Bulgaria/Economy

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Bulgaria's economy contracted dramatically after 1989 with the collapse of the COMECON system and the loss of the Soviet market, to which the Bulgarian economy had been closely tied. The standard of living fell by about 40%. In addition, UN sanctions against Serbia (1992-95) and Iraq took a heavy toll on the Bulgarian economy. First signs of recovery emerged when GDP grew 1.4% in 1994 for the first time since 1988, and 2.5% in 1995. Inflation, which surged in 1994 to 122%, fell to 32.9% in 1995. During 1996, however, the economy collapsed due to the BSP's go-slow, mismanaged economic reforms, its disastrous agricultural policy, and an unstable and decapitalized banking system, which led to inflation of 311% and the collapse of the lev. When pro-reform forces come into power in spring 1997, an ambitious economic reform package, including introduction of a currency board regime, was agreed with the IMF and the World Bank, and the economy began to stabilize.

Since 1990, the bulk of Bulgarian trade has shifted from former COMECON countries primarily to the European Union, although Russian oil exports to Bulgaria make it Bulgaria's largest single trading partner. In December 1996, Bulgaria joined the World Trade Organization. Bulgaria's slow pace of cash privatization, contradictory government tax and investment policies, and bureaucratic red tape have kept foreign investment among the lowest in the region. Total direct foreign investment from 1991 through 1996 was $831 million. Germany was the largest investor.

The BSP promised to move forward on cash and mass privatization upon taking office in January 1995 but was slow to act. The first round of mass privatization finally began in January 1996, and auctions began toward the end of that year. The second and third rounds were conducted in spring 1997 under a new government. In July 1998, the UDF-led government and the IMF reached agreement on a 3-year loan worth about $800 million, which replaced the 14-month stand-by agreement that expired in June 1998. The loan will be used to develop financial markets, improve social safety net programs, strengthen the tax system, reform agricultural and energy sectors, and further liberalize trade.

Economy - overview: 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 stabilizing the economy. The triple digit inflation of 1996 and 1997 has given way to an official consumer price increase of 6.2% in 1999. Following declines in GDP in both 1996 and 1997, the economy grew an officially estimated 3.5% in 1998 and 2.5% in 1999. In September 1998, the IMF approved a three-year Extended Fund Facility, which provides credits worth approximately $900 million, designed to support Bulgaria's reform efforts. In 1999, an unfavorable international environment - primarily caused by the Kosovo conflict - and structural reforms slowed economic growth, but forecasters are predicting accelerated growth over the next several years. The government's structural reform program includes: (a) privatization and, where appropriate, liquidation of state-owned enterprises (SOEs); (b) liberalization of agricultural policies, including creating conditions for the development of a land market; (c) reform of the country's social insurance programs; and (d) reforms to strengthen contract enforcement and fight crime and corruption.

GDP: purchasing power parity - $34.9 billion (1999 est.)

GDP - real growth rate: 2.5% (1999 est.)

GDP - per capita: purchasing power parity - $4,300 (1999 est.)

GDP - composition by sector:
agriculture: 21%
industry: 29%
services: 50% (1999 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: 3.3%
highest 10%: 24.7% (1992)

Inflation rate (consumer prices): 6.2% (1999 est.)

Labor force: 3.82 million (1998 est.)

Labor force - by occupation: agriculture 26%, industry 31%, services 43% (1998 est.)

Unemployment rate: 15% (1999 est.)

Budget:
revenues: $4.69 billion
expenditures: $5.06 billion, including capital expenditures of $NA (1999 est.)

Industries: machine building and metal working, food processing, chemicals, construction materials, ferrous and nonferrous metals, nuclear fuel

Industrial production growth rate: -3% (1999 est.)

Electricity - production: 38.423 billion kWh (1998)

Electricity - production by source:
fossil fuel: 52.34%
hydro: 7.35%
nuclear: 40.31%
other: 0% (1998)

Electricity - consumption: 35.493 billion kWh (1998)

Electricity - exports: 2 billion kWh (1998)

Electricity - imports: 1.76 billion kWh (1998)

Agriculture - products: vegetables, fruits, tobacco, livestock, wine, wheat, barley, sunflowers, sugar beets

Exports: $3.8 billion (f.o.b., 1999 est.)

Exports - commodities: machinery and equipment; metals, minerals, and fuels; chemicals and plastics; food, tobacco, clothing (1998)

Exports - partners: Italy 13%, Germany 10%, Greece 9%, Turkey 8%, Russia (1998)

Imports: $5.3 billion (f.o.b., 1999 est.)

Imports - commodities: fuels, minerals, and raw materials; machinery and equipment; metals and ores; chemicals and plastics; food, textiles (1998)

Imports - partners: Russia 20%, Germany 14%, Italy 8%, Greece 6%, US 4% (1998)

Debt - external: $10 billion (1999 est.)

Economic aid - recipient: $NA

Currency: 1 lev (Lv) = 100 stotinki

Exchange rates: leva (Lv) per US$1 - 1.9295 (January 2000), 1.8364 (1999), 1,760.36 (1998), 1,681.88 (1997), 177.89 (1996), 67.17 (1995)
note: on 5 July 1999 the lev was re-denominated; the post-5 July 1999 lev is equal to 1,000 of the pre-5 July 1999 leva

Fiscal year: calendar year