Bulgarian Economy

Excellent business environment

  • Located in South Eastern Europe, Bulgaria is ideally positioned between the world’s major trading blocks of the EU and Asia. Bordered by Romania, Serbia, Macedonia, Greece, Turkey and the Black Sea. Over the last 8 years Bulgaria has been a vibrant and high growth economy that has enjoyed one of the most productive and successful periods of its entire history. Whilst growth in GDP has fallen in line with the rest of Europe, we believe it is well positioned to move forward again soon.
  • Bulgaria has amongst the lowest business costs (including taxes) in Europe. Corporation tax for example is only 10% and so too is income tax. Highly attractive tax incentives are available for inward investment which the Fund will be looking to take advantage of.
  • Businesses can choose from a well educated, multilingual and arguably the cheapest workforce in Europe. In particular, it has strengths in information technology, maths, engineering and specialized science. It also has the 8th highest number of IT specialists in the World and is the 1st ranked in Europe for outsourcing IT work.
  • All of this has led to a major influx of multinational corporations that continues to this day and includes Microsoft, Deutsche Bank, Google, Nokia, Hewlett Packard and PWC.
  • Much needed restructuring has been done.
  • Bulgaria has undergone a massive denationalisation of state industries to the point where it is now a fully functioning privatized free market economy.
  • The legal system has undergone much needed reforms to counter corruption which affected most ex-communist countries.


  • A full member of the European Union since January 1st 2007, Bulgaria is also receiving considerable economic and structural funding from Brussels to assimilate Bulgaria to the EU in terms of economic performance and infrastructure.
  • Member of NATO since April 2004.
  • Bulgaria has been a parliamentary democracy since 1989 and has undergone multiple peaceful transitions of power since that time.
  • Stable currency which is pegged to the Euro.
  • Set to become a member of the Schengen Area of Europe in March 2011.

Bulgarian Economy

  • Bulgarian economy has posted positive GDP growth every year since 1998 since which time it has been under the auspices of the IMF. The last five years has seen average growth in excess of 6%. Last year saw growth of 7.1% against a growth forecast of 5.8%. Whilst GDP will fall in 2009 (which is to be expected inline with the rest of Europe) it is expected to stabilise in 2010 and grow in 2011.
  • The Bulgarian government used the recent period of economic growth to strengthen its financial position, and budget surpluses averaged 2.7% of GDP between 2004 and 2008, debt on GDP base declined to 14%, and a significant fiscal reserve was accumulated.
  • Inflation will continue to trend down from the high rate in 2008 as domestic demand pressures ease, food inflation drops and world oil prices remain low relative to 2008. Inflation is forecast to average 3.2% in 2009 and 3% in 2010.
  • This will allow the government to reduce interest rates to stimulate the economy and also is vital to Bulgaria adopting the Euro in the future.

Strong and steady Banking Sector

The current world financial crisis has made a significant impact on the availability of credit in most economies, slowing growth and leading to major slowdowns in property markets. The Bulgarian banking sector presently appears to be in reasonably good shape, with relatively high capital adequacy and liquidity ratios by international standards.

Bulgarian banks, unlike western banks, operate traditional lending practices and did not engage in esoteric lending practices. Secondly, Bulgaria had a financial crisis in 1997 and ever since it has tread a relatively cautious line. For example, in Western European States, banks wait 180 days to consider a loan a bad loan; in Bulgaria a loan is considered bad any time between 30 to 90 days. Two years ago, the Bulgarian Central Bank decided to increase the minimum bank reserves from 8% to 12%. At that time the measure was criticized as being overprotective but has proved to be highly successful. It currently sits at 16.9% and whilst this figure may fall slightly in the near future, it will still be well above the 8% mandatory level of adequacy set by the European Union.