Journal Issue

Bulgaria: Staff Report for the 2016 Article IV Consultation—Informational Annex

International Monetary Fund. European Dept.
Published Date:
November 2016
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Fund Relations

(as of September 30, 2016)

Membership Status

Joined on September 25, 1990. Article VIII status assumed on September 24, 1998.

General Resources Account
SDR MillionPercent Quota
Fund holdings of currency798.1889.05
Reserve position in Fund98.1310.95
SDR Department
SDR MillionPercent Allocation
Net cumulative allocation610.88100.00

Outstanding Purchases and Loans: None.

Latest Financial Arrangements

Date of ArrangementExpiration DateAmount ApprovedAmount Drawn
SDR million
Stand By8/6/20043/31/07100.000.00
Stand By2/27/20023/15/04240.00240.00

Projected Payments to the Fund

(SDR million; based on existing use of resources and present holdings of SDRs)


Exchange Rate Arrangement:

The currency of Bulgaria is the lev. Since July 1, 1997, the Bulgarian National Bank has operated a currency board arrangement. From July 1, 1997 to December 31, 1998, the lev was fixed to the Deutsche Mark at BGN 1000 per Deutsche Mark. Since January 1, 1999 the lev has been fixed to the euro at BGN 1.95583 per euro. Bulgaria joined the European Union (EU) on January 1, 2007. Bulgaria has accepted the obligations of Article VIII, Sections 2–4, and maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions.

Article IV Consultations

The 2015 Article IV Board discussion took place on May 4, 2015. The Staff Report was published on May 13, 2015 (Country Report No. 15/119).

Resident Representative

Mr. Hajdenberg is the Regional Resident Representative, based in Bucharest. He took up the position in April 2016.

Relations with the World Bank

The World Bank has been leading the policy dialogue on structural and institutional reforms in support of accelerating Bulgaria’s convergence to EU income levels. On May 19, 2016 the Board of Directors endorsed the Country Partnership Framework (CPF) for Bulgaria of the World Bank Group (WBG) which outlined the roadmap for the WBG’s country support for the period FY17- FY22. The CPF marks a renewed engagement with Bulgaria, including the first new lending operations since FY11. The program sets out a selective engagement with ambitious objectives in two key areas with strong government ownership and demand for the WBG support. Within these two broad areas of engagement the program identifies five objectives. The first area on “Strengthening institutions for sustainable growth” aims to: (i) Improve resilience and stability of the financial sector; (ii) Strengthen electricity sector and improved energy efficiency; and (iii) Better protect natural assets and improved efficiency in use of resources. Objectives of the second area on “Investing in people” are: (i) Enhanced school outcomes for better employability, and (ii) Improved access to essential services (housing, water, ECD, long-term care) for bottom 40 and marginalized groups. The objectives are strongly correlated with the WBG’s twin goals of poverty reduction and shared prosperity.

A. International Bank for Reconstruction and Development (IBRD)

Bulgaria’s active portfolio consists of active investment projects totaling US$430 million in net commitments, which are complemented by Bank-funded analytical pieces and RASs.

  • The two active investment projects focus on the development of municipal infrastructure and the strengthening of the deposit insurance fund.

  • Analytical tasks include an assessment of Bulgaria’s Housing Sector; a Poverty and Social Impact Analysis of improving energy efficiency in Bulgaria; an assessment on how to improve access to essential services, such as education, water, housing, health and long-term care and social welfare; a study on citizen engagement; an update of the Bulgaria FSAP (in collaboration with the IMF); and a Spending Review. In addition, there are two EC funded regional tasks on Poverty Mapping and Sub-national Doing Business under implementation.

  • There are six Reimbursable Advisory Services (RAS) under implementation and one task is at an advanced stage of preparation Reimbursable Advisory Services cover key areas of engagement. Under the current programming period, the World Bank is providing advice on policy formulation and strategy development in climate change adaptation; shared services; pre-university education; water and sanitation services, energy sector reform.

Table 1.Bulgaria: Active World Bank Operations(Net of Cancellations)
OperationUS$ millionBoard date
1.Municipal Infrastructure Development Project102.62009
2.Deposit Insurance Strengthening Project327.52016

B. International Finance Corporation (IFC)

As of June 2016, the IFC had 39 projects (completed and ongoing) in Bulgaria with total commitments of over US$975 million. The single biggest investment of IFC in the country is in the retail sector in the form of a loan for the expansion and improvement of energy efficiency of the largest discount supermarket chain in Bulgaria. Its buildings are awarded with certificate for highest environmental performance. IFC was also involved in the development of the Galata gas field near the Black sea cost, helping diversification of natural gas supply. In line with the IFC’s strategic goals for Bulgaria, IFC has supported a company investing in agricultural land and promoting land consolidation. In the financial sector, IFC had supported two specialized SME banks; helps trade operations through its Global Trade Finance Program; it established Bulgaria’s first micro-lending bank and has invested in a venture fund, which is also targeting the SME sector. In other industries, IFC had contributed to key manufacturing projects—it has supported the modernization and expansion of an electronics producer, particle board producer, a large steel mill, and two glass processing plants. IFC maintains large portfolio in renewable energy in the country, including investments in the largest wind and photovoltaic power producers. Some IFC projects entail an important environmental component. One of the manufacturing plants, for example, is purchasing equipment which would reduce its GHG emissions and the electronics producing company is making sensors for cars that monitor the emission of polluting gases and improve fuel efficiency.

