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Bulgaria-Chapter 3 - The Economy





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Bulgaria Index

[GIF]

A potter, one of many artisans practicing their trade in modern Bulgaria

FROM THE END OF WORLD WAR II until widespread revolution in Eastern Europe swept aside most communist governments in 1989, the Bulgarian Communist Party (BCP) exerted complete economic control in Bulgaria. The party's ascent to power in 1944 had marked the beginning of radical economic change for Bulgaria. After World War II, Bulgaria followed the Soviet model of economic development more closely than any other East Bloc country. The new regime shifted much of the labor force from the countryside to the city to provide workers for new large-scale industrial complexes. At the same time, the focus of Bulgarian international trade shifted from Central Europe to Eastern Europe.

These new policies resulted in impressive initial rates of growth. But this was partly because the country was starting from a low level of economic development. 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 and unprecedented in modern Bulgarian history.

Nonetheless, beginning in the early 1960s low capital and labor 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. Finally, on November 10, 1989, a popular movement toppled Todor Zhivkov, long-time party leader and head of state; orthodox communist dictatorship ended. But unlike the communist parties in most other East European states, the BCP retained majority power after the transition in Bulgaria by winning the first free national elections in June 1990. By that time, however, changes in party leadership and reduction of its power base permitted economic reorientation toward a market system. This difficult transition combined with political instability to seriously worsen economic conditions during 1990.

Bulgaria's success in transforming its economy from central planning to a market-based system remained unmeasured in 1991. Undoubtedly, any form of Bulgarian government faced a daunting task at that point. Because its financial and productive resources had been allocated ineffectively for many years, the economy urgently needed major reforms. The manufacturing sector was uncompetitive in world markets, was technologically outmoded, and consumed energy and materials at enormously wasteful rates. The agricultural sector, once the most productive sector of the Bulgarian economy, had degenerated to the point that the country could scarcely feed its own people. A new trade regime with traditional partners would strain already low hard currency reserves, restricting access to raw materials and sophisticated technology. External and internal debt were enormous when Zhivkov fell. Inflation was high, environmental problems were severe, and skilled labor was insufficient.

Several factors complicate the quantification of socialist economies from a capitalist perspective. Prices in socialist economies serve primarily an accounting function; they do not reflect relative scarcities and demand for a product as they do in capitalist economies. Hence, comparisons of value indicators are difficult. In addition, some socialist statistics simply are calculated differently. For example, the socialist equivalent of national income, referred to as net material product (NMP--see Glossary), excludes the value of most services, including government, that are unrelated to physical production.

Accurate assessment of Bulgarian economic policies and performance under communist regimes also is complicated by incomplete, inaccurate, or misleading statistics. Some Western economists have attempted to extrapolate data based on a combination of Bulgarian statistics, various economic assumptions, and statistical techniques.

Data as of June 1992



BackgroundThe Bulgars, a Central Asian Turkic tribe, merged with the local Slavic inhabitants in the late 7th century to form the first Bulgarian state. In succeeding centuries, Bulgaria struggled with the Byzantine Empire to assert its place in the Balkans, but by the end of the 14th century the country was overrun by the Ottoman Turks. Northern Bulgaria attained autonomy in 1878 and all of Bulgaria became independent from the Ottoman Empire in 1908. Having fought on the losing side in both World Wars, Bulgaria fell within the Soviet sphere of influence and became a People's Republic in 1946. Communist domination ended in 1990, when Bulgaria held its first multiparty election since World War II and began the contentious process of moving toward political democracy and a market economy while combating inflation, unemployment, corruption, and crime. The country joined NATO in 2004 and the EU in 2007.
LocationSoutheastern Europe, bordering the Black Sea, between Romania and Turkey
Area(sq km)total: 110,879 sq km
land: 108,489 sq km
water: 2,390 sq km
Geographic coordinates43 00 N, 25 00 E
Land boundaries(km)total: 1,808 km
border countries: Greece 494 km, Macedonia 148 km, Romania 608 km, Serbia 318 km, Turkey 240 km

