varna. Albena is served by the international airport of Varna....
, Sozopol
Sozopol
Sozopol is an ancient seaside town located 35 km south of Burgas on the southern Bulgarian Black Sea Coast. Today it is one of the major seaside resorts in the country, known for the Apollonia art and film festival that is named after one of the town's ancient names.The busiest times of the year...
, Sveti Vlas
Sveti Vlas
Sveti Vlas is a town and seaside resort on the Black Sea coast of Bulgaria, located in Nesebar municipality, Burgas Province. As of July 2007, it has a population of 3,869....
; winter resorts Pamporovo
Pamporovo
Pamporovo is a popular ski resort in Smolyan Province, southern Bulgaria, one of the best-known in Southeastern Europe. It is set amongst magnificent pine forests and is primarily visited during the winter for skiing and snowboarding. It is also a popular tourist place in summer. The hub of...
, Chepelare
Chepelare
Chepelare is a town and ski resort in Smolyan Province in Southern Bulgaria. It is situated in the central part of the Rhodopes, on the banks of Chepelare River. Chepelare is a popular winter resort with one of the longest ski runs in Southeastern Europe. It is located near Pamporovo, one of the...
and Borovetz. Arbanasi
Arbanasi
Arbanasi is a village in Veliko Tarnovo municipality, Veliko Tarnovo Province of central northern Bulgaria, set on a high plateau between the larger towns of Veliko Tarnovo and Gorna Oryahovitsa...
and Bozhentsi
Bozhentsi
Bozhentsi , officially but not commonly Bozhentsite , is a village and architectural reserve in Gabrovo municipality, Gabrovo Province, in central northern Bulgaria. The village lies in the middle part of the Balkan Mountains, 15 km east of Gabrovo and just north of the Shipka Pass...
are rural tourist destinations with well-preserved ethnographic traditions. Other popular attractions are the 10th century Rila Monastery
Rila Monastery
The Monastery of Saint Ivan of Rila, better known as the Rila Monastery is the largest and most famous Eastern Orthodox monastery in Bulgaria. It is situated in the southwestern Rila Mountains, south of the capital Sofia in the deep valley of the Rilska River at an elevation of above sea level...
and the 19th century Euxinograd
Euxinograd
Euxinograd is a former late 19th-century Bulgarian royal summer palace and park on the Black Sea coast, north of downtown Varna. It is currently a governmental and presidential retreat hosting cabinet meetings in the summer and offering access for tourists to several villas and hotels...
château
Château
A château is a manor house or residence of the lord of the manor or a country house of nobility or gentry, with or without fortifications, originally—and still most frequently—in French-speaking regions...
.
Agriculture, forestry, and fishing
In the communist era, Bulgaria’s agriculture was heavily centralized, integrated with agriculture-related industries, and state-run. In the postcommunist era, the process of restoring agricultural land to private owners in a form that ensures productivity has been slow. Bank investment and insecurity in the land market contributed to slow development in the 1990s. By 2004 some 98 percent of the workforce and output of Bulgaria’s agricultural sector was private, including a number of large private cooperative enterprises. A significant amount of food also is produced for direct consumption by non-farmers on small plots, which are an important support for parts of the population. In 2000 and 2003, droughts limited agricultural production, and floods had the same effect in 2005. Bulgaria’s main field crops are wheat, corn, and barley. The main industrial crops are sugar beets, sunflowers, and tobacco. Tomatoes, cucumbers, and peppers are the most important vegetable exports. Production of apples and grapes, Bulgaria’s largest fruit products, has decreased since the communist era, but the export of wine has increased significantly. The most important types of livestock are cattle, sheep, poultry, pigs, and buffaloes, and the main dairy products are yogurt, cow and sheep cheese. Bulgaria is the world's 13th largest sheep milkSheep milk
Sheep's milk is the milk of domestic sheep. Though not widely drunk in any modern culture, sheep's milk is commonly used to make cultured dairy products. Well-known cheeses made from sheep milk include the Feta of Greece, Roquefort of France, Manchego from Spain, the Pecorino Romano , the Pecorino...
