Dear Prime Minister Borissov, Deputy Minister Petrova, dear Alvaro, dear friends,
I am delighted to present the OECD’s 2021 Economic Assessment of Bulgaria. I’d like to thank the Ministry of Finance of Bulgaria and Deputy Minister Petrova for the support in the preparation of this assessment.
This report illustrates the excellent collaboration between Bulgaria and the OECD and represents the first item of Bulgaria’s 2019 overarching OECD Action Plan. Bulgaria has been working closely with the OECD across many different policy areas and is now one of our most active partners, adhering to 32 legal instruments and participating in 11 OECD bodies.
In terms of economic progress, Bulgaria’s achievements over the past two decades are commendable. Before the pandemic, growth had exceeded 3% for five years, with wages rising strongly and unemployment at historic low rates.
This development was pinned by a sound macroeconomic policy framework, with the currency board and a prudent fiscal policy ensuring economic stability. Meanwhile the economy benefitted from European Union membership and the integration of a large manufacturing sector in global value chains.
Unfortunately, like the rest of the world, Bulgaria has been severely hit by the COVID-19 pandemic. The economic consequences of this shock are significant, but the country’s strong fiscal position has enabled a bold response, and the government’s wage subsidy scheme has prevented many from falling into unemployment.
Bulgaria has already gone far in modernising the economy and strengthening resilience and competitiveness. The country is working with the OECD to ensure the successful implementation of policy reforms on the governance of state-owned enterprises, investment policy, employment policies and regional development, to name a few.
Bulgaria is still facing important challenges. The recommendations of this report stress the importance of continued reform to raise productivity and living standards – in particular, as the rate of vaccination accelerates and the economy starts to recover.
Our assessment recommends lowering regulatory barriers to improve the business environment, pressing on with the insolvency reform to help distressed firms, continuing efforts to fight corruption and establishing a coherent public integrity system.
Moreover, the pandemic has made supporting people and enhancing skills more important than ever. From early childhood education, to vocational education, to investing more in the coverage and quality of active labour market policies.
At the OECD, we welcome the government’s ambitious 2030 targets to reduce poverty and lower income inequality substantially, both high in Bulgaria compared to most OECD countries. Achieving these targets will require a comprehensive effort to improve education, raise employment and strengthen the tax-benefit system. Meeting this challenge also requires improving the connection with lagging regions, notably in the northwest of Bulgaria, and thus further investments in infrastructure and improved access to public services for all, not least in health care.
A reform agenda will boost growth and the country’s sound fiscal policy will allow for more public spending. This will reap benefits for education, for long-term care in a fast-ageing society and for support to vulnerable groups.
Bulgaria must continue along the reform path. In these particularly difficult times, it remains paramount to keep the momentum going.
The country’s request to join the OECD is testimony of its strong commitment to OECD values and standards. While a decision on accession is the prerogative of the OECD Council and no consensus has been reached yet, I applaud Bulgaria for its fruitful and continuously deepening engagement with the OECD.
I very much look forward to continuing making progress together through the design, development and implementation of better policies for better lives in Bulgaria.