13.05.2015

Today the European Commission (the Commission) published a proposal for a Council Recommendation on the updated 2015 National Reform Programme and a Council Opinion on the Convergence Programme (2015-2018) of the Republic of Bulgaria.

The Commission assesses positively the efforts made by Bulgaria to address the Council recommendations from 8 July 2014 in the areas of business environment, pension reform, administrative reform, fight against corruption, energy, education and healthcare, but the progress is still insufficient and the country should continue implementing its commitments to address the challenges in these areas. According to the Commission the macroeconomic scenario underpinning these budgetary projections is plausible. In the area of fiscal policy the government should proceed with its efforts towards maintaining a sustainable fiscal framework and carrying out gradual fiscal consolidation in accordance with the requirements of the preventive arm of the Stability and Growth Pact.

In the framework of the 2015 European Semester the focus for Bulgaria is placed on few but pressing problems which should be tackled and addressed with timely actions. The five recommendations are mainly targeted at overcoming the excessive macroeconomic imbalances identified in February. The Bulgarian government needs to take decisive measures to tackle the problems in the banking sector which, according to the Commission, revealed supervisory weaknesses and may influence significantly the macroeconomic stability. The Commission identified another four areas requiring further efforts by the government - non-banking financial sector, fiscal policy, active labour market policies and regulatory framework for handling insolvencies and for deleveraging. The Commission places a focus on improving tax revenue collection and combatting the shadow economy. In response to the latter, the government is already working on the preparation of a unified strategy to address the recommendation. In its assessment the Commission identifies the improvement of the cost-effectiveness in the healthcare system as an important precondition in support of fiscal stability, which requires continuation of the reforms already taken by the government.

The approved update of the 2015 National Reform Programme and the Convergence Programme (2015 - 2018) outline the measures and commitments aimed at reducing by the end of this year the influence of the imbalances identified by the Commission. In turn, the Commission reserves the right to use a complex approach to follow-up the implementation of the commitments taken by our country.

The recommendations are issued in the framework of the mechanism for strengthened coordination among the economic policies in the EU or the so called "European Semester". They build on the Commission's assessment of the National Reform Programmes in fulfilment of the "Europe 2020" Strategy as well as of the Stability Programmes and the Convergence Programmes in implementation of the strengthened Stability and Growth Pact and the macroeconomic imbalances procedure. The recommendations are to be discussed in the framework of a peer review in the working committees to the Council, to be approved by ECOFIN on 19 June 2015 and to be finally adopted by the European Council on 25-26 June 2015.