producer and is the 3rd largest producer of tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
and 12th largest producer of raspberries
Raspberry
The raspberry or hindberry is the edible fruit of a multitude of plant species in the genus Rubus, most of which are in the subgenus Idaeobatus; the name also applies to these plants themselves...
in Europe. Specialized equipment amounts to some 25,000 tractor
Tractor
A tractor is a vehicle specifically designed to deliver a high tractive effort at slow speeds, for the purposes of hauling a trailer or machinery used in agriculture or construction...
s and 5,500 combine harvester
Combine harvester
The combine harvester, or simply combine, is a machine that harvests grain crops. The name derives from the fact that it combines three separate operations, reaping, threshing, and winnowing, into a single process. Among the crops harvested with a combine are wheat, oats, rye, barley, corn ,...
s, with a fleet of light aircraft.
In 2004 an estimated one-third of Bulgaria’s land mass was covered by forests, of which about 40 percent was conifers. Between 1980 and 2000, the forested area increased by 4.6 percent. In 2002 a total of 4,800 tons of timber was harvested, 44 percent of which was fuel wood and 20 percent, pulpwood. Although nominal state timber standards are very strict, in 2004 an estimated 45 percent of Bulgaria’s timber harvest was logged illegally because of corruption in the forest service. Some 7.5 percent of forests are protected from all uses, and 65 percent are designated for ecological and commercial use. In 2005 about 70 percent of the total forest resource was rated economically viable.
Since Bulgaria stopped high-seas fishing in 1995, the country has imported increasing amounts of fish. The fish farming industry (particularly sturgeon) has expanded in the early 2000s, and some environmental improvements in the Black Sea and the Danube River, the principal sources of fish, may increase the take in future years. However, the catch from those sources has decreased sharply in recent decades, yielding only a few species of fish for domestic markets in 2004. Between 1999 and 2001, Bulgaria’s total fish harvest, wild and cultivated, dropped from 18,600 tons to 8,100 tons, but in 2003 the harvest had recovered to 16,500 tons.
Production of the most important crops (according to the FAO
Fão
Fão is a town in Esposende Municipality in Portugal....
) in 2006 (in '000 tons) amounted to: wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
3301.9; sunflower
Sunflower
Sunflower is an annual plant native to the Americas. It possesses a large inflorescence . The sunflower got its name from its huge, fiery blooms, whose shape and image is often used to depict the sun. The sunflower has a rough, hairy stem, broad, coarsely toothed, rough leaves and circular heads...
1196.6; maize
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
1587.8; grapes 266.2; tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
42.0; tomato
Tomato
The word "tomato" may refer to the plant or the edible, typically red, fruit which it bears. Originating in South America, the tomato was spread around the world following the Spanish colonization of the Americas, and its many varieties are now widely grown, often in greenhouses in cooler...
es 213.0; barley
Barley
Barley is a major cereal grain, a member of the grass family. It serves as a major animal fodder, as a base malt for beer and certain distilled beverages, and as a component of various health foods...
546.3; potato
Potato
The potato is a starchy, tuberous crop from the perennial Solanum tuberosum of the Solanaceae family . The word potato may refer to the plant itself as well as the edible tuber. In the region of the Andes, there are some other closely related cultivated potato species...
es 386.1; peppers
Capsicum
Capsicum is a genus of flowering plants in the nightshade family, Solanaceae. Its species are native to the Americas where they have been cultivated for thousands of years, but they are now also cultivated worldwide, used as spices, vegetables, and medicines - and have become are a key element in...
156.7; cucumber
Cucumber
The cucumber is a widely cultivated plant in the gourd family Cucurbitaceae, which includes squash, and in the same genus as the muskmelon. The plant is a creeping vine which bears cylindrical edible fruit when ripe. There are three main varieties of cucumber: "slicing", "pickling", and...
s 61.5; cherries 18.2; watermelon
Watermelon
Watermelon is a vine-like flowering plant originally from southern Africa. Its fruit, which is also called watermelon, is a special kind referred to by botanists as a pepo, a berry which has a thick rind and fleshy center...
s 136.0; cabbage
Cabbage
Cabbage is a popular cultivar of the species Brassica oleracea Linne of the Family Brassicaceae and is a leafy green vegetable...
