2019 Index of Economic Freedom

Bulgaria

overall score69.0
world rank37
Rule of Law

Property Rights62.5

Government Integrity35.1

Judicial Effectiveness41.9

Government Size

Government Spending63.9

Tax Burden90.2

Fiscal Health98.8

Regulatory Efficiency

Business Freedom62.7

Labor Freedom68.4

Monetary Freedom88.0

Open Markets

Trade Freedom86.0

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 7.1 million
  • GDP (PPP):
    • $153.1 billion
    • 3.6% growth
    • 2.7% 5-year compound annual growth
    • $21,687 per capita
  • Unemployment:
    • 6.2%
  • Inflation (CPI):
    • 1.2%
  • FDI Inflow:
    • $1.1 billion

Bulgaria’s economic freedom score is 69.0, making its economy the 37th freest in the 2019 Index. Its overall score has increased by 0.7 point, with improvements in monetary freedom and fiscal health exceeding declines in scores for government integrity and business freedom. Bulgaria is ranked 19th among 44 countries in the Europe region, and its overall score is above the regional and world averages.

The institutional and structural reform process, although somewhat hindered by political conflicts, is gradually being implemented to complete the transition from a centralized, planned economy to a more liberal, market-driven one. Reforms include privatization of state-owned enterprises, adoption of a favorable investment regime, liberalization of trade, and strengthening of the tax system. Public debt has been well managed. However, 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. Boyko Borissov of the center-right GERB party was elected prime minister for the third time in 2017. His coalition was supported by three nationalist parties in the United Patriots coalition. Rumen Radev, a pro-Russian, independent candidate and former air force commander, won the largely ceremonial presidency in 2016. Tourism, information technology and telecommunications, agriculture, pharmaceuticals, and textiles are leading industries. Bulgaria has been trying—so far unsuccessfully—to join the eurozone and Schengen Area. Heavily dependent on Russian gas, Bulgaria is seeking a link to the Turkish Stream pipeline, which is currently under construction.

Rule of LawView Methodology

Property Rights 62.5 Create a Graph using this measurement

Government Integrity 35.1 Create a Graph using this measurement

Judicial Effectiveness 41.9 Create a Graph using this measurement

Property rights are not well protected. The judiciary in Bulgaria’s “flawed democracy” has benefited from legal and institutional reforms associated with EU accession, but practical gains in efficiency and accountability have been lacking. The court system remains the least trusted government institution. The government has struggled to combat corruption, which is fueled by human and narcotics trafficking and contraband smuggling.

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 28 percent of total domestic income. Over the past three years, government spending has amounted to 34.7 percent of the country’s output (GDP), and budget deficits have averaged 0.1 percent of GDP. Public debt is equivalent to 23.9 percent of GDP.

Regulatory EfficiencyView Methodology

Launching a business has become less time-consuming, and licensing requirements have been eased, although 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. State-owned enterprises, such as airports, are being privatized, and government subsidies to the largely state-owned, loss-making energy sector are gradually being reduced.

Open MarketsView Methodology

The combined value of exports and imports is equal to 131.1 percent of GDP. The average applied tariff rate is 2.0 percent. As of June 30, 2018, according to the WTO, Bulgaria had 116 nontariff measures in force. Generally, foreign and domestic investors are treated equally under the law. About 75 percent of adult Bulgarians have an account with a formal banking institution. The level of nonperforming loans remains relatively high.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.90.2
2Ireland80.50.1
3United Kingdom78.90.9
4Iceland77.10.1
5Netherlands76.80.6
6Denmark76.70.1
7Estonia76.6-2.2
8Georgia75.9-0.3
9Luxembourg75.9-0.5
10Sweden75.2-1.1
11Finland74.90.8
12Lithuania74.2-1.1
13Czech Republic73.7-0.5
14Germany73.5-0.7
15Norway73-1.3
16Austria720.2
17Macedonia71.1-0.2
18Latvia70.4-3.2
19Bulgaria690.7
20Malta68.60.1
21Romania68.6-0.8
22Cyprus68.10.3
23Poland67.8-0.7
24Armenia67.7-1.0
25Belgium67.3-0.2
26Kosovo670.4
27Albania66.52.0
28Spain65.70.6
29Slovenia65.50.7
30Portugal65.31.9
31Hungary 65-1.7
32Slovakia65-0.3
33Turkey64.6-0.8
34Serbia 63.91.4
35France63.8-0.1
36Italy62.2-0.3
37Bosnia and Herzegovina61.90.5
38Croatia61.40.4
39Montenegro60.5-3.8
40Moldova59.10.7
41Russia58.90.7
42Belarus57.9-0.2
43Greece57.70.4
44Ukraine52.30.4
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