Guidance

Overseas business risk: Bulgaria

Updated 31 August 2022

1. Politics

1.1 President

Rumen Radev is the current Head of State. He won his second presidential term at the November 2021 presidential election with nearly 67% of the votes. Radev was previously Head of the Air Force and a former air force pilot; he is not thought to be a member of any political party. The President of Bulgaria is elected for a five-year term, with a two-term maximum. The President does not have executive functions.

1.2 Executive

The Prime Minister is head of the executive branch. After the fall of the government of Prime Minister Kiril Petkov on 22 June, President Radev dissolved Parliament, scheduled early elections for 2 October and appointed a caretaker government. The major task of the caretaker government, headed by PM Galab Donev, is to prepare the elections. Other priorities include addressing the energy crisis by ensuring security of supply at reasonable prices; guarding against any food supply crisis as a result of the war in Ukraine; developing the legislation needed to release the EU Recovery and Resilience funds; enhancing defence modernisation; and promoting Bulgaria’s Schengen accession. The caretaker government will be in place until the formation of a regular one. The first opportunity to form a regular government will come following the parliamentary elections on 2 October. In 2021 there were three rounds of parliamentary elections before a coalition agreement could be reached, enabling former PM Petkov’s government to be formed in December 2021.

2. Economics

2.1 Basic Economic Facts

• Population: 6.5 million (preliminary data from 2021 census)

• Nominal GDP: 69.2 USD bn (2021)

• GDP per capita: 10 006 USD (2021)

• GDP (real annual) growth: -4.2% (2021)

• Unemployment rate: 5.2% (2021)

• Inflation rate (HICP): 1.2% (2021)

• Current Account balance: -0.7% of GDP (2021)

• Fiscal Balance: -3% of GDP (2021)

• Long-term credit ratings: Fitch: BBB positive (2021)

• Exchange rate:

  • 1 GBP = 2.34 Lev/BGN (February 2022)

  • 1 euro = 1.95583 Lev/BGN (fixed exchange rate)

  • 1 USD = 1.72 Lev/BGN (February 2022)

Find more data in the FCDO’s economic factsheets.

Main Industries:

• energy

• mining

• oil and gas

• machine building

• information technology

• tourism

• construction

• food processing

• healthcare

Main trading partners:

• Germany

• Romania

• Italy

• Greece

• Turkey

See Trade and Investment factsheets for up to date figures on the main imports and exports between the UK and Bulgaria. Learn more about Exporting to Bulgaria.

2.2 Economic Developments

Geographical location, low costs and good technical skills make Bulgaria attractive as an outsourced manufacturing base. Likewise, Bulgaria has benefitted from increased service off shoring (including call centres, accountancy back office, software programming, IT support and architectural design services). However, partly as a result of this success, there is a shortage of qualified labour in the IT sector and construction industry. Moreover, there is a common complaint from the private sector that the education system is not geared towards the needs of business.

Bulgaria’s population is estimated to have dropped to 6.5 million, a result of the low birth rate and mass еmigration of Bulgarians overseas over the past two decades. The standard of living is well below that of Western European countries as reflected by GDP and salaries, although this in turn gives strong prospects for growth as Bulgaria “catches up” with EU norms. Income levels vary considerably between major cities and rural areas where poverty is still evident.

The Bulgarian Lev (BGN) has been pegged to the euro since 1999, which has provided Bulgaria with a stable monetary system. Bulgaria committed to adopting the euro upon joining the European Union in 2007. In 2020, Bulgaria joined the EU’s Exchange Rate Mechanism (ERM-II), and the European Banking Union, after the Government delivered on its commitments in the areas of banking and non-banking financial supervision, the governance of state-owned enterprises, and money laundering, among others. The Government continues to work towards adopting the euro on 1 January 2024.

Bulgaria’s GDP was projected for 3% growth in 2020, fuelled mainly by growing household consumption. With a surplus of 1% of GDP and a debt of 21%, Bulgaria was relatively well prepared to face the economic downturn caused by the pandemic. Household consumption immediately picked up pace at the end of each of the three partial lockdowns, providing a strong boost to the economy. Expanded government spending on furlough schemes and other economic packages has brought the government deficit to 3.4% of GDP and a 25% debt-GDP ratio.