72.7; apple
Apple
The apple is the pomaceous fruit of the apple tree, species Malus domestica in the rose family . It is one of the most widely cultivated tree fruits, and the most widely known of the many members of genus Malus that are used by humans. Apple grow on small, deciduous trees that blossom in the spring...
s 26.1; plums 18.0; strawberries 8.8.
Mining and minerals
Bulgaria’s mining industry has declined in the post-communist era. Many deposits have remained underdeveloped because of a lack of modern equipment and low funding. Mining has contributed less than 2 percent of GDP and engaged less than 3 percent of the workforce in the early 2000s. Bulgaria has the following estimated deposits of metallic minerals: 207 million tons of iron ore, 127 million tons of manganese ore, 936 million tons of copper ore, 238 million tons of chromium ore, and 150 million tons of gold ore. Several of Bulgaria’s minerals are extracted commercially; 80 percent of mining is done by open-pit excavation. Iron extraction at Kremikovtsi and elsewhere is not sufficient to support the domestic steel industry, but copper, lead, and zinc deposits fully supply the nonferrous metallurgy industries. A British firm has exploratory gold mines at Dikanyite and Gornoseltsi, and a domestic copper and gold mine operates at Chelopech. About 50 nonmetallic minerals are present in significant amounts. Substantial amounts of uranium are present in the Rhodope Mountains, but no extraction has occurred in the last 10 years.Despite the poor performance of the mining sector, productivity has increased in recent years. Mining remains one of the most important sources of export earnings and is still a significant contributor to economic growth. The mining industry is worth $760 mln, and, along with related industries, employs 120,000 people. The rising global prices of gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
, lead and copper in 2010, as well as investments in zinc
Zinc
Zinc , or spelter , is a metallic chemical element; it has the symbol Zn and atomic number 30. It is the first element in group 12 of the periodic table. Zinc is, in some respects, chemically similar to magnesium, because its ion is of similar size and its only common oxidation state is +2...
and coal production, have boosted economic growth in the mining sector after the late-2000s financial crisis. As of 2010 Bulgaria ranks as the 19th largest coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
producer in the world, 9th largest bismuth
Bismuth
Bismuth is a chemical element with symbol Bi and atomic number 83. Bismuth, a trivalent poor metal, chemically resembles arsenic and antimony. Elemental bismuth may occur naturally uncombined, although its sulfide and oxide form important commercial ores. The free element is 86% as dense as lead...
producer, 19th largest copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...
producer, and the 26th largest zinc
Zinc
Zinc , or spelter , is a metallic chemical element; it has the symbol Zn and atomic number 30. It is the first element in group 12 of the periodic table. Zinc is, in some respects, chemically similar to magnesium, because its ion is of similar size and its only common oxidation state is +2...
producer.
The "Elatsite" copper mine and reprocessing facility, built during Vulko Chervenkov
Vulko Chervenkov
-Biography:Chervenkov was born in Zlatitsa, Bulgaria. He became a member of the Communist Party in 1919 and participated in communist youth group activities and newspaper editing. He took part in the failed 1923 September Uprising and was sentenced to death, but was allowed to emigrate to the...
's rule, takes its place as one of the largest in South-Eastern Europe. It extracts 13 million tonnes of ore annually, producing about 42,000 tonnes of copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...
, 1.6 tonnes of gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
and 5.5 tonnes of silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
.
Ferrous metallurgy
Metallurgy
Metallurgy is a domain of materials science that studies the physical and chemical behavior of metallic elements, their intermetallic compounds, and their mixtures, which are called alloys. It is also the technology of metals: the way in which science is applied to their practical use...
has major importance. Much of the production of steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
and pig iron
Pig iron
Pig iron is the intermediate product of smelting iron ore with a high-carbon fuel such as coke, usually with limestone as a flux. Charcoal and anthracite have also been used as fuel...
takes place in Kremikovtsi
Kremikovtsi
Kremikovtsi is an industrial district of Sofia, Bulgaria. It is located to the northeast of the capital. The Kremikovtsi Steel Complex which is close to the neighbourhood is one of the largest industrial enterprises in Bulgaria and the Balkans...
and Pernik
Pernik
Pernik is a city in western Bulgaria with a population of 81,052 . It is the main city of Pernik Province and lies on both banks of the Struma River in the Pernik Valley between the Viskyar, Vitosha and Golo Bardo mountains.Originally the site of a Thracian fortress founded in the 4th century BC,...
