Economic and social challenges in the ESIF context

Bulgaria’s economic performance has remained subdued during the post-crisis period. After a decline in economic activity in 2009, growth has been fluctuating around 1 % per year. Long-term sustainable growth is being held back by structural bottlenecks such as skills mismatches in the labour market, the continuous decline in the working-age population, the EU’s lowest labour productivity and highest energy intensity of production, and inefficient management of natural resources such as water. Public services are inefficient and of poor quality due to limited progress in administrative and judicial reform. In response, the European Semester policy recommendations focused on the labour market, social inclusion, quality of education, innovation-friendly business environment, energy efficiency, and administrative capacity building. These priorities are reflected in the 2014-2020 ESIF programmes in Bulgaria with funds to be invested in all 11 thematic objectives.

Main priorities and results

ESIF will contribute to increasing the employment rate, ensuring high-quality human capital through better education, raising qualifications and skills, improving health and healthcare, with a special emphasis on the young, the elderly and disadvantaged population groups such as Roma. Bulgaria aims to increase the rate of employment for people aged 20 to 64 from 63.5 % in 2013 to 76 % in 2020. For older people (55-64 years), the 2020 employment target is 53 %, while for youth unemployment the target for 2020 is 7 %. To advance the social inclusion of the underprivileged and more vulnerable part of its population, Bulgaria aims to have 260 000 people less in poverty by 2020. Also, better access to healthcare is to be provided to several thousand children, including those with disabilities.

The ESI Funds are expected to boost the qualifications of around 100 000 people, help 28 000 jobseekers to find jobs, finance employment and training measures to help 17 000 young people, and provide lifelong learning for 160 000 people. In education, around 1 500 schools will receive ESIF support, providing 160 000 pupils the opportunity to develop their knowledge and skills. Around 30 000 university students will receive scholarships while thousands of secondary and high school students will receive career guidance and training in real work environments.

ESI Funds will help improve Bulgaria’s business environment by strengthening SMEs’ knowledge-based competitiveness. By 2020, 1.5 % of GDP should be spent on R&D in Bulgaria. EUR 528 million in ESI Funds will support innovation in companies, the creation of innovative start-ups and improving innovation and research infrastructure.

ESI Funds will be spent on making 3 500 farms and 120 companies in the forestry sector more competitive and environment-friendly, creating jobs both in farming and non-agricultural sectors in rural areas. More than 4 000 small farmers will receive support to develop their farms and 1 630 young farmers will receive start-up aid. In fisheries, ESI Funds will be spent on investments and innovation to reduce the negative impact of fishing activities on the marine environment and support SMEs in the aquaculture and processing sector.

Investments using ESI Funds in Bulgaria should lead to a 25 % rise in energy efficiency in households, industry, services and transport alike. By 2020, the share of renewable energy sources in gross final energy consumption in Bulgaria should be 16 %. ESI Funds will also be invested in water and waste management, the preservation of natural resources, biodiversity and climate-change risk prevention.

EUR 1.6 billion in ESI Funds will be devoted to upgrading Bulgaria’s transport infrastructure, providing better connections between regions and with neighbouring countries, improving access to services and stimulating trade and tourism: 190 km of TEN-T railway, 62 km of TEN-T motorway and 8 km of Sofia metro track will be built, the latter raising the number of trips by metro from 80 to 105 million per year by 2023.

Good governance is one of the main challenges for Bulgaria. Human resources in the public administration and the judiciary need proper management and development. That is why ESIF will be mobilised to develop areas such as e-governance and e-justice, and establish quality services for citizens and businesses. By 2020, the time needed to provide public administrative services should be reduced, compared to 2013, by 50% and the average duration of criminal and civil proceedings by 10%.

Use of financial instruments and territorial tools

EUR 612 million from the ERDF, Cohesion Fund and ESF budgets has been earmarked for financial instruments, 70 % more than in 2007-2013. Most support will be directed towards energy efficiency, the waste and water sectors, SMEs, urban development and tourism. Bulgaria has also joined the SME Initiative, contributing EUR 102 million.

ESIF will also be used to contribute to community-led local development in rural areas and areas dependent on fisheries, creating 600 jobs. One third of Bulgaria’s rural population is to benefit from infrastructure that has been improved with help of ESIF.

Key information

2. Pre-conditions for effective and efficient use of ESIFs

Three of the ex ante conditionalities (EACs) specific to the EMFF and 7 out of 11 thematic EACs remain unfulfilled, most notably for smart specialisation, water, transport, health and digital growth, but also the crucial general EAC for public procurement. However, Bulgaria has put in place action plans to implement all of its EACs by the end of 2016 at the latest.

3. ESIF management

The programming, management, monitoring and control of ESIF programmes in Bulgaria are the responsibility of the deputy prime minister responsible for the management of EU funds and the central coordination unit in the Council of Ministers. The deputy prime minister coordinates and chairs the Council for coordination of EU funds management, which involves all ministries with responsibility for EU funds.

The different ESIF programmes include measures to strengthen the administrative capacity of the bodies responsible for coordination, management, implementation, payment and control. Project beneficiaries, such as municipalities, the judiciary and institutional beneficiaries in the transport sector, are also eligible for assistance to strengthen their administrative capacity. International financial institutions, such as the European Investment Bank, the World Bank and the European Bank for Reconstruction and Development, provide expertise.

4. Simplification for beneficiaries

The Bulgarian authorities are working to reduce the administrative burden for project beneficiaries, digitalising where possible the communication between beneficiaries and the managing authorities. This involves electronic submission of project proposals and project reporting and making administrative procedures easier and more efficient. For example: application and reporting forms will be standardised, rules will be introduced for simplified costs when reporting expenditure and the different auditing and inspection bodies will coordinate their inspections.