Coastline(km)354 km

Climatetemperate; cold, damp winters; hot, dry summers

Elevation extremes(m)lowest point: Black Sea 0 m
highest point: Musala 2,925 m
Natural resourcesbauxite, copper, lead, zinc, coal, timber, arable land
Land use(%)arable land: 29.94%
permanent crops: 1.9%
other: 68.16% (2005)

Irrigated land(sq km)5,880 sq km (2003)
Total renewable water resources(cu km)19.4 cu km (2005)
Freshwater withdrawal (domestic/industrial/agricultural)total: 6.92 cu km/yr (3%/78%/19%)
per capita: 895 cu m/yr (2003)
Natural hazardsearthquakes; landslides
Environment - current issuesair pollution from industrial emissions; rivers polluted from raw sewage, heavy metals, detergents; deforestation; forest damage from air pollution and resulting acid rain; soil contamination from heavy metals from metallurgical plants and industrial wastes
Environment - international agreementsparty to: Air Pollution, Air Pollution-Nitrogen Oxides, Air Pollution-Persistent Organic Pollutants, Air Pollution-Sulfur 85, Air Pollution-Sulfur 94, Air Pollution-Volatile Organic Compounds, Antarctic-Environmental Protocol, Antarctic-Marine Living Resources, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Wetlands
signed, but not ratified: none of the selected agreements
Geography - notestrategic location near Turkish Straits; controls key land routes from Europe to Middle East and Asia
Population7,204,687 (July 2009 est.)
Age structure(%)0-14 years: 13.8% (male 509,544/female 484,816)
15-64 years: 68.5% (male 2,426,060/female 2,508,772)
65 years and over: 17.7% (male 518,711/female 756,784) (2009 est.)
Median age(years)total: 41.4 years
male: 39.2 years
female: 43.6 years (2009 est.)
Population growth rate(%)-0.79% (2009 est.)
Birth rate(births/1,000 population)9.51 births/1,000 population (2009 est.)
Death rate(deaths/1,000 population)14.31 deaths/1,000 population (July 2009 est.)

Net migration rate(migrant(s)/1,000 population)-3.11 migrant(s)/1,000 population (2009 est.)
Urbanization(%)urban population: 71% of total population (2008)
rate of urbanization: -0.3% annual rate of change (2005-10 est.)
Sex ratio(male(s)/female)at birth: 1.06 male(s)/female
under 15 years: 1.05 male(s)/female
15-64 years: 0.97 male(s)/female
65 years and over: 0.68 male(s)/female
total population: 0.92 male(s)/female (2009 est.)
Infant mortality rate(deaths/1,000 live births)total: 17.87 deaths/1,000 live births
male: 21.28 deaths/1,000 live births
female: 14.25 deaths/1,000 live births (2009 est.)

Life expectancy at birth(years)total population: 73.09 years
male: 69.48 years
female: 76.91 years (2009 est.)

Total fertility rate(children born/woman)1.41 children born/woman (2009 est.)
Nationalitynoun: Bulgarian(s)
adjective: Bulgarian
Ethnic groups(%)Bulgarian 83.9%, Turk 9.4%, Roma 4.7%, other 2% (including Macedonian, Armenian, Tatar, Circassian) (2001 census)

Religions(%)Bulgarian Orthodox 82.6%, Muslim 12.2%, other Christian 1.2%, other 4% (2001 census)
Languages(%)Bulgarian 84.5%, Turkish 9.6%, Roma 4.1%, other and unspecified 1.8% (2001 census)