, with a third metallurgical base in Debelt
Debelt
Debelt is a village in Sredets municipality in Burgas Province in southeastern Bulgaria, about 25 kilometers from Burgas. It has a population of 1,574 and an altitude of 46 meters. The village was founded around the 2nd century by the Roman emperor Vespasian. Then called Deultum, it was the only...
. In production of steel and steel products per capita the country heads the Balkans
Balkans
The Balkans is a geopolitical and cultural region of southeastern Europe...
. the fate of Kremikovtsi steel factories has come under debate because of serious pollution in the capital, Sofia.
The largest refineries for lead
Lead
Lead is a main-group element in the carbon group with the symbol Pb and atomic number 82. Lead is a soft, malleable poor metal. It is also counted as one of the heavy metals. Metallic lead has a bluish-white color after being freshly cut, but it soon tarnishes to a dull grayish color when exposed...
and zinc
Zinc
Zinc , or spelter , is a metallic chemical element; it has the symbol Zn and atomic number 30. It is the first element in group 12 of the periodic table. Zinc is, in some respects, chemically similar to magnesium, because its ion is of similar size and its only common oxidation state is +2...
operate in Plovdiv
Plovdiv
Plovdiv is the second-largest city in Bulgaria after Sofia with a population of 338,153 inhabitants according to Census 2011. Plovdiv's history spans some 6,000 years, with traces of a Neolithic settlement dating to roughly 4000 BC; it is one of the oldest cities in Europe...
(the biggest refinery between Italy and the Ural mountains), Kardzhali
Kardzhali
Kardzhali or Kurdzhali is a town in Bulgaria, capital of Kardzhali Province in the Eastern Rhodopes. Near the town is the noted Kardzhali Dam.-Geography:...
and Novi Iskar
Novi Iskar
Novi Iskar is a town in western Bulgaria, located in Sofia City Province and the Capital Municipality. It is often regarded as a suburb of Sofia and lies in the northern part of the Sofia Valley, with the Iskar Gorge beginning just north of the town.Novi Iskar was formed through the merging of...
; for copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...
in Pirdop
Pirdop
Pirdop is a town located in South-West Bulgaria of Sofia Province in the southeastern part of the Zlatitsa - Pirdop Valley at 670 m above sea level. It is surrounded by the Balkan Range to the north, Sredna Gora Mountain to the south, and Koznitsa and Galabets saddles to the east and west,...
and Eliseina (now defunct); for aluminium
Aluminium
Aluminium or aluminum is a silvery white member of the boron group of chemical elements. It has the symbol Al, and its atomic number is 13. It is not soluble in water under normal circumstances....
in Shumen
Shumen
Shumen is the tenth-largest city in Bulgaria and capital of Shumen Province. In the period 1950–1965 it was called Kolarovgrad, after the name of the communist leader Vasil Kolarov...
. In production of many metals per capita, such as zinc and iron, Bulgaria ranks first in Eastern Europe
Eastern Europe
Eastern Europe is the eastern part of Europe. The term has widely disparate geopolitical, geographical, cultural and socioeconomic readings, which makes it highly context-dependent and even volatile, and there are "almost as many definitions of Eastern Europe as there are scholars of the region"...
.
Infrastructure
Although it has relatively few reserves of fossil fuels, Bulgaria's well-developed energy sector and strategic geographical location make it a key European energy hub. Nearly 34% of the electricity is produced by nuclear energy from the nuclear power station at KozloduyKozloduy Nuclear Power Plant
The Kozloduy Nuclear Power Plant is a nuclear power plant in Bulgaria situated north of Sofia and east of Kozloduy, a town on the Danube river, near the border with Romania. It is the country's only nuclear power plant and the largest in the region...
and public opinion is strongly in support of nuclear energy development. have seen a rapid increase in electricity production from renewable energy sources such as wind and solar power, making Bulgaria one of the fastest-growing wind energy producers in the world. The country aims at producing 16 % of its electricity from renewable energy sources by 2020.
