Doing Business in Bulgaria
As a parliamentary republic with a functioning market economy, Bulgaria joined NATO in 2004 and EU in 2007. The laws and regulations in almost all spheres of life were harmonized with EU legislation.
A currency board establishes a fixed exchange rate (to EUR) regime under which the Central Bank cannot finance the government or the commercial banks.
Bulgaria will keep the fixed rate until the adoption of the Euro which is part of its EU accession agreement.
Since 1997, all governments maintained a conservative fiscal policy, with low deficits or even surpluses. The public debt went down from over 100% of GDP to about 29% at present.
The third lowest ratio in EU of government debt-to-GDP was recorded in Bulgaria (28.7%) next only to Estonia’s and Luxembourg’s according to Eurostat’s 2016 report. The euro area’s total public debt stands at about 90.1% of Eurozone’s GDP.
Government spending in Bulgaria was the 6th lowest in EU – 40.7% of GDP, compared to 48.5% in the entire Euro area according to Eurostat’s 2015 report. In addition, Bulgaria’s 10% corporate and personal income tax rates are the lowest flat rates in EU and one of the lowest in the world according to Eurostat’s 2015 report. In comparison, Romania holds 16% corporate and personal income tax rates, Serbia – 15%, and the Czech Republic respectively 19% and 15%.
Since 2005, The World Economic Forum in Davos (www.weforum.org) has based its competitiveness analysis on the Global Competitiveness Index (GCI), a comprehensive tool that measures the microeconomic and macroeconomic foundations of national competitiveness. In the 2016-2017 GCI, Bulgaria ranks 50th overall (out of 138) as compared to Serbia (90th), Romania (62th), Greece (86th), Turkey (55th), and Poland (36th). This is a positive trend since the country took 62nd place in the 2012-2013 edition and 74th place in the 2011-2012 edition. Bulgaria scores best in “Technological readiness” (38th) and “Macroeconomic environment” (42th).
Since 2003, the World Bank has prepared the Doing Business Report (www.doingbusiness.org). It objectively assesses regulations affecting domestic firms in 190 economies and ranks the economies in 10 areas of regulation. The report provides quantitative measures of regulations affecting areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. In the 2017 edition Bulgaria ranks 39th out of 190 countries as compared to Hungary (41st) and Greece (61st). The best scores that Bulgaria receives are in “Protecting Minority Investors” (13th), “Trading across Borders” (21th), and “Getting Credit” (32rd).
Since 1996, the index published in Economic Freedom of the World Report (www.freetheworld.com) by the Fraser Institute (Vancouver, Canada) has been measuring the degree to which the policies and institutions of countries are supportive of economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of privately owned property. 42 variables are used to construct a summary index and to measure the degree of economic freedom in five broad areas – size of government, legal system and property rights, sound money, freedom to trade internationally, regulations. In the 2016 edition of the Index Bulgaria ranks 45th (out of 159). The best scores are in “Sound money”, “Freedom to trade internationally” and “Regulations”.
|GOVERNMENT DEBT (% OF GDP)||3rd lowest in the EU (28.7%)||Eurostat||2016|
|PERSONAL AND CORPORATE INCOME FLAT TAX RATES||1st lowest in the EU (10%)||Eurostat||2016|
|DOING BUSINESS INDEX||39th (out of 190)||World Bank||2017|
|ECONOMIC FREEDOM OF THE WORLD INDEX||45th (out of 159)||Fraser Institute||2016 (calculating the index in the 2016 edition with data from 2014)|
|GLOBALCOMPETITIVENESS INDEX (GCI)||50th (out of 138)||World Economic Forum||2016-2017|
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