Deja vu: European Commission’s recipe to fix Bulgaria’s economic woes
After finding macroeconomic imbalances in half of EU’s member states, the European Commission issued on May 29 country-specific recommendations on measures that the countries should adopt in the next 18 months. In Bulgaria’s case, the recommendations were a familiar list of topics that have repeatedly come up over the past decade – reforms in the education, health care, pension and judicial systems.
In April, the EC said that it found macroeconomic imbalances in Bulgaria, which, while not excessive, required addressing, in particular in the areas of fighting unemployment and reducing external and corporate indebtedness.
Specifically, while Bulgaria’s public finances were stable, the country should maintain the “sound fiscal framework” in the coming years, improving tax collection so as to “support necessary growth-enhancing expenditure.”
“The labour market is suffering from structural challenges with regional and skills mismatches among the highest in the EU […] Active labour market policies and a well-functioning Employment Agency are needed to help people, particularly the young and other vulnerable groups to find a job. With the highest rate of citizens at risk of poverty in the EU, Bulgaria should also give priority to implementing a comprehensive strategy for social inclusion,” the EC said.
On education, the Commission recommended that “ambitious reforms are agreed and implemented as a priority. Moreover, Bulgaria’s health care system has considerable potential for increasing its efficiency, which would improve the quality of the services it delivers and thereby the population’s overall health.”
To improve business environment, Bulgaria should reduce the administrative burden on companies and encourage lending to small businesses. “Improving the quality and independence of the judiciary system, and effectively tackling corruption are further necessary steps to increase investor confidence,” the EC said.
On retirement reform, the Commission said that Bulgarian workers left the labour market earlier than the EU average. “Ensuring the adequacy of pension provision – and increasing the supply of labour – depends on further measures to encourage Bulgarians to contribute to the system over longer working lives.”
Bulgaria should also put the EU funds made available to the country to better use, having so far only used 30 per cent of the money allocated to the country since 2007. “The effective deployment of these resources on quality projects is crucial for sustaining necessary public investment. To increase investment, while avoiding irregularities, the relevant legislation should be fully enforced,” the EC said.
Finally, in the energy sector, Bulgaria remained dependent on external resources and remained highly energy inefficient. The country should implement energy market regulations in full and modernise its energy sector “to deliver more competitive and secure energy at a lower cost to citizens, businesses and the environment.”
(European Commission headquarters Berlaymont building. Photo: JLogan)
