With the right policies and investments in public infrastructure and services, Bulgaria could achieve its goal of converging with Europe in the next 20 years, according to the World Bank.
By Svetla Dimitrova for Southeast European Times in Sofia -- 26/11/12
Bulgaria’s population dropped from 9 million to 7.4 million since 1985, the World Bank said. [AFP]
Although Bulgaria's development path has been difficult at times during the past two decades, the country has made major achievements, the World Bank said as it celebrated its 20-year-long partnership with the Balkan country.
"Today, Bulgaria is not only a European Union member state, it also has become part of the European convergence machine as trade expanded and capital inflows surged," the international financial institution noted earlier this month.
The prospects of the Balkan nation's EU entry in 2007 made it attractive to foreign investors. Between 2002 and 2008, Bulgaria attracted "record levels" of foreign direct investments, standing at 16.5 percent of GDP -- the third highest in the Union after Luxembourg and Hungary.
With a public debt to GDP ratio of 15.5 percent in 2011, Bulgaria has the second lowest public debt level among the countries in the Union after Estonia, with 6 percent.
Although it remains the bloc's poorest member, Bulgaria has also managed to substantially narrow its income gap -- its GDP per capita as a share of the EU27 GDP has increased from 28 percent in 2000 to 45 percent in 2011.
"Bulgaria has achieved a lot over the past two decades, including solid macro-economic stability, which is extremely important in today's uncertain economic environment," World Bank Regional Director for Central Europe and Baltic Countries Peter Harrold said in Sofia.
"With the right policies, and with investments in public infrastructure and services, co-funded by European grants, the goal for the next 20 years of converging with Europe seems genuinely achievable."
But there is no room for complacency, as the Balkan nation still faces some key challenges.
The demographic situation in Bulgaria is among the worst in Europe. Its population has shrunk from close to 9 million people in 1985 to less than 7.4 million last year and is expected to number fewer than 5.4 million by 2060 if that trend is not reversed.
"Bulgaria is projected to have the world's fastest shrinking working age population," said the Bank.
Bulgarian Finance Minister Simeon Djankov said that converging with the EU27 income level, the unfavourable demographic situation and energy independence were the top three challenges facing Bulgaria in the next five to 10 years.
"There are some specific steps that can be taken and this government is taking them," the minister told SETimes when asked about the measures for resolving Bulgaria's demographic problems.
One example he cited was the ruling centre-right GERB party's plans to build up to 80 kindergartens in the country's big cities in the next four years, which will allow the mothers of up to 70,000 kids to return to work.
"The focus should be on the creation of more jobs," Djankov said.
He voiced confidence that such a policy would result in fewer Bulgarians having to seek a job abroad, while also helping attract more expatriates to return home.
According to George Angelov, senior economist at the Open Society Institute in Sofia, the key challenge is making Bulgaria a prosperous country.
"Everything else, including the demographic situation, is associated with and a consequence of this," he told SETimes. "People emigrate from Bulgaria just because this is the poorest country in the EU. If this fact doesn't change and Bulgarians don't get the feeling that their country is moving forward so that it makes sense for them to stay and raise their children here, the number of people leaving their homeland will grow."
Economic slowdown and rising unemployment are the biggest challenges the Southeast European countries face in the immediate future, according to Satu Kähkönen, the World Bank's sector manager for the Europe & Central Asia region.
"As a group, southeastern Europe has already entered recession. There are variants between the countries, but we have already seen growth contracting in Serbia, in particular, and we are also seeing slowdown in all of the countries," she told SETimes.