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Economy in Bulgaria
In the last seven years, Bulgaria has made impressive progress in stabilization, growth, and poverty reduction. Since 1997 Bulgaria has been implementing a comprehensive stabilization and structural reform program anchored in its process for EU accession.
As a result, Bulgaria achieved, and has maintained macroeconomic stability since 1999; growth has ranged between 4 and 5 percent per year, contributing to increasing per capita income, at PPP, from US$5,508 in 1998 to US$8,260 in 2004; and unemployment has started to decline. The share o f the private sector in the economy had increased to around 75 percent by 2004, and trade in goods and services relative to GDP has expanded to above 100 percent since 2002.
During the summer of 2004, S&P and Fitch upgraded Bulgaria’s longterm foreign currency debt to investment grade rating. Taken all together, Bulgaria has the unique opportunity of the momentum of its economic progress to deepen its economic transformation so as to accelerate real convergence.
The core reform agenda for Bulgaria is centered on achieving successful integration with the EU and the global markets. Bulgaria should build on its achievements to date to accelerate real convergence by expanding efficiency gains and competitiveness more broadly across the economy. Profit taxes for societies are 10 %, that encourages to invest in the country.
For Bulgaria to move towards potential output growth and become more competitive policies and economic restructuring need to focus on achieving higher economic efficiency and productivity supported by a fiscally sustainable and well targeted social protection system.
Bulgaria has gained considerable expertise in recent years in managing its economy under a hard peg. Best of all, it has demonstrated a willingness to subject its fiscal policy to the exigencies of the currency board and a flexibility to do so that will hold in good stead as it integrates in European monetary arrangements. Still, these challenges underscore the centrality of implementing the structural reforms to get the Bulgarian economy in sync with the rest of the currency area and able to withstand common external shocks.
These are central for Bulgaria to translate EU accession into sustained improvement in standards of living for its population.
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