Statistical Issues

Bulgaria—Statistical Issues AppendixAs of October 13, 2016
I. Assessment of Data Adequacy for Surveillance
General: Data provision is adequate for surveillance purposes.
National Accounts
The National Statistical Institute (NSI) is responsible for compiling national accounts, based on a system consistent with the System of National Accounts 2008 (SNA 2008) and the European System of Accounts 2010. GDP data by activity and expenditure categories are compiled and reconciled within an annual supply and use framework. Government output and final consumption are estimated on an accrual basis. Published national accounts include production, income, and capital accounts for the five resident institutional sectors (general government and its sub-sectors, financial corporations, non-financial corporations, nonprofit institutions serving households, and households). The NSI publishes financial accounts and balance sheets by institutional sectors and sub-sectors on an annual basis.
The flow of customs data has improved significantly in recent years and a new system for processing customs records is near completion. The development of export and import unit value indices is progressing smoothly and additional support is expected from Eurostat in this area. The current indices are used as deflators for the import and export components of the national accounts. Each month the Foreign Trade Statistics Department of the NSI is in contact with the BNB to review data issues and ensure consistency between the NSI export and import data and the balance of payments data.
Labor Market Statistics
Data on employment and hours worked are compiled by the NSI based on a Labor Force Survey and Enterprises’ survey on employment—”Quarterly survey on employees, hours worked, wages and salaries, and other expenditures paid by the employers” (QLCS) and “Annual enterprises survey on employment, wages and salaries, and other labor cost” are adjusted according to the ESA2010 methodology. The NSI current monthly and quarterly estimates are based on the results from the sample– QLCS. The QLCS sample includes 13100 private sector enterprises out of approximately 203000. The public sector enterprises are covered exhaustively except for the schools and kindergartens for which a sample is drown as well from 2008. The NSI household labor force survey provide average quarterly results and is an alternative source of data, but the methodological discrepancies between household and establishment survey need to be taken into account (especially regarding agricultural employment).
The NSI also compiles and publishes quarterly wage data for various economic sectors. The main shortcomings include: (i) under-reporting of private sector wages; and (ii) reporting of average gross earnings only and not wages by occupation. Since 2002, a survey on earnings (Structure of Earnings Survey – SES) is conducted every four years providing information about average monthly and hourly earnings by economic activity, occupation, gender and education. The household budget survey provides an alternative source of data for private sector wages.

A Population Census was conducted in early 2011 and is a source for redesigning the household surveys conducted by the NSI, particularly the household budget survey and the labor force survey.
Price Statistics

The NSI produces a monthly consumer price index (CPI), harmonized consumer price index (HICP) according to Eurostat methods, and a producer price index (PPI). The CPI series began in 1995, the PPI in 2000 and the HICP in 2005 (for earlier years it is set equal to the CPI). The CPI’s geographical coverage of the index is restricted to 27 urban areas that account for an estimated 65 percent of sales. A monthly PPI covers the mining and manufacturing industries, the production and distribution of electricity and steam, and natural gas and air conditioning supply.
Government Finance Statistics

In recent years, following the recommendations of a combined STA/FAD mission and within the framework of EU fiscal reporting, the authorities have made significant progress in implementing accrual accounting for government, budgetary and statistical systems. Consolidated data on a cash basis, covering general government and its subsector operations, were routinely reported for publication in the GFS Yearbook/Annual CD-ROM and in the IFS. In addition, quarterly accrual GFS data for the whole general government are reported for publication in the IFS, through Eurostat. The major part of the GFS data is compiled by the NSI and the transmissions to Eurostat are carried out by the NSI. Since September 2008, the Ministry of Finance (MOF) prepares and submits the SDDS monthly indicators for the central government finances in the IMF’s GFSM 2001 format. Since June 2016 general government operations for the SDDS Plus are prepared quarterly on accrual basis by the NSI and the BNB. High frequency data filled in Statement II (Sources and Uses of Cash) template in the GFSM 2001 format are published on the MOF’s website on a monthly and quarterly basis. As of 2014, the Bulgarian statistical authorities (NSI, BNB and MoF) agreed to use the provided option by Eurostat for IMF data transmission. In this way GFS data become consistent with the ESA/EDP data not only by adding accrual data, but also in terms of scope, including all units of GG sector in accordance with ESA rules. The Bulgarian National Statistical Institute as the institution responsible for compiling GFS tables under ESA’2010 has confirmed to Eurostat to use data from ESA tables 6 and 7 (flows and stocks data of assets and liabilities) for reporting the annual GFS to IMF. The data for Statement II of the IMF GFS Yearbooks on a cash basis are still submitted by the MOF. Since 2015 it has been presented in the IMF GFSM 2014 format.
The Ministry of Finance prepares data on the execution of the consolidated government budget on a monthly and quarterly basis, following the national presentation. These data are not according to GFS standards. Aggregate data on revenue, expenditure, balance of the general government and composition of financing (in national formats) are published with a monthly bulletin and posted on the MOF’s website, in addition to the GFSM 2001 data. Progress has been made in presenting data on a disaggregated basis, including expenditure by functional classification. In addition, a full economic classification of expenditure is now available, and the authorities have provided such data on an annual basis back to 1998.
Monetary and Financial Statistics: The BNB reports monetary data for publication in the IFS based on the ECB framework for the collection and compilation of monetary data, beginning with data starting in February 2004. Data comply with the MFSM methodology, with some minor deviations documented in the IFS metadata. Data for other financial corporations are not currently reported to the IMF.
Financial Sector Surveillance: Bulgaria participates in the financial soundness indicators (FSIs) project. Annual data are posted on the FSI website for the period 2005–15.
External Sector Statistics

