2018 Index of Economic Freedom

Bulgaria

overall score68.3
world rank47
Rule of Law

Property Rights63.6

Government Integrity38.2

Judicial Effectiveness42.5

Government Size

Government Spending60.5

Tax Burden90.9

Fiscal Health94.3

Regulatory Efficiency

Business Freedom64.3

Labor Freedom66.1

Monetary Freedom82.8

Open Markets

Trade Freedom86.9

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 7.1 million
  • GDP (PPP):
    • $144.6 billion
    • 3.0% growth
    • 1.9% 5-year compound annual growth
    • $20,327 per capita
  • Unemployment:
    • 8.0%
  • Inflation (CPI):
    • -1.3%
  • FDI Inflow:
    • $776.2 million
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Bulgaria’s economic freedom score is 68.3, making its economy the 47th freest in the 2018 Index. Its overall score has increased by 0.4 point, with improvements in fiscal health and judicial effectiveness outweighing declines in government integrity, business freedom, and labor freedom. Bulgaria is ranked 23rd among 44 countries in the Europe region, and its overall score is just below the regional average but well above the world average.

To achieve the transition from a centralized, planned economy to a more liberal, market-driven one, the government has undertaken significant reforms that include privatization of state-owned enterprises, liberalization of trade, and strengthening of the tax system. Public debt has been well managed. Despite a favorable investment regime, however, including low, flat corporate income taxes, significant challenges remain. Corruption in public administration, a weak judiciary, low productivity, and organized crime continue to hamper Bulgaria’s investment climate and economic prospects.

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Background

Communist domination of the former People’s Republic of Bulgaria ended in 1990. The country joined NATO in 2004 and the European Union in 2007. Following snap elections in 2017, Boyko Borissov of the center-right GERB party became prime minister for the third time. His coalition was formed with support from United Patriots, a coalition of three nationalist parties. Rumen Radev, a pro-Russian, independent candidate and former air force commander, won the largely ceremonial presidency in 2016. Recovery from the eurozone crisis has been slow but steady. Tourism, information technology and telecommunications, agriculture, pharmaceuticals, and textiles are leading industries. A main entry point at the height of the migrant crisis, Bulgaria has moved to secure its border with Turkey.

Rule of LawView Methodology

Property Rights 63.6 Create a Graph using this measurement

Government Integrity 38.2 Create a Graph using this measurement

Judicial Effectiveness 42.5 Create a Graph using this measurement

Although Bulgaria has adequate means of enforcing property and contractual rights under local legislation, property rights are not well protected in practice. The constitution and law provide for an independent judiciary, but corruption, inefficiency, and a lack of accountability remain pervasive. Public trust in the judicial system continues to be extremely low. The government has struggled to combat corruption.

Government SizeView Methodology

The individual income and corporate tax rates are a flat 10 percent. Other taxes include value-added and estate taxes. The overall tax burden equals 26.7 percent of total domestic income. Over the past three years, government spending has amounted to 36.3 percent of total output (GDP), and budget deficits have averaged 1.6 percent of GDP. Public debt is equivalent to 27.8 percent of GDP.

Regulatory EfficiencyView Methodology

Business owners are concerned about endemic corruption, especially in the energy sector and large infrastructure projects. Unpredictability caused by frequent regulatory and legislative changes has hindered business growth. Unemployment continues to decline. The government has provided new subsidies to organic farmers and food producers, but subsidies to the largely state-owned, loss-making energy sector are being reduced gradually.

Open MarketsView Methodology

Trade is extremely important to Bulgaria’s economy; the combined value of exports and imports equals 124 percent of GDP. The average applied tariff rate is 1.6 percent. Nontariff barriers impede some trade. Government openness to foreign investment is above average. The financial sector as a whole has coped well with the challenging external environment. The top five banks account for about half of total banking assets.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.70.2
2Ireland80.43.7
3Estonia78.8-0.3
4United Kingdom781.6
5Iceland772.6
6Denmark76.61.5
7Luxembourg76.40.5
8Sweden76.31.4
9Georgia76.20.2
10Netherlands76.20.4
11Lithuania75.3-0.5
12Norway74.30.3
13Czech Republic74.20.9
14Germany74.20.4
15Finland74.10.1
16Latvia73.6-1.2
17Austria71.8-0.5
18Macedonia71.30.6
19Romania69.4-0.3
20Armenia68.7-1.6
21Poland68.50.2
22Malta68.50.8
23Bulgaria68.30.4
24Cyprus67.8-0.1
25Belgium67.5-0.3
26Hungary 66.70.9
27Kosovo66.6-1.3
28Turkey65.40.2
29Slovakia65.3-0.4
30Spain65.11.5
31Slovenia64.85.6
32Albania64.50.1
33Montenegro64.32.3
34France63.90.6
35Portugal63.40.8
36Italy62.50.0
37Serbia 62.53.6
38Bosnia and Herzegovina61.41.2
39Croatia611.6
40Moldova58.40.4
41Russia58.21.1
42Belarus58.1-0.5
43Greece57.32.3
44Ukraine51.93.8
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