March 22, 2019
The Bulgarian economy continues to grow strongly, supported by buoyant domestic demand.
", "publishDate": "2019-03-22", "sections": [ { "heading": "Summary of economic performance and outlook", "content": "- Date: March 22, 2019.\n- The Bulgarian economy \"continues to grow strongly, supported by buoyant domestic demand.\"\n- Growth exceeded 3 percent in 2018 and is projected to maintain its momentum in 2019.\n- Capacity constraints are becoming more binding; inflationary pressure has eased after peaking in August last year, reflecting developments in commodity and tourism-related prices.\n- The unemployment rate has reached a historical low and wages are rising rapidly amid increasing skill shortages.\n- The current account surplus remained sizable in 2018 but is projected to decline.\n- Risks are tilted to the downside, especially from weaker-than-expected growth of trading partners.\n- The fiscal balance recorded a small surplus of 0.1 percent of GDP in 2018, exceeding the budgeted deficit of 1 percent of GDP, owing to strong revenue performance and capital underspending.\n- Credit growth has picked up across the board.\n- The banking sector is profitable and asset quality continues to improve; non-performing loans have fallen below 9 percent of total loans in 2018Q3.\n- The central bank has made steady progress in strengthening banking sector supervision." }, { "heading": "Executive Board assessment and policy recommendations", "content": "- Directors welcomed robust economic growth, historically low unemployment, and improved financial sector conditions.\n- Downside risks have recently risen, emanating mostly from weakening trading‑partner growth and global trade.\n- With sound macroeconomic policies in Bulgaria, Directors emphasized the need to implement broad‑based structural reforms to:\n - boost potential growth,\n - accelerate EU income convergence,\n - address unfavorable demographic dynamics.\n- Priorities highlighted by Directors:\n - Improve the efficiency of public spending and the quality of public institutions.\n - Strengthen the governance framework to bolster prospects.\n - Continue to improve revenue and spending efficiency.\n - Strengthen public investment management to improve investment efficiency and public institutions.\n - Maintain reform momentum through effective implementation, including recent progress on judiciary reforms and the fight against corruption.\n - Strengthen the anti‑money laundering (AML) framework and governance of state‑owned enterprises (SOEs).\n - Improve education and healthcare and address labor market bottlenecks to enhance human capital and mitigate labor shortages and skill mismatches.\n - Promote deeper collaboration between educational institutions and business to alleviate labor-market challenges.\n - For the financial sector: ensure banks with high NPLs maintain sufficient capital buffers; continue strengthening financial supervision, including operationalizing the new governance framework, strengthening legislation for related‑party lending, and formalizing the supervisory review and evaluation process." }, { "heading": "ERM II and banking union accession commitments", "content": "- Bulgaria and ERM II parties agreed that Bulgaria will join ERM II and the banking union simultaneously upon completing several commitments, including:\n - strengthening financial sector supervision,\n - improving SOE governance,\n - strengthening the anti‑money laundering (AML) framework.\n- Directors noted that preparations for ERM II and the banking union would help support reforms and enhance institutional quality." }, { "heading": "Selected economic indicators, 2015–19 (highlights)", "content": "- Real GDP: 2015: 3.5; 2016: 3.9; 2017: 3.8; 2018: 3.2; 2019 Proj.: 3.3.\n- Real domestic demand (selected years shown in source table): 2015: 1.7; 2016: 4.9; 2017: 6.3.\n- Public consumption: 2015: 1.4; 2016: 2.2; 2017: 3.7; 2018: 4.2.\n- Private consumption: 2015: 4.5; 2016: 7.0; 2017: 5.0.\n- Gross capital formation (selected): 2015: 1.5; 2016: -4.3; 2017: 7.3; 2018: 5.7; 2019 Proj.: 5.2.\n- Private investment (selected): 2015: -3.4; 2016: -1.5; 2017: 6.4; 2018: 2.4; 2019 Proj.: 4.0.\n- Public investment (selected): 2015: 20.3; 2016: -18.6; 2017: -5.9; 2018: 13.5; 2019 Proj.: 10.1.\n- Net exports (contribution to GDP growth) and stock building: Stock building 2/: 2015: -0.2; 2016: 0.5; 2017: 0.8; 2018: 0.2; 2019 Proj.: 0.0. Net exports 2/: 2015: 0.1; 2016: -1.1; 2017: -3.2; 2018: -1.8.\n- Exports of goods and services 3/: 2015: 8.1; 2016: 5.8; 2017: 2.7.\n- Imports of goods and services (selected): 2015: 5.4; 2016: 7.5; 2017: 5.3.\n- Potential GDP: 3.0 (as shown in source table).\n- Output gap (percent of potential GDP): 2015: -1.2; 2016: -0.4.\n- Unemployment rate (percent of labor force): 2015: 9.2; 2016: 7.7; 2017: 6.2; 2018: 4.7.\n- Price indicators:\n - GDP deflator: 2015: 3.4; 2016: 3.1; 2017: 2.9.\n - Consumer price index (HICP, average): 2015: -1.3; 2016: 1.2; 2017: 2.6.\n - Consumer price index (HICP, end of period): 2015: -0.9; 2016: -0.5; 2017: 1.8; 2018: 2.3.\n- Fiscal indicators (percent of GDP):\n - General government net lending/borrowing (cash basis): 2015: -2.8; 2016: 1.6; 2017: -0.6.\n - General government primary balance (selected): 2015: -2.0; 2016: -0.1.\n - Structural overall balance (selected): 2015: -2.4; 2016: -0.7.