Bulgaria gets in shape for last mile of EU marathon

Date: 21/04/05

Giant advertisements for soft drinks have stood alongside communist-era statues in Sofia for more than a decade. To Western eyes, the mix looks incongruous but offers superficial proof that free-market capitalism has been embraced by Bulgaria.

The transition has been painful, particularly during the financial crisis of the 1990s. It has also been double-edged.

The European Commission's 2004 annual report on Bulgaria's EU membership bid stated that "governments since 1997 have pursued tight fiscal policies and market-based economic reforms and have mostly implemented announced policies, although sometimes delayed or weakened". But it alluded too to opinion poll findings that many in Bulgaria do not discern any improvement in their standard of living.

The main macroeconomic indicators suggest the country is doing well. In late March, the National Statistical Institute announced a growth rate of 5.6% for 2004, the highest since the collapse of communism. Industrial production and the services sector grew by 5% and agriculture by 2%.

Unemployment has fallen steadily in recent years - from 18% to 2000 to 12% at the end of last year. This means the rate of people out of work is lower than in current EU member states Poland and Slovakia.

On the negative side, foreign entrepreneurs wishing to invest in Bulgaria still complain about the level of bureaucracy they have to grapple with. The country also has a vast unregulated market - some estimates indicate its value could be equivalent to nearly 30% of gross domestic product.

Research conducted by the Bulgarian International Business Association (BIBA) concludes that unclear laws, smuggling and inefficient customs services combine to allow this 'grey economy' flourish.

A recent BIBA paper also laments the condition of Bulgarian education, reporting that young people often leave both school and university with poor writing and presentation skills and knowledge of computers. Derisory wages in the teaching profession are identified as a major problem.

Roma gypsies, who make up 8-12% of Bulgaria's eight million-strong population, face the highest levels of exclusion from the workforce. Unemployment among the Roma community has been higher than 40% in the past few years. The Roma lag behind the rest of the country in school attendance, with illiteracy in their ethnic group estimated at 14% in the 10-19 age bracket, according to the World Bank.

Krassen Stanchev from the Institute for Market Economy in Sofia says that Bulgaria is on course for adjusting to many of the demands of EU membership. It is complying, for example, with the Union's rules on budgetary discipline.

Yet he feels it has been sluggish in ensuring that businesses live up to European environmental standards. "We only started to invest in environmental technologies in 1998," he says. "Hungary and the Czech Republic started in 1994, Poland in 1993."

In his view, the private sector deserves more credit than the government of Simeon Saxe-Coburg for dwindling unemployment. Jobs created by private firms outnumber those created in the public sphere by four to one, he says.

But Juliana Nikolova from the European Institute Foundation contends that the government has been instrumental in shortening the dole queues, thanks in part to the implementation of an EU-funded programme for boosting employment.

She agrees that better education is vital and predicts this will be a major issue in the general election scheduled for June. But she does not have much confidence in politicians taking the steps necessary for excellence in the classroom. "Some of the parties talk about raising quality; others talk about access to education," she says. "But it is essential that we deal with both."

Article looks at the economic and political situation in Bulgaria less than two years before the country's planned accession to the European Union.

European Commission: DG Enlargement: Bulgaria http://ec.europa.eu/enlargement/archives/bulgaria/index_en.htm

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