Bulgaria's national road network has a total length of 40231 kilometres (24,998.4 mi), of which 39587 kilometres (24,598.3 mi) are paved, but nearly half of them fall into the lowest international rating for paved roads. Motorways, such as Trakiya
Trakiya motorway
The Trakia motorway or Thrace motorway, designated A1, is a motorway currently in construction in Bulgaria. It is planned to connect the capital of Sofia with Burgas on the Black Sea through Plovdiv and with Kalotina on the Serbian border. The motorway is named after the historical region of...
, Hemus
Hemus motorway
The Hemus motorway or Haemus motorway , designated A2, is a motorway currently under construction in Bulgaria. Its planned length is 433 km, of which 129 km are in operation , divided into two sections — Sofia-Yablanitsa and Varna-Shumen...
and Struma
Struma motorway
The Struma Motorway is a planned expressway that will lead from the Daskalovo junction 5 km away of Sofia to the Bulgarian border with Greece at the village of Kulata. Around 20 km of the expressway have already been built, with four more sections left.Tenders for Struma Motorway will...
, have a total length of 441 km (274 mi). Railroads are a major mode of freight transportation, although highways carry a progressively larger share of freight. Bulgaria also has 6238 kilometres (3,876.1 mi) of railway track and plans to construct a high-speed rail
High-speed rail
High-speed rail is a type of passenger rail transport that operates significantly faster than the normal speed of rail traffic. Specific definitions by the European Union include for upgraded track and or faster for new track, whilst in the United States, the U.S...
way by 2017, at a cost of €3 bln. Sofia and Plovdiv are major air travel hubs, while Varna and Burgas are the principal maritime trade ports.
Bulgaria has an extensive, but antiquated telecommunications network which requires substantial modernization. Telephone
Telephone
The telephone , colloquially referred to as a phone, is a telecommunications device that transmits and receives sounds, usually the human voice. Telephones are a point-to-point communication system whose most basic function is to allow two people separated by large distances to talk to each other...
service is available in most villages, and a central digital trunk line connects most regions. Currently there are three actitve mobile phone operators - Mtel
Mtel
Mtel may refer to:*Massachusetts Tests for Educator Licensure*Mobiltel, a leading Bulgarian mobile telecom.*M:tel Crna Gora , a telecommunications company in Montenegro*Mtel , the mobile telephony arm of NITEL, Nigeria's principal telecom....
, GLOBUL
GloBul
GLOBUL is the second-largest Bulgarian GSM/UMTS operator. The company was founded in 2001 and is 100% owned by Greek telecommunications corporation Cosmote, which is active in four Balkan countries: Greece, Bulgaria, Romania, and Albania...
and Vivacom. Since 2000, a rapid increase in the number of Internet users has occurred – from 430,000 they grew to 1,545,100 in 2004, and 3.4 million (48% penetration rate) in 2010. Bulgaria has the fastest average Broadband Internet speed in the world after Romania and South Korea.
Science and technology
In 2010 Bulgaria spent 0.25% of its GDP on scientific research, which represents one of the lowest scientific budgets in Europe.Chronic underinvestment in the sector since 1990 forced many scientific professionals to leave the country. As a result, Bulgaria's economy scores low in terms of innovation, competitiveness and high added value exports.
The Bulgarian Academy of Sciences
Bulgarian Academy of Sciences
The Bulgarian Academy of Sciences is the National Academy of Bulgaria, established in 1869. The Academy is autonomous and has a Society of Academicians, Correspondent Members and Foreign Members...
(BAS) is the leading scientific institution in the country and employs most of Bulgaria's researchers in its numerous branches. The principal areas of research and development are energy, nanotechnology
Nanotechnology
Nanotechnology is the study of manipulating matter on an atomic and molecular scale. Generally, nanotechnology deals with developing materials, devices, or other structures possessing at least one dimension sized from 1 to 100 nanometres...