EU Funding for the period 2021 – 2027

Under the European Commission’s Recovery and Resilience Facility, Bulgaria is set to receive up to 6.27 billion euro, amounting to over 10% of the country’s GDP and split between four pillars:

• Green Bulgaria (2.5 billion euro) for “green transition” projects and measures, including low-carbon economy, biodiversity and bio-agriculture

• Innovative Bulgaria Pillar (1.8 billion euro) for improving the educational environment, skills development, research and innovation, digitalisation of industry

• Fair Bulgaria Pillar (1.2 billion euro) for justice reform, improvement of the business environment, social inclusion and healthcare

• Connected Bulgaria Pillar (1.1 billion euro) for transport and communication projects including high-speed digital infrastructure in less populated areas, construction and renovation of water supply and sewerage networks; and local development.

Under the European Structural and Investment Funds, Bulgaria is also set to receive about 10.92 billion euro, mainly from the following three funds:

• European Regional Development Fund and European Social Fund - 8.36 billion euro

• Just Transition Fund - 1.29 billion euro

• Cohesion Fund - 1.27 billion euro

2.3 Outlook for 2022-2023

National and international financial institutions expect the Bulgarian economy to continue its post-pandemic recovery in 2022 and 2023, building on its’ rebound in 2021. The Bulgarian National Bank (BNB) expects GDP growth of 3.6% in 2022 and 4.5% in 2023. The European Commission and the World Bank forecast GDP growth below 4% over the next two years - 3.7% in 2022 and 3.9% in 2023 and 3.8% in 2022 and 3.6% in 2023 respectively. The IMF is more optimistic, with a 4.5% GDP growth forecast for 2022. The main driver for growth will continue to be private consumption, expected to be weaker than in 2021 due to rising inflation rates, and exports. Large investment projects funded by the Recovery and Resilience Plan will further fuel economic growth.

Inflation will play a key role in economic growth in the next years. The BNB expects inflation to accelerate in the first half of 2022, and then slow down to 7.5% by the end of year. This will be fuelled by higher production and consumption costs, the result of the global increase in energy prices, as well as rising food prices on international markets. Nevertheless, disposable income is forecast to grow in real terms, although low-income households will have lower purchasing power. The labour market is expected to remain stable with unemployment forecast at 5% for 2022 and expected to continue decreasing in the following years. Labour shortages will persist, particularly in highly skilled sectors.

The formation of a new government in December 2021 has significantly reduced political uncertainty. The coalition parties have pledged a comprehensive anti-corruption agenda to improve rule of law, while promising increased investment and more effective public spending, which is expected to have a positive impact on investor confidence in the coming years. On the other hand, the main risks for 2022 and 2023 relate to slower than expected execution of investment projects and absorption of EU funds, as well as delayed implementation of the Recovery and Resilience Plan. The other major risk concerns higher inflation rates than initial forecasts, which would have an additional negative effect on real household incomes and consumption.

3. Human Rights

Bulgaria has ratified most of the European and universal human rights treaties and counts human rights as an official foreign policy priority.

Accepting diversity remains a major issue in Bulgaria. Public attitudes towards the Roma remain negative and they still face structural discrimination. Sexual orientation and gender identity are another base for discrimination or negative attitude. The country does not allow civil partnerships, nor does it recognise civil partnerships signed in another country; marital rape is also not recognised by legislation. Hate speech and hate crime either pass with impunity or are prosecuted as hooliganism.

An example of the above is the controversy over the Council of Europe Convention on preventing and combating violence against women and domestic violence (the so-called Istanbul Convention). Bulgaria chose not to ratify it because of its references to “gender”. The matter became hugely politicised with the Constitutional Court eventually ruling the Convention unconstitutional.

Issues remain with human trafficking, including forced labour, and discrimination against minority groups. Bulgaria is a source and transit country for men, women, and children trafficked for the purposes of commercial sexual exploitation and forced labour in the agriculture, construction, and service sectors.

Conditions in prisons do not meet EU requirements and the country is subject to continuing criticism by the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment (CPT).

4. Bribery and Corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, or a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world. In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere in the world.

In the run up to Bulgaria (along with Romania) joining the EU it was agreed that further work was needed in key areas to address shortcomings in judicial reform, the fight against corruption, and tackling organised crime. The Cooperation and Verification Mechanism (CVM) was set up as a result. Annual CVM reports were produced until 2019, when the European Commission assessed that Bulgaria had met all benchmarks and recommended the end of the mechanism. There were legitimate reasons to end the out-dated CVM, but this was a political assessment: real reform had not taken place and political will was lacking. Some EU Member States were against the end of the CVM for Bulgaria, so the mechanism has not been closed officially.

