Bulgaria

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.

Main Airports

Bourgas (BOJ), Sofia (SOF), Varna (VAR)

U.S. Embassy

16 Kozyak Street, Sofia
tel: [359] (2) 937-5100

Statistics

GDP: purchasing power parity:

$71.54 billion (2005 est.)

GDP - real growth rate:

5.5% (2005 est.)

GDP - per capita: purchasing power parity:

9,600 (2005 est.)

Inflation rate (consumer prices):

5% (2005 est.)

Labor force:

3.34 million (2005 est.)

Exports:

$11.67 billion f.o.b. (2005 est.)

Exports - partners:

Italy 12.8%, Germany 11.1%, Turkey 9.9%, Greece 6.1%, Belgium 5.9%, France 4.3%, US 4.1% (2005)

Imports:

$15.9 billion f.o.b. (2005 est.)

Imports - partners:

Germany 14.6%, Russia 12.2%, Italy 9.8%, Turkey 6.7%, Greece 6.5%, France 4% (2005)

Population:

7,385,367 (July 2006 est.)

Population growth rate:

-0.86% (2006 est.)

Population Below Poverty Line:

13.4% (2002 est.)

Major Industries:

electricity, gas, water; food, beverages, tobacco; machinery and equipment, base metals, chemical products, coke, refined petroleum, nuclear fuel

Employing Workers: 100*

Registering Property: 65*

Enforcing Contracts: 52*

Closing a Business: 64*

*2006 World Bank rank out of 175 countries

Starting a Business

The table below shows the number of steps and the amount of time needed to start a business, on average

Indicator	Bulgaria	Region
Procedures (number)	9	9.4
Time (days)	32	32

Bulgaria Risk Assessment

Country Rating

Rating: A4

A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behaviour. Corporate default probability is still acceptable on average.

Risk Assessment

Economic growth remained strong in 2007, driven mainly by domestic demand with foreign direct investment and the expansion of credit spurring investment. Job and wage growth fuelled private consumption. Continued strong import growth, however, particularly of capital goods, led to a further widening of the trade deficit. Corporate payment behaviour has remained generally satisfactory with some sectors, like agriculture and construction, presenting above average risk.

The strong growth should continue in 2008. Investment should continue to grow at a satisfactory rate due notably to fund transfers from the European Union. Private consumption should remain buoyant. There should be little easing of inflation, however, due to the strong domestic demand and wage pressure, which could keep the country from joining the euro zone before 2012.

Fiscal policy has remained prudent but the extent of the current account deficit has led to an increase in private foreign debt and greater dependence on foreign capital. That deficit seems difficult to sustain in view of the country's rigid exchange rate system (currency board) with foreign direct investment expected to slow from 2008. That situation may ultimately only unwind at the price of a sharp growth slowdown.

STRENGTHS

• Accession to the European Union has been a stimulatory factor and triggered a catch-up dynamic in the country.
• Prudent fiscal policy and active debt management have resulted in a considerable reduction in sovereign default risk.
• The banking sector has been consolidated.
• The country benefits from a skilled labour force.
• Buoyant investment and increased capital goods imports augur well for growth in the future.

• The current level of external financing needs will be difficult to sustain in the medium term.
• Foreign debt has grown considerably under the effect of rising private debt.
• Maintaining a steady inflow of foreign capital will require implementation of new reforms and improvements in the business environment.
• Dissension within the centrist coalition in power has delayed reform implementation.

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