Bulgaria provides quarterly balance of payments (BOP) statistics for dissemination in IFS on a timely basis. Balance of payments and international investment position (IIP) statistics are compiled according to the Balance of Payments and International Investment Position Manual, sixth edition (BPM6) and reported to STA on quarterly basis. The BNB publishes monthly balance of payments data and quarterly international investment position data on its official website in accordance with the Statistical Data Release Calendar. Since joining the EU in January 2007, the trade data with EU countries are being collected following the INTRASTAT system. The flow of customs data has improved significantly in recent years and a new system for processing customs records is near completion. Each month the Foreign Trade Statistics Department of the NSI is in contact with the BNB to review data issues and ensure consistency between the NSI export and import data and the balance of payments data. Data for imports and exports of goods with non-EU member states are based on SAD (Single Administrative Document) collected by Customs Agency while the movement of goods within the EU is based on Intrastat declarations collected by the National Revenue Agency. The Data Template on International Reserves and Foreign Currency Liquidity is disseminated monthly and quarterly external debt data are reported to the World Bank for re-dissemination in the Quarterly External Debt Statistics (QEDS) database. In line with the Special Data Dissemination Standard Plus (SDDS Plus) requirements, Bulgaria participates in: (i) the Coordinated Direct Investment Survey (CDIS) with inward data separately identifying equity and debt instruments positions and providing further breakdown of gross asset and liability debt instrument positions; (ii) the Coordinated Portfolio Investment Survey (CPIS) providing semiannual core data as well as the following encouraged items: currency of denomination, sector of the holder, liabilities, sector of the issuer, and cross-sectors classifications; and (iii) the Currency Composition of Official Foreign Exchange Reserves (COFER).
II. Data Standards and Quality
Bulgaria started to adhere to the SDDS Plus in 2016.
Bulgaria: Table of Common Indicators Required for Surveillance(as of October 13, 2016)
Date of latest observationDate receivedFrequency of Data6Frequency of Reporting6Frequency of publication6
Exchange Rates30/09/201610/03/2016MMM
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1August 201609/15/2016MMM
Reserve/Base MoneyAugust 201609/21/2016MMM
Broad MoneyAugust 201609/21/2016MMM
Central Bank Balance SheetAugust 201609/21/2016MMM
Consolidated Balance Sheet of the Banking SystemAugust 201609/21/2016MMM
Interest Rates2September 201610/06/2016MMM
Consumer Price IndexAugust 201609/13/2016MMM
Revenue, Expenditure, Balance and Composition of Financing3 – General Government4201406/30/2015AAA
Revenue, Expenditure, Balance and Composition of Financing3 – General Government4April 201605/31/2016MMM
Revenue, Expenditure, Net operating balance, Gross operating balance, Net lending/borrowing, Net2016 Q107/31/2016QQQ
acquisition of assets, Net incurrence of liabilities 5 – General Government
Revenue, Expenditure, Balance, Net acquisition of assets, Net incurrence of liabilities, Net change in the stock of cash 5 – Central GovernmentAugust 201609/30/2016MMM
Stocks of General Government and General Government-Guaranteed Debt6August 201609/30/2016MMM
External Current Account BalanceJune 201609/17/2016MMM
Exports and Imports of Goods and ServicesJune 201609/17/2016MMM
GDP2016 Q209/15/2016QQQ
Gross External DebtMarch 201607/20/2016MMM
International Investment Position2016 Q107/12/2016QQQ

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

On a gross cash basis. The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and local governments.

Indicators presented in adherence with the SDDS Plus.

Including currency and maturity composition.

Monthly (M); Quarterly (Q); Annually (A).

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

On a gross cash basis. The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and local governments.

Indicators presented in adherence with the SDDS Plus.

Including currency and maturity composition.

Monthly (M); Quarterly (Q); Annually (A).

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