## Poverty and Social Protection in Bulgaria

_IMF Working Papers, July 31, 2020_

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## Bibliographic details
- Authors: Jean-Jacques Hallaert
- Published: July 31, 2020
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513550190.001

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### Key findings
- Absolute poverty has dropped markedly in Bulgaria.
- Income inequality has increased substantially in the aftermath of the GFC.
- The increase in inequality is due to a rise in market income inequality compounded by a reduction in fiscal redistribution.
- The redistributive role of direct taxation has declined with the introduction of a flat tax.
- Social spending is relatively low and decreasing (as a share of GDP).
- Social spending is concentrated on a few social risks and experienced a decline in its redistributive efficiency.
- The COVID-19 crisis is likely to deepen income inequality, increasing the room for redistributive policies.

### Drivers of inequality identified
- Rise in market income inequality.
- Reduction in fiscal redistribution.
- Policy change: introduction of a flat tax reducing the redistributive role of direct taxation.
- Low and shrinking social spending, both in scale and redistributive impact.

### Implications and policy considerations
- The observed decline in fiscal redistribution and social spending suggests scope to enhance redistributive policies to mitigate rising inequality.
- The COVID-19 crisis increases the urgency and room for redistributive policy responses to prevent further widening of income inequality.

*Poverty and Social Protection in Bulgaria — Jean-Jacques Hallaert (IMF Working Paper No. 2020/147).*

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_Source: https://www.imf.org/en/publications/wp/issues/2020/07/31/poverty-and-social-protection-in-bulgaria-49552_