Country nameconventional long form: Republic of Bulgaria
conventional short form: Bulgaria
local long form: Republika Balgariya
local short form: Balgariya
Government typeparliamentary democracy
Capitalname: Sofia
geographic coordinates: 42 41 N, 23 19 E
time difference: UTC+2 (7 hours ahead of Washington, DC during Standard Time)
daylight saving time: +1hr, begins last Sunday in March; ends last Sunday in October
Administrative divisions28 provinces (oblasti, singular - oblast); Blagoevgrad, Burgas, Dobrich, Gabrovo, Khaskovo, Kurdzhali, Kyustendil, Lovech, Montana, Pazardzhik, Pernik, Pleven, Plovdiv, Razgrad, Ruse, Shumen, Silistra, Sliven, Smolyan, Sofiya, Sofiya-Grad, Stara Zagora, Turgovishte, Varna, Veliko Turnovo, Vidin, Vratsa, Yambol
Constitutionadopted 12 July 1991

Legal systemcivil and criminal law based on Roman law; accepts compulsory ICJ jurisdiction with reservations

Suffrage18 years of age; universal
Executive branchchief of state: President Georgi PARVANOV (since 22 January 2002); Vice President Angel MARIN (since 22 January 2002)
head of government: Prime Minister Boyko BORISSOV (since 27 July 2009); Deputy Prime Ministers Simeon DJANKOV and Tsvetan TSVETANOV (since 27 July 2009);
cabinet: Council of Ministers nominated by the prime minister and elected by the National Assembly
elections: president and vice president elected on the same ticket by popular vote for a five-year term (eligible for a second term); election last held 22 and 29 October 2006 (next to be held in 2011); chairman of the Council of Ministers (prime minister) elected by the National Assembly; deputy prime ministers nominated by the prime minister and elected by the National Assembly
election results: Georgi PARVANOV reelected president; percent of vote - Georgi PARVANOV 77.3%, Volen SIDEROV 22.7%; Boyko BORISSOV elected prime minister, result of legislative vote - 162 to 77 with 1 abstension

Legislative branchunicameral National Assembly or Narodno Sabranie (240 seats; members elected by popular vote to serve four-year terms)
elections: last held 5 July 2009 (next to be held mid-2013)
election results: percent of vote by party - GERB 39.7%, BSP 17.7%, MRF 14.4%, ATAKA 9.4%, Blue Coalition 6.8%, RZS 4.1%, other 7.9%; seats by party - GERB 116, BSP 40, MRF 38, ATAKA 21, Blue Coalition 15, RZS 10

Judicial branchindependent judiciary comprised of judges, prosecutors and investigating magistrates who are appointed, promoted, demoted, and dismissed by a 25-member Supreme Judicial Council (consists of the chairmen of the two Supreme Courts, the Chief Prosecutor, and 22 members, half of whom are elected by the National Assembly and the other half by the bodies of the judiciary for a 5-year term in office); three levels of case review; 182 courts of which two Supreme Courts act as the last instance on civil and criminal cases (the Supreme Court of Cassation) and appeals of government decisions (the Supreme Administrative Court)

Political pressure groups and leadersConfederation of Independent Trade Unions of Bulgaria or CITUB; Podkrepa Labor Confederation
other: numerous regional, ethnic, and national interest groups with various agendas
International organization participationACCT, Australia Group, BIS, BSEC, CE, CEI, CERN, EAPC, EBRD, EIB, EU, FAO, G- 9, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IFC, IFRCS, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC, MIGA, NATO, NSG, OAS (observer), OIF, OPCW, OSCE, PCA, SECI, UN, UNCTAD, UNESCO, UNIDO, UNMIL, UNMIS, UNWTO, UPU, WCL, WCO, WEU (associate affiliate), WFTU, WHO, WIPO, WMO, WTO, ZC
Flag descriptionthree equal horizontal bands of white (top), green, and red; the pan-Slavic white-blue-red colors were modified by substituting a green band (representing freedom) for the blue
note: the national emblem, formerly on the hoist side of the white stripe, has been removed