, archaeology
Archaeology
Archaeology, or archeology , is the study of human society, primarily through the recovery and analysis of the material culture and environmental data that they have left behind, which includes artifacts, architecture, biofacts and cultural landscapes...
and medicine. With major-general
Major General
Major general or major-general is a military rank used in many countries. It is derived from the older rank of sergeant major general. A major general is a high-ranking officer, normally subordinate to the rank of lieutenant general and senior to the ranks of brigadier and brigadier general...
Georgi Ivanov
Georgi Ivanov
Major general Georgi Ivanov Kakalov is a retired Bulgarian military officer and the first Bulgarian cosmonaut. He was a member of the National Assembly of Bulgaria in 1990.-Early life and military career:...
flying on Soyuz 33
Soyuz 33
-Backup crew:-Mission parameters:*Mass: *Perigee: *Apogee: *Inclination: 51.63°*Period: 88.99 minutes-Mission highlights:...
in 1979, Bulgaria became the 6th country in the world to have an astronaut in space. Bulgaria has deployed its own experiments on various missions, such as the RADOM-7
RADOM-7
RADOM is a Bulgarian Liulin-type spectrometry-dosimetry instrument, designed to precisely measure cosmic radiation around the Moon. It is installed on the Indian satellite Chandrayaan-1. Another three instruments were deployed on the International Space Station...
dosimeters on the International Space Station
International Space Station
The International Space Station is a habitable, artificial satellite in low Earth orbit. The ISS follows the Salyut, Almaz, Cosmos, Skylab, and Mir space stations, as the 11th space station launched, not including the Genesis I and II prototypes...
and Chandrayaan-1 and the space greenhouse
Greenhouse
A greenhouse is a building in which plants are grown. These structures range in size from small sheds to very large buildings...
(a Bulgarian invention) on the Mir space station. In 2011 the government announced plans to reboot the space program by producing a new microsatellite and joining the European Space Agency
European Space Agency
The European Space Agency , established in 1975, is an intergovernmental organisation dedicated to the exploration of space, currently with 18 member states...
.
Due to its large-scale computing technology exports to COMECON
Comecon
The Council for Mutual Economic Assistance , 1949–1991, was an economic organisation under hegemony of Soviet Union comprising the countries of the Eastern Bloc along with a number of communist states elsewhere in the world...
states, in the 1980s Bulgaria became known as the Silicon Valley
Silicon Valley
Silicon Valley is a term which refers to the southern part of the San Francisco Bay Area in Northern California in the United States. The region is home to many of the world's largest technology corporations...
of the Eastern Bloc
Eastern bloc
The term Eastern Bloc or Communist Bloc refers to the former communist states of Eastern and Central Europe, generally the Soviet Union and the countries of the Warsaw Pact...
. The country ranked 8th in the world in 2002 by total number of ICT
Information and communication technologies
Information and communications technology or information and communication technology, usually abbreviated as ICT, is often used as an extended synonym for information technology , but is usually a more general term that stresses the role of unified communications and the integration of...
specialists, outperforming countries with far larger populations, and it operates the only supercomputer in the Balkan region, an IBM Blue Gene
Blue Gene
Blue Gene is a computer architecture project to produce several supercomputers, designed to reach operating speeds in the PFLOPS range, and currently reaching sustained speeds of nearly 500 TFLOPS . It is a cooperative project among IBM Blue Gene is a computer architecture project to produce...
/P, which entered service in September 2008.
