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Development Challenge The USAID Program Other Program Elements Other Donors Program Data Sheets Summary Tables USAID Search: Bulgaria Previous Years' Activities 2002, 2001, 2000, 1999, 1998, 1997 Last updated: 27     (text taken from the FY 2003 Congressional Budget Justification) THE DEVELOPMENT CHALLENGE: Twelve years after the beginning of its transition to a market-oriented democracy, Bulgaria continues to embrace the principles of democratic governance and free enterprise, though at an uneven pace of reform. Considerable progress has been made in boosting economic growth, maintaining financial stability, and moving ahead with removing assets from state ownership. Bulgaria's economy grew by 4.8% in the first half of 2001, the fourth consecutive year. With an inflation rate of 4.5% and nearly 70% private sector share of GDP, Bulgaria has shown commendable macroeconomic performance and strict fiscal discipline. Despite these positive developments, the country has still not managed to create an investor-friendly business environment. Enterprise development is hindered by a multitude of administrative barriers, slow reform of the judiciary, rampant corruption, and unfair competition stemming from the shadow economy. Bulgarian small and medium-sized enterprises are constrained by restricted access to credit, a weak capital market, and existing legal/regulatory impediments often created by the lack of constructive public-private dialogue. Because of an inherited, cumbersome public bureaucracy, Bulgaria's government seems poorly prepared to deal with the policy issues it faces. Most government institutions operate inefficiently with little transparency and continued over-centralization. Law enforcement is inadequate, and the fight against corruption sporadic. Growing public apathy and disengagement were reflected in the poor voter turnout at both the parliamentary and presidential elections in 2001, setting off alarms. Although the new government is committed to macroeconomic stability, structural reform, and growth of the private sector, public confidence in the government continues to decline. GDP per capita (2000): $1,459 purchasing power parity $5,300; Monthly average income: $125; Unemployment: 17% of which 59% long-term; Population growth rate: -5.1 per 1,000; 2/3 of Bulgarians suffer from cardiovascular diseases. Bulgaria faces strong social tensions stemming from growing unemployment and poverty, pervasive corruption, and deteriorating health and educational systems. In recent years, Bulgarians have experienced a sharp decline in real income, accompanied by increasing income inequality and growing long-term unemployment. This dramatic deterioration of living standards has disproportionately affected certain vulnerable groups within society like the elderly, children, minorities, and women. Regional disparities are growing more pronounced. Highly trained and educated youth are departing in droves for opportunity elsewhere. An aging population and a growing Roma minority are increasingly disaffected and negatively impacted by financially unstable social programs. Therefore, improving the welfare and quality of life of the population and promoting participation and inclusion of marginalized groups ranks high on Bulgaria's human development agenda. However, this would prove unattainable unless driven by sustained economic growth, a flexible labor market, and increased investment required to generate new employment opportunities. National security is the primary U.S. interest in Bulgaria, in the areas of promoting regional stability; fostering market-oriented reform; and strengthening rule of law and democratic institutions. THE USAID PROGRAM: FY 2002 Estimate: $34.0 million FY 2003 Request: $28.0 million FY 2002 is the last implementation year of the current USAID strategy. The Program Data Sheets provided below cover the five strategic objectives, crosscutting, and special initiatives for which FY 2002 funds are requested. The five core objectives actively support Bulgaria's accelerated efforts to achieve a democratic political system and an open, free, and competitive economy by: fostering a competitive, private sector-led, market-oriented economy and generating employment; institutionalizing rule of law and fighting corruption; strengthening local government and promoting fiscal decentralization; supporting civil society by building the capacity of non-governmental organizations; and modernizing Bulgaria's financial system through assistance to banking and capital markets, while at the same time addressing social issues through pension and health reform. FY 2002 funds will be used to implement the ongoing programs of technical assistance to private enterprises in target industry clusters, trade promotion and facilitation, agribusiness development, microfinance initiatives, loan guarantee schemes, modernization of Bulgaria's court system, increasing the professionalism of the judiciary through training, fiscal decentralization, social enterprises, training of new members of Parliament, ethnic integration and conflict prevention. FY 2002 funds will also be used to fund a new anti-corruption program and other new activities that directly respond to the urgent needs of the new government. USAID is in the process of finalizing its next five-year strategic plan. While most of the priorities will continue to be valid, USAID will broaden current strategic areas to include a robust engagement of social sector issues. Further, to streamline its management structure, USAID intends to reorganize its current portfolio and formulate three new strategic objectives: private sector development, improved effectiveness, accountability and responsiveness of key democratic systems, and mitigation of adverse social and economic impacts of the transition. OTHER PROGRAM ELEMENTS: Bulgaria has benefited from several regional USAID programs. USAID's Regional Infrastructure Program for Water and Transportation is an important element of the U.S. Government's support for achieving Stability Pact regional objectives. The EcoLinks program links Bulgarian businesses, local governments and associations with counterparts in the U.S. or other countries in the region to promote regional efforts in addressing environmental problems with market-based solutions. Since 1998, Bulgarian leaders and experts have benefited from the Georgetown University Scholarship program by participating in more than 70 long-term academic and 59 short-term programs at U.S. and third-country universities. The American University in Bulgaria continues to receive USAID support. OTHER DONORS: The United States is a major donor of assistance to Bulgaria, closely coordinating its activities with the other bilateral and multilateral donors. The European Union is currently the largest donor providing nearly $280 million per year, in infrastructure development, agriculture and PHARE. Bulgaria has negotiated a stand-by agreement with the International Monetary Fund to cover balance of payments difficulties and support for its reform program. The World Bank program targets improving the business climate, accelerating private sector growth and reducing poverty and raising the living standards. The UNDP program is centered around good governance, job creation, and environmental protection. The European Investment Bank and the Government of Japan are taking the lead in infrastructure development projects. Other bilateral donors include Switzerland (environment, local government, small and medium enterprises, social sector), The Netherlands (energy, social transformation, regional cooperation), and the British Know-How Fund (public sector, civil society, financial markets, social welfare). Program Data Sheets 183-0100  Improved Business Climate in the Bulgarian Economy 183-0130  Accelerated Development and Growth of Private Enterprises in a competitive environment 183-0140  A More Competitive and Market-Responsive Private Financial Sector 183-0200  Key Democratic Systems Work Effectively, Accountably and Responsively 183-0210  Increased, Better-Informed Citizens' Participation in Public Policy Decision Making 183-0220  An Improved Judiciary that Better Supports Democratic Processes and Market Reforms 183-0230  More Effective, Responsive, and Accountable Local Governments 183-0340  Mitigate Adverse Social and Economic Impacts of the Transition 183-0400  Cross-Cutting and Special Initiatives 183-0410  Special Initiatives 183-0420  Cross Cutting Activities Country Background Information Resources     CIA Factbook Library of Congress National Geographic Country Maps State Dept. Country Information

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