Bulgaria - Future trends



Bulgaria's economic policy after 2000 will be determined by the success of its preparations for EU membership. The EU opinion on its progress is favorable, but negotiations will become more difficult as they move from administrative to economic issues, such as the restructuring of the energy sector and agriculture. Bulgaria's market economy and its competitiveness within the single European market still require significant further improvement. Public expenditure will focus on investment in roads, natural gas, electricity, agriculture, and the environment. The government claims investment of some $9 billion is enough to fuel growth over the next years, but, all too optimistically, it relies on the private sector to provide most of the funds.

With Bulgarian privatization completed by the end of 2001, the IMF envisages strong annual growth of 4 percent to 5 percent over the next several years and single-digit inflation. However, slow and allegedly corrupt privatization processes are a potential obstacle to economic transformation, and corruption charges combined with insufficient growth, unemployment, poverty, and deteriorating health care and education, could bring about a change of government in 2001. This outcome would not mean any long-term changes in policy.

The end of Slobodan Milosevic's government in Serbia could prove beneficial by decreasing the risk of war on Bulgaria's borders. The reopening of land routes and river traffic on the Danube will facilitate trade with the EU, Bulgaria's largest export market, whose growth will have a positive impact on the economy.

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