Economy of Bulgaria

During the communist era, five-year plans were developed and implemented under the supervision of the Prime Minister of the Council of Ministers. Half of the national budget was spent on economic development, while no resources were allocated to the industry, until its share in gross domestic product exceeded 50%. In years 70. economic growth was observed, which, however, in the years 80. collapsed, due to technological backwardness and economic inefficiency of industry.

There were rather hesitant attempts to introduce market reforms, similar to the changes implemented in Hungary. But, to maintain the living conditions of society, Bulgaria's external debt levels have risen during the last five years of communist rule.

Bulgaria has always been an agricultural country, in which two-thirds of the land was devoted to the cultivation of cereals: wheat, corn, barley, rye, oats and rice. The industrial cultivation of sunflower was also important, cotton and sugar beet. Tobacco and cigarettes accounted for half of the agricultural exports, and the wine 20%.

Before World War II, agriculture was weakened by the excessive division of land. Do 1965 r. over a million small farms merged into 920 agricultural cooperatives i 165 state farms. Medium, cooperative farms in Bulgaria were three times larger than farms in Romania and Hungary. Despite the reduction of the agricultural workforce from 82% employed in 1948 r. do 39% w 1968 r., thanks to the use of machines, fertilizer and irrigation, agricultural production has increased. Currently, agricultural cooperatives are being liquidated, and the land returns to its former owners. Such actions are the cause of numerous disputes.

Do 1970 r. collectivization doubled the number of citizens living in urban areas and thus laid the foundations for industrial development. Iron and steel works were established in Pernik and Kremikowice, fertilizer production plants in Dimitrovgrad, and in Burgas, petrochemical plants. In Plovdiv, Textile plants were built in Sliven and Sofia. Until recently, around 75% Bulgaria carried out foreign trade with the countries of the Warsaw Pact, of which more than half with the Soviet Union. Switching production to the needs of Western countries turned out to be quite difficult, since the quality of many products previously shipped to the USSR was low. About two-thirds of Bulgarian exports go to the risky market of the Arab states and the former USSR. This does not increase confidence in Bulgaria, and it only exposes the already inefficient Bulgarian heavy industry to further losses.

There are oil refineries in Ruse and Burgas, and north of Varna, oil and gas are produced. Before 1990 r. more than 90% crude oil consumed in Bulgaria was imported from the USSR at prices much lower than world prices. After the supply from Russia was interrupted, Bulgaria hoped to import oil from Iraq, but the Gulf War in 1991 r. hindered these plans. The economic sanctions imposed by the United Nations on Yugoslavia have cost Bulgaria hundreds of millions of dollars, and neither have the European Union, nor had the UN paid her any compensation for this.

The lignite deposits in the Pernik area are used by the Bulgarian metallurgical industry, and the coal from the Dimitrovgrad opencast mines is burnt in polluting power plants. The only hydroelectric plants are in operation in the Rhodope Mountains and the Rila Mountains. Near 40% Bulgaria's energy resources are produced at the Kozloduy nuclear power plant.

Bulgaria's internal political disputes delayed the process of economic reform. The tax reform and the new banking law allowed foreigners to do business in Bulgaria (except for agricultural activities). Foreign investment remains low, and privatization is progressing slowly. Bulgaria's strategic location, a skilled workforce and good infrastructure are the country's strengths, but its political instability, high indebtedness and the inexperience of reformers hold back further progress. International Monetary Fund (MFW) he was forced to constantly push Bulgarian politicians into action. From 1989 r. living standard approx 90% the population has declined, while inflation rose to 80%.

Ultimately in April 1997 r. the government of the Union of Democratic Forces began implementing the IMF's recommendations, the left rate was set against the Deutsche Mark and galloping inflation was brought under control. Fact, that 75% of the population have their own flats or houses, has proved to be extremely important in tackling general poverty, but unemployment reaching so far 20% (in some rural areas, where the light industry collapsed, even 80%) and average earnings on the level 100 $ monthly cause, that for many, the current situation is still very precarious.