Foundations for Growth and Competitiveness 2026

Bulgaria

Bulgaria’s economic convergence towards more advanced economies picked up in recent years, largely driven by an increase in hours worked. However, an ageing workforce and emigration are a drag on growth. The capital stock is very low compared to OECD countries, both relative to GDP and the population, contributing to low productivity.

Improving the quality of education and increasing participation in adult learning could promote upskilling and help matching skills required by employers. Reducing regulatory barriers to competition and fighting corruption, while improving judicial efficiency, would boost investment and raise productivity through a more efficient allocation of resources. Transitioning away from coal-based power generation without compromising energy security will spur investment in renewable energy and underlying infrastructure.

Economic performance

Gaps to the average of the upper half of the OECD countries

Source: Panel A: OECD, Economic Outlook database; Panel B: OECD, Labour Force Statistics database; Panel C: OECD, Economic Outlook and Productivity databases; Panel D: OECD, Economic Outlook and Annual National accounts, GFCF by assets databases.

Selected policy gaps

Source: OECD calculations based on the Foundations for Growth and Competitiveness database.

Education: Improve education quality

With the workforce declining, raising the educational level of the workforce would help to maintain growth. The formal education system in Bulgaria has undergone major changes in the past decades, with increasing enrolment rates and rising educational attainment, although quality did not improve in parallel. Bulgaria ranked among the lowest in the PISA 2022 assessment relative to OECD countries, with the share of students performing below the baseline proficiency (Level 2) in mathematics, reading, and science rising significantly between 2012 and 2022.

Recommendations

✓ Re-evaluate the curriculum and the assessment framework for students with a focus on reading, math, and science.

✓ Expand workplace-based training to all vocational students.

✓ Raise the quality of teachers by continuous training and career development opportunities.

Skills: Promote upskilling over the lifecycle

Given the low level of skills of many adults, upskilling the population is crucial to raise productivity and further improve living standards. However, participation in adult learning is very low in Bulgaria, as less than 2% of 25–64-year-olds took part in adult learning programmes in 2022. Both the supply and demand side of adult learning remains weak as only 43% of firms plan to provide on-the-job training, while broader participation is hampered by weak motivation among adults as they perceive such learning neither necessary nor useful.

Recommendations

✓ Increase the involvement of employers in the design of adult education and training programmes.

✓ Expand individual training vouchers and high-quality adult training programmes, including distance learning and modular and/or credit-based formats.

✓ Strengthen support to employers to assess their skills and training needs.

Competition: Reduce barriers to entry and retail price controls

A business-friendly environment is essential to unlock higher investment and productivity. Bulgaria’s regulatory framework has improved, but some areas of the economy would benefit from lowering regulatory barriers further. Bulgaria continues to have more burdensome administrative requirements necessary to set up new firms than most OECD countries. Retail price controls and regulation in the energy sector are high, while restrictions in some professional services are tighter than in the average OECD economy.

Recommendations

✓ Reduce paperwork and move transactions for setting up new firms to a digital one-stop shop.

✓ Continue with orderly liberalisation of retail electricity and gas markets while targeting support to energy-poor households.

✓ Reduce barriers to the conduct of activity in professional services by easing the regulation of fees and occupational licensing.

Corruption: Strengthen the institutional framework and effective enforcement of sanctions

Bulgaria is relatively fast in transposing EU legislation to its national system, but enforcement is weak, and perceptions of corruption are high. Corruption in public procurement and judicial inefficiency erode business confidence and distort efficient allocation of resources. These governance challenges limit the country’s attractiveness as a destination for foreign investment and prevent higher economic growth.

Recommendations

✓ Strengthen the institutional framework through the representation of all relevant stakeholders in the National Council for Anti-Corruption Policies and clarify monitoring, evaluation and reporting arrangements.

✓ Regulate third-party spending in electoral campaigns in line with practices in other OECD countries, and establish a formal public procurement performance measurement framework, focusing on the level of competition.

✓ Consider introducing standardised guidance and specialised training on pre-trial investigations of corruption-related offences for prosecutors to improve judicial efficiency in high-level corruption cases.

Energy: Facilitate the development of renewable energy to achieve a growth-friendly phase-out of coal

Bulgaria needs to reduce emissions to align with EU emission reduction goals and achieve net zero by 2050. A significant share of emissions is generated by the energy industries and replacing coal will require a major overhaul in the energy mix. A phase-out of coal without compromising energy security. for businesses and households will spur growth-enhancing investments in renewable energy, domestic transmission and cross-border interconnection network, as well as energy storage.

Recommendations

✓ Develop and implement a coal phase-out strategy, including economic and social transformation in affected regions in anticipation of retirement of coal plants.

✓ Continue to support new renewable energy generation facilities, while streamlining permit procedures in a digital one-stop shop.

✓ Incorporate committed new generation capacity into grid development plans and accelerate investments.

Recent progress on structural reforms

Bulgaria is revamping its education system that better meets the skills needs of the labour market, provides equal chances to all, and makes the teaching career attractive. However, several deficiencies are not adequately addressed, and further reforms are needed such as raising the performance of teachers, training vocational skills and sufficiently funding of schools. Bulgaria has introduced key reforms to amend the Criminal Code and the Judicial System Act, to allow judicial review of prosecutorial decisions, and to establish clearer accountability for the Prosecutor General and their deputies to increase judicial efficiency and address corruption more effectively.