The new horizontal Rule of Law Mechanism launched in 2019 continues to highlight long-standing concerns over judicial independence, slow and limited implementation of anti-corruption measures and weak protection of media freedom in Bulgaria. All reports are available here.

Many observers agree that issues around corruption are typically at high level, and involve unhealthy links between political and business interests. Independence and predictability of judiciary are also questionable. By contrast, low level corruption in the public sector is less of an issue (lack of capacity or competence is more likely to be the problem), and in the private sector the vast majority of business transactions follow market norms.

Fighting corruption has long been a declared priority for Bulgaria, and legal reforms have resulted in the establishment of new structures and legislative amendments. However, corruption remains widespread. The European Commission recommends that Bulgaria should shield anti-corruption institutions from political influence and appoint their management in a transparent, merit-based procedure. Random assignment of cases in courts should be ensured by an effective nationwide system.

Transparency International’s Corruption Perceptions Index in Bulgaria for 2021 is 42 points, positioning the country at 78th, a significant drop compared to 2020 when it was in 69th place. This makes Bulgaria the most corrupt EU Member State.

Visit the Business Anti-Corruption portal page providing advice and guidance about corruption and some basic effective procedures you can establish to protect your company from them.

Read the information provided on our Bribery and corruption page.

5. Terrorism Threat

Please read the information provided on the terrorism section in the FCDO’s Bulgaria Travel Advice.

6. Protective Security and Organised Crime

Please read the safety and security section in the FCDO’s Bulgaria Travel Advice for up to date security advice.

Bulgaria’s geographic location in South East Europe places it at the crossroads of Europe, Asia and the Middle East. This makes it an ideal transit route for trafficking of various types of illegal commodities.

Bulgaria is a transit country for refugees/migrants, who cross the border from Turkey, are reluctant to stay in Bulgaria and look for options to continue their journey to Western Europe. Migration pressure had its peak in Bulgaria, mainly through the Turkish – Bulgarian border, in 2015. There has been a decreasing trend since then, mainly due to the completion of a physical fence on the Bulgarian – Turkish border, the enhanced technical measures and the focused priority activity by the Bulgarian law-enforcement authorities at the borders. However, corruption issues are still existent at the borders, which facilitates organised immigration crime.

Bulgaria is a source and transit country for victims of human trafficking and modern slavery to Central and Western European countries, mainly based on social and economic factors. The main forms of exploitation are labour and sexual exploitation.

Cyber-crime in Bulgaria is an increasing threat, particularly cyber enabled financial crime with Bulgaria retaining its role as an intermediary point in the transfer of funds of suspicious origin.

Bulgaria is a source country for some synthetic drugs and a transit country on the Balkan route for some Class A drugs, notably heroin that originates further East.

Significant numbers of forged ID documents, used in Bulgaria and beyond, are known to originate in Bulgaria.

The country is still subject to monitoring by the European Commission for its shortcomings in the area of combating organised crime (see more in Section 3 - Bribery and Corruption above).

Read the information provided on our Organised crime page .

7. Intellectual Property

In Bulgaria intellectual property is protected by either Bulgarian law or international treaties. Bulgaria’s legislation in the area of intellectual property meets the standards of most European Union countries. Bulgaria is also a member of the World Intellectual Property Organization (WIPO). Although Bulgarian law protects intellectual property rights, enforcement is sometimes a challenge.

For information on obtaining a patent in Bulgaria, you should contact:

Patent Office of the Republic of Bulgaria
Sofia 1040, 52 b
Dr. G.M.Dimitrov Blvd

Tel: +359 2 9701321, Fax: +359 2 8708325,

Email bpo@bpo.bg  Website: Patent Office

For information on registering your Trademark in Bulgaria, you should contact the Office for Harmonisation in the Internal Market.

Refer also to the website of the World Intellectual Property Organisation (WIPO), and the Madrid Protocol for the international registration of marks.

Read the information provided on our Intellectual Property page.

8. Contact:

Contact the Department for Business and Trade’s (DBT) team in Bulgaria for further information.

9. Useful links

• Embassy website

• Export guide

• Facebook

• Twitter