BULGARIA

General

A Slavic State, Bulgaria achieved independence in 1908 after 500 years of Ottoman rule. Bulgaria fought on the losing side in both World Wars. After World War II it fell within the Soviet sphere of influence. Communist domination ended in 1991 with the dissolution of the USSR, and Bulgaria began the contentious process of moving toward political democracy and a market economy. In addition to the problems of structural economic reform, particularly privatisation, Bulgaria faces the serious issues of keeping inflation under control and unemployment, combatting corruption, and curbing black-market and mafia-style crime.

Economy

In April 1997, the current ruling Union of Democratic Forces (UDF) government won pre-term parliamentary elections and introduced an IMF currency board system which succeeded in stabilising the economy. The triple digit inflation of 1996 and 1997 has given way to an official consumer price increase of 1% in 1998. Following declines in GDP in both 1996 and 1997, the economy grew an officially estimated 4% in 1998. In September 1998, the IMF approved a three-year Extended Fund Facility, which provides credits worth approximately $ 864 million, deigned to support Bulgaria’s reform efforts. The government’s structural reform programme includes: (a) privatisation and, where appropriate, liquidation of state-owned enterprises (SOEs); (b) liberalisation of agricultural policies, including creating conditions for the development of a land market; (c) reform of the country’s social insurance programmes; and, (d) reforms to strengthen contract enforcement and fight crime and corruption.