2013 Index of Economic Freedom

Bulgaria

overall score65.0
world rank60
Rule of Law

Property Rights30.0

Freedom From Corruption33.0

Limited Government

Government Spending64.2

Fiscal Freedom94.0

Regulatory Efficiency

Business Freedom73.6

Labor Freedom74.8

Monetary Freedom78.6

Open Markets

Trade Freedom86.8

Investment Freedom55.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 7.4 million
  • GDP (PPP):
    • $101.0 billion
    • 1.7% growth
    • 1.7% 5-year compound annual growth
    • $13,597 per capita
  • Unemployment:
    • 9.6%
  • Inflation (CPI):
    • 3.4%
  • FDI Inflow:
    • $1.9 billion
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Bulgaria’s economic freedom score is 65, making its economy the 60th freest in the 2013 Index. Its overall score is up by 0.3 point, reflecting improvements in the management of public spending that counterbalance declines in freedom from corruption and labor freedom. Bulgaria is ranked 29th out of 43 countries in the Europe region, and its overall score is above the world average but below the regional average.

Despite a challenging global economic environment that has slowed economic growth in recent years, Bulgaria has maintained strong momentum in liberalizing economic activity while taking steps to restore fiscal discipline. Public debt and budget deficits remain among the lowest in the region, and the flat personal and corporate tax rates are highly competitive. Open-market policies encourage flows of trade and investment. Efforts are underway to revitalize the stalled privatization process.

Continued reform efforts are needed to solidify the foundations of economic freedom and ensure vibrant economic development in the future. The judicial system remains inefficient and vulnerable to political interference, and corruption, perceived as widespread, remains a cause for concern.

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Background

Bulgaria joined the European Union in January 2007 but is not a part of the visa-free Schengen zone of 26 European countries. Former Sofia mayor Boyko Borisov became prime minister after his center-right Citizens for European Development of Bulgaria party won the July 2009 parliamentary elections. He also relies on the parliamentary support of a right-wing nationalist group, Ataka, to govern. Tourism, agriculture, and the mining of coal, copper, and zinc are the leading industries. Bulgaria is involved in two rival gas-pipeline projects: Russia’s South Stream pipeline and the European Union–backed Nabucco pipeline. Bulgaria’s economy has stagnated in recent years, largely as a result of the EU economic crisis. The prospects for adoption of the euro in the near future have declined. Corruption remains pervasive.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 33.0 Create a Graph using this measurement

Respect for constitutional provisions securing property rights and providing for an independent judiciary is somewhat lax. The judicial system does not enforce property rights effectively, and inconsistent application of laws discourages private investment. A government anti-corruption agency (BORCOR) set up in 2011 is not operational. Government corruption and organized crime are threats to border security.

Limited GovernmentView Methodology

The income and corporate tax rates are a flat 10 percent. Other taxes include a value-added tax (VAT) and an estate tax. The overall tax burden is equivalent to about 20 percent of total domestic income. Government spending amounts to 34.6 percent of total domestic output, but deficits have narrowed to 2.1 percent of GDP. Public debt remains quite low at 17 percent of GDP.

Regulatory EfficiencyView Methodology

The overall regulatory framework supports entrepreneurial activity. Launching a business has become less time-consuming, and licensing requirements have been eased. The minimum capital requirement has been eliminated. Labor regulations are relatively flexible, although the non-salary cost of employees can be burdensome. Most prices are determined by market forces, and inflation has diminished as economic growth has slowed.

Open MarketsView Methodology

The trade-weighted average tariff is 1.6 percent, as in other members of the European Union, and few non-tariff barriers interfere with trade. Foreign and domestic investors are treated equally, but arbitrary bureaucracy is an impediment to more dynamic investment flows. The financial sector remains stable and well capitalized. Privatization of state-owned banks has been completed, and credit is generally allocated on market terms.

Country's Score Over Time

Bar Graph of Bulgaria Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Bulgaria to other economic country groups

Regional Ranking

rank country overall change
1Switzerland81-0.1
2Denmark76.1-0.1
3Ireland75.7-1.2
4Estonia75.32.1
5United Kingdom74.80.7
6Luxembourg74.2-0.3
7Finland741.7
8The Netherlands73.50.2
9Sweden72.91.2
10Germany72.81.8
11Georgia72.22.8
12Lithuania72.10.6
13Iceland72.11.2
14Austria71.81.5
15Czech Republic70.91.0
16Norway70.51.7
17Armenia69.40.6
18Belgium69.20.2
19Cyprus69-2.8
20Slovakia68.71.7
21Macedonia68.2-0.3
22Spain68-1.1
23Malta67.50.5
24Hungary 67.30.2
25Latvia66.51.3
26Poland661.8
27Albania65.20.1
28Romania65.10.7
29Bulgaria650.3
30France64.10.9
31Portugal63.10.1
32Turkey62.90.4
33Montenegro62.60.1
34Slovenia61.7-1.2
35Croatia61.30.4
36Italy60.61.8
37Serbia 58.60.6
38Bosnia and Herzegovina57.30.0
39Moldova55.51.1
40Greece55.40.0
41Russia51.10.6
42Belarus48-1.0
43Ukraine46.30.2
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