Labour
In 2005 the labour force was estimated at 3.3 million; in 2004, 11 percent worked in agriculture, 33 percent in industry, and 56 percent in services. The unemployment rate has been in double digits throughout the post-communist era, reaching a high point of 19 percent in 2000. Since then, the rate has decreased substantially with the creation of new jobs in private and state enterprises. In 2005 the official figure was 11.5 percent, compared with 16.9 percent at the end of 2002. However, in 2003 an estimated 500,000 Bulgarians were unemployed but not officially counted because they were not seeking work. In January 2005, the government raised the minimum wage by 25 percent, to US$90 per month. The largest labour unions are Podkrepa (Support) and the Confederation of Independent Trade Unions in Bulgaria. They represent labour in the National Council for Tripartite Partnership, in which they join government and business representatives to discuss issues of labour, social security, and living standards. The unions were an important political force in the fall of the Zhivkov regime.Currency and inflation
Bulgaria’s unit of currency is the levBulgarian lev
The lev is the currency of Bulgaria. It is divided in 100 stotinki . In archaic Bulgarian the word "lev" meant "lion".It is speculated that Bulgaria, as a member of the European Union will adopt the Euro in 2015 .- First lev, 1881–1952 :...
(pl., leva). In October 2006, the U.S. dollar was worth 1.57 leva. In 1999 the value of the lev was pegged to that of the German deutsch-mark, which was replaced by the euro in 2001. Following Bulgaria’s admission to the European Union, the lev is scheduled to be replaced by the euro.
In 2003 Bulgaria’s inflation rate was estimated at between 2.3 and 3 percent. The rate was 6 percent in 2004 and 5 percent in 2005.
Taxation and government budget
As of 1 January 2008 the income taxIncome tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
for all citizens is set to a flat rate of 10%. This flat tax
Flat tax
A flat tax is a tax system with a constant marginal tax rate. Typically the term flat tax is applied in the context of an individual or corporate income that will be taxed at one marginal rate...
is one of the lowest income rates in the world and the lowest income rate in the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
. The reform was done in pursue for higher GDP growth and greater tax collection rates. Some called it a "revolution" in taxation, but the changes were met with mild discussions and some protests by affected working classes. The proposal was modified to allow for compensating the perceived losers from the changes in the tax formula. The corporate income tax is also 10% as of 1 January 2007 which is also among the lowest in Europe. Currently this taxation is kept while other countries highered their taxes during the crisis.
For 2005 Bulgaria’s estimated state revenues totaled US$11.2 billion, and its estimated state expenditures, including capital expenditures, were US$10.9 billion, yielding a surplus of US$300 million. In 2004 revenues totaled US$10.1 billion and expenditures US$9.7 billion, for a surplus of US$400 million.
Foreign economic relations
In the 1990s, Bulgaria moved gradually away from dependence on markets in the former Soviet sphere, increasing its exports to the European Union (EU). In 1999 Bulgaria joined the Central European Free-Trade Agreement (CEFTA), with whose members (Croatia, the Czech Republic, Hungary, Poland, Romania, Slovakia, and Slovenia; Macedonia was added in 2006) it has established important trade relations. The admission of all but Croatia and Romania to the EU in 2004 reduced the significance of CEFTA trade, however. In 2004 some 54 percent of Bulgaria’s import trade and 58 percent of its export trade was with EU member countries. Bulgaria has bilateral free-trade agreements with Albania, Croatia, Estonia, Israel, Latvia, Lithuania, Macedonia, Moldova, and Turkey.In the early 2000s, hydrocarbon fuels remained an important import, although beginning in the late 1990s those commodities’ share of total imports decreased significantly, from 29 percent in 1996 to 13 percent in 2004. During that period, the diversification of imported products
improved as the volume of machinery and equipment, consumer products, and automobiles increased. A large percentage of imports is accounted for by raw materials such as cloth, metal ore, and petroleum, which are processed and re-exported. The most important imports in 2005 were machinery and equipment, metals and ores, chemicals and plastics, fuels, and minerals. The major sources of imports, in order of volume, were Germany, Russia, Italy, Turkey, and Greece. In 2005 Bulgaria’s largest export markets, in order of volume, were Italy, Germany, Turkey,
Greece, and Belgium. The most important export commodities were clothing, footwear, iron and steel, machinery and equipment, and fuels. In 2005 Bulgaria’s exports totaled US$11.7 billion and its imports totaled US$15.9 billion, incurring a trade deficit of US$4.2 billion. The trade deficit is especially severe with Russia, where markets for Bulgarian goods have shrunk drastically in the early 2000s.