\n - Structural primary balance (selected): 2015: -1.6; 2016: 2.5; 2017: 0.7.\n - General government gross debt: 2015: 25.6; 2016: 27.4; 2017: 23.3; 2018: 20.5; 2019 Proj.: 19.3.\n- Monetary aggregates:\n - Broad money: 2015: 8.8; 2016: 7.6; 2017: 8.0.\n - Domestic private credit: 2015: 8.9; 2016: 7.1.\n- Exchange rates regime:\n - Leva per U.S. dollar (end of period): 2015: 1.9.\n- External sector (percent of GDP):\n - Current account balance: 2015: 6.5; 2016: 4.6.\n - o/w: Merchandise trade balance (selected): 2015: -5.8; 2016: -4.1; 2017: -4.9.\n- Note from source: \"Exports suffered from maintenance work in the main refinery in 2018 and are expected to recover in 2019.\"\n- Data as of February 28, 2019.\n\nIMF Executive Board Concludes the 2019 Article IV Consultation with Bulgaria, March 22, 2019.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Bulgaria and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2019/03/22/pr1987-bulgaria-imf-executive-board-concludes-the-2019-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2019/03/22/pr1987-bulgaria-imf-executive-board-concludes-the-2019-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2019/03/22/pr1987-bulgaria-imf-executive-board-concludes-the-2019-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2019/03/22/pr1987-bulgaria-imf-executive-board-concludes-the-2019-article-iv-consultation/bundle-manifest.json)", "Published: March 22, 2019", "Date: March 22, 2019.", "The Bulgarian economy \"continues to grow strongly, supported by buoyant domestic demand.\"", "Growth exceeded 3 percent in 2018 and is projected to maintain its momentum in 2019.", "Capacity constraints are becoming more binding; inflationary pressure has eased after peaking in August last year, reflecting developments in commodity and tourism-related prices.", "The unemployment rate has reached a historical low and wages are rising rapidly amid increasing skill shortages.", "The current account surplus remained sizable in 2018 but is projected to decline.", "Risks are tilted to the downside, especially from weaker-than-expected growth of trading partners.", "The fiscal balance recorded a small surplus of 0.1 percent of GDP in 2018, exceeding the budgeted deficit of 1 percent of GDP, owing to strong revenue performance and capital underspending.", "Credit growth has picked up across the board.", "The banking sector is profitable and asset quality continues to improve; non-performing loans have fallen below 9 percent of total loans in 2018Q3.", "The central bank has made steady progress in strengthening banking sector supervision.", "Directors welcomed robust economic growth, historically low unemployment, and improved financial sector conditions.", "Downside risks have recently risen, emanating mostly from weakening trading‑partner growth and global trade.", "With sound macroeconomic policies in Bulgaria, Directors emphasized the need to implement broad‑based structural reforms to:", "Priorities highlighted by Directors:", "Bulgaria and ERM II parties agreed that Bulgaria will join ERM II and the banking union simultaneously upon completing several commitments, including:", "Directors noted that preparations for ERM II and the banking union would help support reforms and enhance institutional quality.", "Real GDP: 2015: 3.5; 2016: 3.9; 2017: 3.8; 2018: 3.2; 2019 Proj.: 3.3.", "Real domestic demand (selected years shown in source table): 2015: 1.7; 2016: 4.9; 2017: 6.3.", "Public consumption: 2015: 1.4; 2016: 2.2; 2017: 3.7; 2018: 4.2.", "Private consumption: 2015: 4.5; 2016: 7.0; 2017: 5.0.", "Gross capital formation (selected): 2015: 1.5; 2016: -4.3; 2017: 7.3; 2018: 5.7; 2019 Proj.: 5.2.", "Private investment (selected): 2015: -3.4; 2016: -1.5; 2017: 6.4; 2018: 2.4; 2019 Proj.: 4.0.", "Public investment (selected): 2015: 20.3; 2016: -18.6; 2017: -5.9; 2018: 13.5; 2019 Proj.: 10.1.", "Net exports (contribution to GDP growth) and stock building: Stock building 2/: 2015: -0.2; 2016: 0.5; 2017: 0.8; 2018: 0.2; 2019 Proj.: 0.0. Net exports 2/: 2015: 0.1; 2016: -1.1; 2017: -3.2; 2018: -1.8.", "Exports of goods and services 3/: 2015: 8.1; 2016: 5.8; 2017: 2.7.", "Imports of goods and services (selected): 2015: 5.4; 2016: 7.5; 2017: 5.3.", "Potential GDP: 3.0 (as shown in source table).", "Output gap (percent of potential GDP): 2015: -1.2; 2016: -0.4.", "Unemployment rate (percent of labor force): 2015: 9.2; 2016: 7.7; 2017: 6.2; 2018: 4.7.", "Price indicators:", "Fiscal indicators (percent of GDP):", "Monetary aggregates:", "Exchange rates regime:", "External sector (percent of GDP):", "Note from source: \"Exports suffered from maintenance work in the main refinery in 2018 and are expected to recover in 2019.\"", "Data as of February 28, 2019.", "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)", "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)", "[Bulgaria and the IMF](http://www.imf.org/external/country/BGR/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2019/03/22/pr1987-bulgaria-imf-executive-board-concludes-the-2019-article-iv-consultation/index.md", "json": "/en/news/articles/2019/03/22/pr1987-bulgaria-imf-executive-board-concludes-the-2019-article-iv-consultation/index.json", "bundleManifest": "/en/news/articles/2019/03/22/pr1987-bulgaria-imf-executive-board-concludes-the-2019-article-iv-consultation/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T22:36:40.445Z" }