Journal Issue

Bulgaria: Staff Report for the 2017 Article IV Consultation—Informational Annex

International Monetary Fund. European Dept.
Published Date:
February 2018
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Fund Relations

(as of December 31, 2017)

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 ofExpirationAmountAmount
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, aside from restrictions notified to the Fund pursuant to Decision No. 144-(52/51).

Article IV Consultations

Bulgaria is on the 12-month consultation cycle. The 2016 Article IV Board discussion took place on November 4, 2016. The Staff Report was published on November 10, 2016 (Country Report No. 16/344).

Financial Sector Assessment Program

Bulgaria received a joint IMF-World Bank mission on the Financial Sector Assessment Program (FSAP) in October 2016 and January 2017. The Financial Sector Assessment Report (FSSA) was discussed at the Board on May 22, 2017 and was published on May 23, 2017 (Country Report No. 17/132).

Technical Assistance

Bulgaria received a technical assistance on oversight and management of State-Owned Enterprises from the Fiscal Affairs Department (FAD) in FY2017.

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

(As of January 12, 2018)

The World Bank Group (WBG) 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 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 operation 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, early childhood development, 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 portfolio consists of active investment projects totaling US$430 million in net commitments, which are complemented by Bank-funded analytical pieces and Reimbursable Advisory Services (RAS).

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

  • Analytical tasks include a Spending Review with in-depth assessment of public order and safety and waste management; an assessment of Bulgaria’s housing stock exposure to seismic risk; support for the enhancement of the National Program of Energy Efficiency in Residential Buildings; a road financing strategy; 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; and Roma inclusion.

  • There are seven 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, air quality management, forestry, and assessment of the public procurement system.

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)

Since the start of operations in Bulgaria in 1991, IFC has invested a total of over US$1050 million in 40 projects, including US$198 million mobilized from partners. Support was provided to the energy (wind and solar, oil and gas), retail and manufacturing (glass, steel) sectors, as well as to the banking sector in the form of trade finance. IFC will continue to play a countercyclical role through selective private sector investments. In the financial sector, this includes provision of short term liquidity and guarantees; in the real sector, this includes support for projects which contribute to the growth and competitiveness of local firms in promising sectors and which improve resource efficiency. IFC has implemented seven Advisory Services projects in Bulgaria addressing barriers to competition, developing a national corporate governance code of best practices, and addressing administrative barriers relating to on-site inspections and construction procedures. In October 2017, IFC signed a mandate for PPP advisory with the Ministry of Transport aiming to prepare the concession of Sofia Airport.

Statistical Issues

(As of January 25, 2018)

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 the 2010 European System of Accounts (ESA 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, capital accounts, and financial 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 released revised national accounts estimates in September 2016, for 2000 to 2014, reflecting its latest efforts to fully implement the ESA 2010. Some of the key improvements to the estmates include using a market-equivalent rental approach to derive estimates of value added for owner-occupied dwellings; improving the coverage of consumption of fixed capital to include purchases of software and software produced on own-account by the general government; and improving the data sources used to derive estimates of household final consumption expenditure.
Despite, these improvements, some weaknesses remain. The method used to derive taxes on products (VAT) in constant prices are not consistent with international best practice. Therefore, the changes in taxes on products in constant prices are no consistent with the changes in final consumption expenditure over time.
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.
Price Statistics
The NSI produces a monthly consumer price index (CPI), harmonized index of consumer prices (HICP), a producer price index (PPI), and a housing price index. The CPI series began in 1995, the PPI in 2000, the HICP in 2005 (for earlier years it is set equal to the CPI), and the housing price index in 2015. The CPI’s geographical coverage is restricted to 27 urban areas that account for an estimated 65 percent of sales. A monthly PPI covers the mining and manufacturing, 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. Quarterly GFS data on an accrual basis for the 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 IIP 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. Data for imports and exports of goods with non-EU member states are 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 January 25, 2018)
Date of latest observationDate receivedFrequency of Data7Frequency of Reporting7Frequency of publication7
Exchange Rates1/08/20181/10/2018MMM
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1November 20171/19/2018MMM
Reserve/Base MoneyNovember 201712/27/2017MMM
Broad MoneyNovember 201712/27/2017MMM
Central Bank Balance SheetNovember 201712/27/2017MMM
Consolidated Balance Sheet of the Banking SystemNovember 201712/27/2017MMM
Interest Rates2January 20181/25/2018MMM
Consumer Price IndexDecember 20171/12/2018MMM
Revenue, Expenditure, Balance and Composition of Financing3 – General Government4201610/25/2017AAA
Revenue, Expenditure, Balance and Composition of Financing3 – General Government4November 201712/29/2017MMM
Revenue, Expenditure, Net operating balance, Gross operating balance, Net lending/borrowing, Net acquisition of assets, Net incurrence of liabilities 5 – General Government2017 Q210/25/2017QQQ
Revenue, Expenditure, Balance, Net acquisition of assets, Net incurrence of liabilities, Net change in the stock of cash 5 – Central GovernmentNovember 201712/29/2017MMM
Stocks of General Government and General Government-Guaranteed Debt6November 201712/29/2017MMM
External Current Account BalanceNovember 20171/19/2018MMM
Exports and Imports of Goods and ServicesNovember 20171/19/2018MMM
GDP2017 Q312/05/2017QQQ
Gross External DebtSeptember 201711/28/2017MMM
International Investment Position2017 Q311/28/2017QQQ

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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