Economy - overviewBulgaria, a former Communist country that entered the EU on 1 January 2007, has experienced strong growth since a major economic downturn in 1996. Successive governments have demonstrated a commitment to economic reforms and responsible fiscal planning, but have failed so far to rein in rising inflation and large current account deficits. Bulgaria has averaged more than 6% growth since 2004, attracting significant amounts of foreign direct investment, but corruption in the public administration, a weak judiciary, and the presence of organized crime remain significant challenges.
GDP (purchasing power parity)$93.98 billion (2008 est.)
$88.66 billion (2007 est.)
$83.48 billion (2006 est.)
note: data are in 2008 US dollars
GDP (official exchange rate)$49.9 billion (2008)
GDP - real growth rate(%)6% (2008 est.)
6.2% (2007 est.)
6.3% (2006 est.)
GDP - per capita (PPP)$12,900 (2008 est.)
$12,100 (2007 est.)
$11,300 (2006 est.)
note: data are in 2008 US dollars
GDP - composition by sector(%)agriculture: 7.3%
industry: 30.5%
services: 62.2% (2008 est.)
Labor force2.67 million (2008 est.)

Labor force - by occupation(%)agriculture: 7.5%
industry: 35.5%
services: 57% (2007 est.)
Unemployment rate(%)6.3% (2008 est.)
7.7% (2007 est.)
Population below poverty line(%)14.1% (2003 est.)
Household income or consumption by percentage share(%)lowest 10%: 3%
highest 10%: 25.5% (2007)
Distribution of family income - Gini index30.7 (2007)
26.4 (2001)
Investment (gross fixed)(% of GDP)33.4% of GDP (2008 est.)
Budgetrevenues: $22.24 billion
expenditures: $20.74 billion (2008 est.)
Inflation rate (consumer prices)(%)12.3% (2008 est.)
9.8% (2007 est.)

Stock of money$14.29 billion (31 December 2008)
$15.58 billion (31 December 2007)
Stock of quasi money$19.67 billion (31 December 2008)
$17.03 billion (31 December 2007)
Stock of domestic credit$32.04 billion (31 December 2008)
$25.18 billion (31 December 2007)
Market value of publicly traded shares$8.858 billion (31 December 2008)
$21.79 billion (31 December 2007)
$10.32 billion (31 December 2006)
Economic aid - recipient$742 million (2005-06 est.)

Public debt(% of GDP)14.1% of GDP (2008 est.)
41.9% of GDP (2004 est.)
Agriculture - productsvegetables, fruits, tobacco, wine, wheat, barley, sunflowers, sugar beets; livestock
Industrieselectricity, gas, water; food, beverages, tobacco; machinery and equipment, base metals, chemical products, coke, refined petroleum, nuclear fuel

Industrial production growth rate(%)1.5% (2008 est.)

Current account balance-$12.65 billion (2008 est.)
-$8.716 billion (2007 est.)
Exports$22.71 billion (2008 est.)
$18.58 billion (2007 est.)

Exports - commodities(%)clothing, footwear, iron and steel, machinery and equipment, fuels
Exports - partners(%)Greece 9.9%, Germany 9.2%, Turkey 8.9%, Italy 8.5%, Romania 7.2%, Belgium 5.9%, France 4.1% (2008)
Imports$35.64 billion (2008 est.)
$28.65 billion (2007 est.)

Imports - commodities(%)machinery and equipment; metals and ores; chemicals and plastics; fuels, minerals, and raw materials
Imports - partners(%)Russia 14.6%, Germany 11.8%, Italy 7.9%, Ukraine 7.3%, Romania 5.6%, Turkey 5.5%, Greece 5.4%, Austria 4.1% (2008)

Reserves of foreign exchange and gold$17.93 billion (31 December 2008 est.)
$17.54 billion (31 December 2007 est.)
Debt - external$51.46 billion (31 December 2008 est.)
$42.62 billion (31 December 2007)

Stock of direct foreign investment - at home$42.91 billion (31 December 2008 est.)
$33.91 billion (31 December 2007 est.)
Stock of direct foreign investment - abroad$1.292 billion (31 December 2008 est.)
$559 million (31 December 2007 est.)
Exchange ratesleva (BGN) per US dollar - 1.3171 (2008 est.), 1.4366 (2007), 1.5576 (2006), 1.5741 (2005), 1.5751 (2004)

