2017 Index of Economic Freedom

Bulgaria

overall score67.9
world rank47
Rule of Law

Property Rights62.5

Government Integrity41.8

Judicial Effectiveness38.9

Government Size

Government Spending58.4

Tax Burden91.0

Fiscal Health86.4

Regulatory Efficiency

Business Freedom66.7

Labor Freedom68.3

Monetary Freedom83.3

Open Markets

Trade Freedom87.0

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 7.2 million
  • GDP (PPP):
    • $136.9 billion
    • 3.0% growth
    • 1.5% 5-year compound annual growth
    • $19,097 per capita
  • Unemployment:
    • 9.8%
  • Inflation (CPI):
    • -1.1%
  • FDI Inflow:
    • $1.8 billion
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Bulgaria’s transition to a more open and flexible economic system has been facilitated by substantial restructuring. Competitive flat tax rates and an open trade regime, supported by a relatively efficient regulatory framework, have encouraged development of a growing private sector. The financial sector demonstrated a relatively high level of resilience during the 2014 liquidity crisis.

The management of public finance has been relatively sound. The level of public debt continues to be among the lowest in the region, with budget deficits declining. However, deeper and more committed institutional reforms are needed in areas like judicial effectiveness and government integrity to help ensure long-term economic development.

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Background

From May 2013 to October 2014, Bulgaria held a European Parliament election and two national parliamentary elections. A year after the 2013 parliamentary election and amid protests against low living standards, high energy costs, and corruption, President Rosen Plevneliev dissolved the parliament because of banking instability. Boyko Borissov of the center-right GERB party formed a minority coalition government with the center-right Reformist bloc and became prime minister for the second time. Recovery from the eurozone crisis has been slow but steady. Tourism, information technology and telecommunications, agriculture, pharmaceuticals, and textiles are leading industries. Migrant flows are an issue, and Bulgaria has taken steps to secure its border with Turkey.

Rule of LawView Methodology

Property Rights 62.5 Create a Graph using this measurement

Government Integrity 41.8 Create a Graph using this measurement

Judicial Effectiveness 38.9 Create a Graph using this measurement

Property rights are not well protected. The judiciary has benefited from legal and institutional reforms associated with accession to the European Union, but practical gains in efficiency and accountability have been lacking. Public trust in the judicial system remains extremely low. The government has struggled to combat corruption within the business community, in the judiciary, and in its own ranks.

Government SizeView Methodology

The individual income and corporate tax rates are a flat 10 percent. Other taxes include a value-added tax and an estate tax. The overall tax burden equals 26.5 percent of total domestic income. Government spending has amounted to 37.2 percent of total output (GDP) over the past three years, and budget deficits have averaged 2.8 percent of GDP. Public debt is equivalent to 26.9 percent of GDP.

Regulatory EfficiencyView Methodology

Launching a business has become less time-consuming, and licensing requirements have been eased, though the pace of change has lagged behind that of some other countries. Relatively flexible labor regulations enhance employment growth, but there is room for further reform. Government subsidies to the largely state-owned energy sector are being reduced gradually, and other state-owned enterprises (such as airports) are being privatized.

Open MarketsView Methodology

Trade is extremely important to Bulgaria’s economy; the value of exports and imports taken together equals 131 percent of GDP. The average applied tariff rate is 1.5 percent. Officially, foreign and domestic investors are treated equally under the law. The banking sector has regained stability since the 2014 liquidity crisis, although the level of nonperforming loans remains high. Foreign banks account for more than 70 percent of total assets.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.50.5
2Estonia79.11.9
3Ireland76.7-0.6
4United Kingdom76.40.0
5Georgia763.4
6Luxembourg75.92.0
7The Netherlands75.81.2
8Lithuania75.80.6
9Denmark75.1-0.2
10Sweden74.92.9
11Latvia74.84.4
12Iceland74.41.1
13Finland741.4
14Norway743.2
15Germany73.8-0.6
16Czech Republic73.30.1
17Austria72.30.6
18Macedonia70.73.2
19Armenia70.33.3
20Romania69.74.1
21Poland68.3-1.0
22Kosovo67.96.5
23Bulgaria67.92.0
24Cyprus67.9-0.8
25Belgium67.8-0.6
26Malta67.71.0
27Hungary 65.8-0.2
28Slovakia65.7-0.9
29Turkey65.23.1
30Albania64.4-1.5
31Spain63.6-4.9
32France63.31.0
33Portugal62.6-2.5
34Italy62.51.3
35Montenegro62-2.9
36Bosnia and Herzegovina60.21.6
37Croatia59.40.3
38Slovenia59.2-1.4
39Serbia 58.9-3.2
40Belarus58.69.8
41Moldova580.6
42Russia57.16.5
43Greece551.8
44Ukraine48.11.3
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