In the first half of 2006, Bulgaria had a current account deficit of US$2.3 billion, a substantial increase over the deficit for the same period of 2005, which was some US$1.4 billion. Its trade deficit was US$2.78 billion, foreign direct investment totaled US$1.8 billion, and the financial account balance was US$2.29 billion. In mid-2006 the overall balance of payments was US$883 million, compared with US$755 million for the same period of 2005.
Bulgaria’s large foreign debt has been an economic burden throughout the postcommunist era. At the end of 2005, Bulgaria reported an external debt of US$15.2 billion, an increase in value but a decrease as a percentage of gross domestic product (GDP) compared with 2002 and previous years. As a percentage of GDP, the external debt remained constant between 2004 and 2005.
Beginning in the late 1990s, investment from the West and from Russia has contributed significantly to recovery from the economic crisis of 1996–97, but the rate of investment has remained lower than that in other countries of Eastern Europe. In 2003 the largest national sources of foreign direct investment, in order of volume, were Austria, Greece, Germany, Italy, and the Netherlands. In 1997 the Belgian Solve company bought the Deny Soda Combine, and in 1999 LUKoil of Russia bought the Neftochim Oil Refinery at Burgas. Union Minière, a Belgian mining company, bought the large Pirdop copper-smelting plant, giving an important boost to Bulgarian nonferrous metallurgy. A number of foreign companies have invested in the chemical fertilizer and food-processing industries In the early 2000s, China invested in the Bulgarian electronics industry. Some cooperative agreements have been made for manufacture of vehicle components. Daimler-Chrysler of Germany has a contract to update Bulgaria’s military transport vehicles between 2003 and 2015. The French Eurocopter company has a bilateral protocol involving a variety of machinery, computer software, and other industrial products. In 2004 Bulgarian oil reserves attracted interest from Melrose Resources of Edinburgh. Russia’s natural gas giant, Gazprom, has pledged investment in Bulgaria’s natural gas infrastructure in exchange for increased purchase of its product. A three-company Israeli consortium agreed in 2004 to work with the domestic Overgas company (which is half-owned by Gazprom) on a major natural-gas distribution network in Bulgaria. In 2005 three European consortia submitted bids for construction of the Belene nuclear power plant. One such investor is the Italian ENEL energy consortium, which also owns the Maritsa–Iztok–3 thermal power plant. In 2006 Russia’s Gazprom company bid against several European energy companies for ownership of newly privatized regional heating utilities, and the Austrian Petromaxx Energy Group invested US$120 million in a new oil refinery at Silistra.
In December 1996, Bulgaria joined the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
. In the early 90's Bulgaria's slow pace of privatization, contradictory government tax and investment policies, and bureaucratic red tape kept foreign investment among the lowest in the region. Total direct foreign investment from 1991 through 1996 was $831 million. In the years since 1997, however, Bulgaria has begun to attract substantial foreign investment. In 2004 alone over 2.72 billion Euro (3.47 billion US dollars) were invested by foreign companies. In 2005 economists observed a slowdown to about 1.8 billion euros (2.3 billion US dollars) in FDI
FDI
-Medical:* FDI World Dental Federation, Fédération dentaire internationale. The World Dental Federation also have an , also known as the FDI.* first dorsal interosseous, one of the four dorsal interossei muscles of the hand -Finance:* FDi magazine, a UK-based publication that covers foreign direct...
which is attributed mainly to the end of the privatization of the major state owned companies. After joining the EU in 2007 Bulgaria registered a peak in foreign investment of about 6 billion euros.
Miscellaneous data
Households with access to fixed and mobile telephone access- landline telephone - 62% (2009)
- mobile telephone - 78% (2009)
Broadband penetration rate
- fixed broadband- 13.0% (2010)
- mobile broadband- 1.3% (2010)
Individuals using computer and internet
- computer - 47% (2009)
- internet - 45% (2009)
See also
- Bulgarian National BankBulgarian National BankThe Bulgarian National Bank is the central bank of the Republic of Bulgaria with its headquarters in Sofia. The BNB has been established on 25 January 1879. It is an independent institution responsible for issuing all banknotes and coins in the country, overseeing and regulating the banking sector...
- Bulgarian Stock Exchange