Currency (code)lev (BGN)

Telephones - main lines in use2.258 million (2008)
Telephones - mobile cellular10.633 million (2008)
Telephone systemgeneral assessment: an extensive but antiquated telecommunications network inherited from the Soviet era; quality has improved; the Bulgaria Telecommunications Company's fixed-line monopoly terminated in 2005 when alternative fixed-line operators were given access to its network; a drop in fixed-line connections in recent years has been more than offset by a sharp increase in mobile-cellular telephone use fostered by multiple service providers; the number of cellular telephone subscriptions now greatly exceeds the population
domestic: a fairly modern digital cable trunk line now connects switching centers in most of the regions; the others are connected by digital microwave radio relay
international: country code - 359; submarine cable provides connectivity to Ukraine and Russia; a combination submarine cable and land fiber-optic system provides connectivity to Italy, Albania, and Macedonia; satellite earth stations - 3 (1 Intersputnik in the Atlantic Ocean region, 2 Intelsat in the Atlantic and Indian Ocean regions) (2008)
Internet country code.bg
Internet users2.647 million (2008)
Airports212 (2009)
Pipelines(km)gas 2,926 km; oil 339 km; refined products 156 km (2008)
Roadways(km)total: 40,231 km
paved: 39,587 km (includes 331 km of expressways)
unpaved: 644 km (2005)

Ports and terminalsBurgas, Varna
Military branchesBulgarian Armed Forces: Ground Forces, Naval Forces, Bulgarian Air Forces (Bulgarski Voennovazdyshni Sily, BVVS) (2009)
Military service age and obligation(years of age)18-27 years of age for voluntary military service; as of May 2006, 67% of the Bulgarian Army comprised of professional soldiers; conscription ended January 2008; Air Forces and Naval Forces became fully professional at the end of 2006 (2008)
Manpower available for military servicemales age 16-49: 1,701,979
females age 16-49: 1,691,092 (2008 est.)
Manpower fit for military servicemales age 16-49: 1,351,312
females age 16-49: 1,381,017 (2009 est.)
Manpower reaching militarily significant age annuallymale: 38,263
female: 36,374 (2009 est.)
Military expenditures(% of GDP)2.6% of GDP (2005 est.)
Disputes - internationalnone

Electricity - production(kWh)40.25 billion kWh (2007 est.)
Electricity - production by source(%)fossil fuel: 47.8%
hydro: 8.1%
nuclear: 44.1%
other: 0% (2001)
Electricity - consumption(kWh)31.08 billion kWh (2007 est.)
Electricity - exports(kWh)8.441 billion kWh (2008 est.)
Electricity - imports(kWh)3.097 billion kWh (2008 est.)
Oil - production(bbl/day)3,357 bbl/day (2008 est.)
Oil - consumption(bbl/day)124,000 bbl/day (2008 est.)
Oil - exports(bbl/day)76,570 bbl/day (2007 est.)
Oil - imports(bbl/day)189,000 bbl/day (2007 est.)
Oil - proved reserves(bbl)15 million bbl (1 January 2009 est.)
Natural gas - production(cu m)300 million cu m (2008 est.)
Natural gas - consumption(cu m)3.4 billion cu m (2008 est.)
Natural gas - exports(cu m)0 cu m (2008)
Natural gas - proved reserves(cu m)5.663 billion cu m (1 January 2009 est.)
HIV/AIDS - adult prevalence rate(%)less than 0.1% (2001 est.)
HIV/AIDS - people living with HIV/AIDS346 (2001 est.)
HIV/AIDS - deaths100 (2001 est.)
Literacy(%)definition: age 15 and over can read and write
total population: 98.2%
male: 98.7%
female: 97.7% (2001 census)

School life expectancy (primary to tertiary education)(years)total: 14 years
male: 13 years
female: 14 years (2006)
Education expenditures(% of GDP)4.5% of GDP (2005)








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