OVERVIEW of Small and Medium-Sized Enterprises in Bulgaria

Latest development:

• Bulgaria’s economic policy is underpinned by the goals of maintaining macroeconomic and financial stability.
• For the past several years Bulgaria’s GDP growth rates have remained above the EU average. According to the preliminary data, released by the National Statistical Institute, in 2018 Bulgaria’s GDP grew 3.1% on a yearly basis.
• Gross capital formation amounted BGN 22.4 billion in 2018.
• Inflation as measured by the consumer prices index increased up to 2.7% in 2018.
• The unemployment rate fell at 6.1%.
• Between January and December 2018 exports totalled EUR 27.4 billion (up 1.2% y-o-y) and imports increased by 6.3% amounting to EUR 29.7 billion.
• As a result of the global financial crisis and lowered external demand the Bulgarian industry slowed down its growth, which was observed in recent years, especially before 2008. From the beginning of 2010 a trend for increase of industrial production and industrial turnover indexes has been observed. In January 2019 the industrial production was 105.3% at 2015 basis and the turnover in industry was 111.7%.
• In the end of 2017 the current account balance was EUR 3 367.9 million and in the end of 2018 amounted to EUR 2 539.0 million.
• The budget balance under the consolidated fiscal program in 2018 was positive, amounting to BGN 137.0 million. It was formed by a surplus on the national budget amounting to BGN 251.7 million and a surplus on European funds, amounting to BGN 114.7 million.
• Bulgaria’s budget deficit and public debt remain among the lowest in Europe. In the third semester of 2018 Bulgaria’s budget deficit was 1.3% of GDP and the state (Maastricht) debt to GDP ratio was 22.8%.

Credit rating:

Standard & Poor’s: On November 30, 2018, Bulgaria’s credit rating was confirmed as positive. The long-term and short-term credit ratings of the country in foreign and local currency are confirmed at “BBB-” and “A-3” respectively. The positive outlook signals a successful improvement in financial conditions as well as a strengthening of the country’s fiscal and external buffers.

Moody’s: Moody’s changed its credit rating on Baa2 (a positive outlook) on long-term government securities in foreign and local currency on July 22, 2011. Since then, the rating has been reconfirmed 2 times: June 2015 and May 2017.

Fitch Ratings: On November 16, 2018, Bulgaria’s long-term credit rating “BBB” in foreign and local currency was confirmed with a stable outlook. The short-term rating in foreign and local currencies is also retained as “F2”. Rating ratings are supported by a stable fiscal position.

The fastest growing sectors of the Bulgarian economy

• We put a special focus on developing capital-intensive and innovation-driven industries with high value-added which contribute to an enhanced competitiveness of the Bulgarian economy, such as information technologies and outsourcing, automotive industry, electronics, machinery, chemical and pharmaceutical industry.
• ICT and BPO are among the fastest growing sectors and major drivers for job creation. Bulgaria has strong traditions in the export-oriented ICT sector. It employs over 17 500 specialists with 4 300 ICT graduates every year.
• Another sector with strong growth is the automotive industry. In the last 10 years the sector has attracted investments totaling over USD 600 mln, accommodating leading global producers of auto components. The automotive parts and components are exported and used by many international companies for their well-known car models. Thus, in eight out of ten cars made in Europe, there are parts that were produced in Bulgaria.
• Bulgaria offers excellent opportunities for doing business in more traditional sectors like agriculture and food-processing. We have longstanding experience in this field.

The objectives of the Bulgarian government’s economic policy are directed at:

• To maintain economic and financial stability and taking active steps to achieve high economic growth. Implementation of policies aimed at achieving the objectives of the “Europe 2020” strategy for sustainable growth driven by knowledge and innovation;
• Change the structure of the economy by stimulating creation and development of sustainable enterprises in high-tech industries and knowledge intensive services and investment promotion;
• Creation a competitive, resource-efficient low-carbon industry by introducing new technologies, innovation and incentives for innovative companies;
• Ensuring the implementation of economic and fiscal incentives for investment in production capacities and to reduce imbalances in regional economic development;
• Improving the business environment by reducing the administrative burden and the number of regulations, as well as reduction of the financial burden on businesses. Legislation changes with particular attention to SMEs;
• Improving the work of the institutions and services to citizens and businesses, ensuring transparency of public activities and prevention of corruption by accelerated introduction of e-governance;
• Positioning of Bulgaria as a preferred destination for investors in sectors with high added value;
• Exports promotion as an engine of economic growth and support for export-oriented enterprises, by intensifying trade and economic relations especially with emerging economies, export financing and guarantees;
• Effective management of EU funds, raise of utilized funds by simplifying procedures, improving transparency and control. Improving access to finance for small and medium sized companies;
• Ensuring application of anti-monopoly and anti-trust legislation as a measure to stimulate competition. Ensuring equal access to public procurement.