The Bulgars, a Central Asian Turkic tribe, merged with the local Slavic inhabitants in the late 7th century to form the first Bulgarian state. In succeeding centuries, Bulgaria struggled with the Byzantine Empire to assert its place in the Balkans, but by the end of the 14th century the country was overrun by the Ottoman Turks. Northern Bulgaria attained autonomy in 1878 and all of Bulgaria became independent from the Ottoman Empire in 1908. Having fought on the losing side in both World Wars, Bulgaria fell within the Soviet sphere of influence and became a People’s Republic in 1946. Communist domination ended in 1990, when Bulgaria held its first multiparty election since World War II and began the contentious process of moving toward political democracy and a market economy while combating inflation, unemployment, corruption, and crime. The country joined NATO in 2004 and the EU in 2007.


Bulgaria has undergone a significant transformation over the past three decades. It has changed from a highly centralized, planned economy to an open, market-based, upper-middle-income country securely anchored in the European Union (EU). In its initial transition, Bulgaria went through a decade of slow economic restructuring and growth, high indebtedness, and a loss of savings.

However, the advancement of structural reforms starting in the late 1990s, the introduction of the currency board, and expectations of EU accession unleashed a decade of exceptionally high economic growth and improved living standards.

Yet, a number of legacies from that early period, the global economic crisis of 2008, and a period of political instability in 2013-14 undid some of those gains.

In 2019, trends on the labour market remained positive against the backdrop of stronger consumer confidence and higher household savings. Data from the Labour Force Survey conducted by the National Statistical Institute (NSI) indicates that in Q3 2019 there was an increase in labour supply measured through the size of the workforce. At the same time, economic activity reached a historical high, attributable to the continually growing number of workers and employees and the trend of continual decline in the working-age population.

Administrative statistical data of the Employment Agency indicates a significant drop in the unemployment rate in December 2019 as compared to December 2018. The average monthly number of unemployed persons in Bulgaria in the period January-December 2019 stood at 185 266 (a decrease of 17 728 persons compared to the previous year).


Driven by private consumption and business investments, in 2018 Bulgarian GDP recorded slower real growth of 3.1% compared to 3.8% in 2017. Nevertheless, the economic growth in Bulgaria was above the average for the EU economy for the fourth successive year.

In 2018 the unemployment rate declined to the historically low level of 5.2%. Mainly due to price changes in the energy resources and higher internal demand, the average annual change of HICP in Bulgaria increased to 2.6% in 2018 compared to 1.2% in 2017.

The favourable state of the Bulgarian economy, characterised by low unemployment, increasing incomes, stable fiscal position and the lack of excessive imbalances had a positive impact on the Bulgarian banking sector. It was also marked by several tendencies: consolidation processes, increasing growth in deposits, continuing increase in lending accompanied by higher revenues, decrease in non-performing loans (NPLs) and growing digital challenges.

At the end of 2018, there were 25 banks operating in Bulgaria, five of which were foreign bank branches. The top five banks held approximately 59.4% of all assets in the banking system. At the end of 2018 the market share of domestic banks was 22% and the share of EU subsidiaries was 72.1%. The number of banks is constantly decreasing due to the consolidation processes taking place in the sector.

In 2018 banks’ total assets increased by 7.9% year-on-year to €54 billion (BGN 105.6 billion). The share of loans and advances increased to 63.3% compared to 61% at the end of December 2017. The share of cash dropped to 19.3% from 19.9% and the share of securities decreased to 12.9% from 14.3%.

The loan portfolio of the banking system grew at a moderate pace due to the favourable economic environment, low interest rates, competition and higher loan demand. According to the BNB’s interest rate statistics, average interest rates on new deposits remained low in all sectors and currencies in 2018, and interest rates on loans declined compared to the previous year.

The total amount of loans outstanding to the non-government sector (non-financial corporations and households), rose to €27.87 billion (BGN 54.51 billion) from €25.87 billion (BGN 50.63 billion), according to the BNB monetary statistics. In the last year the outstanding loans to non-financial corporations, including small and medium-sized enterprises (SMEs), which represent 99.9% of all enterprises in the country, increased by 5.4%, reaching €16.7 billion (BGN 32.69 billion). By sectors, the highest amount of loans and deposits were in the trade, manufacturing, construction and real estate industries.

Deposits held by banks grew by 7.3% in 2018 and reached €39.7 billion (BGN 77.66 billion), or 72% of GDP, despite the low interest rate levels. Approximately two thirds of the deposits were held by the household sector (66.4%).

The banks have used the favourable momentum to clean their loan portfolios intensively as evidenced by the decline in the share and the amount of NPLs. As of 31 December 2018, the amount of NPLs (excluding central banks and credit Institutions) dropped to €2.3 billion (BGN 4.54 billion) in absolute terms, or to 7.5%. Although the level of NPLs is still above the EU average, the higher level of coverage for gross non-performing loans by provisions compared with the average level of the EU countries is typical for the Bulgarian banking system.

The higher credit growth, accompanied by increased revenues from payment services, the better quality of the loan portfolio, the lower impairments, the declining interest rates and some one-off effects influenced the financial result of the sector for 2018 as the adjusted net profit of the system grew by 12% to €736 million (BGN 1.44 billion). Adjusted net interest income decreased by 0.6% to €1.36 billion (BGN 2.66 billion) despite the increase in lending. The adjusted net income from fees and commissions increased by 4% to €530 million (BGN 1.04 billion).

The capital position of the banking sector continued to be marked by a significant capital surplus above the regulatory requirements for the capital adequacy and leverage ratios, at a system and local level, as well as in comparison with the average levels of European banks. At the end of 2018, CET 1 for the whole banking system was 18.99% and the total capital adequacy was 20.38%. The Liquidity coverage ratio stood at 294.1%. In 2018, return on assets increased to 1.6% from 1.2% and return on equity grew to 12.1% from 9.3% a year ago.


General healthcare in Bulgaria varies. In the cities, major hospitals boast plentiful, professional, qualified staff, clean modern wards and the latest technology, achieving standards that will be familiar to European visitors. In more rural areas, however, you may have to travel a considerable distance for the privilege of staying in a grim, Soviet era clinic, where your friends and family will be expected to make your bed and prepare your food.

Bulgarian healthcare is universal and state funded through the National Health Insurance Fund. Bulgaria spends around 4.2% of its GDP on healthcare and has around 1.8 doctors per 1,000 people, which is above the EU average.  However, a legacy of poor healthcare funding over decades in the Eastern Bloc means that life expectancy is well below the EU average, at just 76 for women and under 70 for men.

The private healthcare sector however, sits in stark contrast to the overall picture. Many doctors and dentists turned private with the introduction of the free market following the fall of communism, leading to a glut of private practices. This meant that clinics had to invest in better technology and provide better staff training and service in order to gain a competitive edge in a crowded market. At the same time, a low wage economy forced them to keep their prices down.

There is a wide choice of healthcare tourism options in Bulgaria, with many quality dental clinics springing up around the major tourist centres and medical and cosmetic surgery clinics appearing at many of the country’s famous spa sites. And the industry is growing and improving all the time, with the Bulgarian Union for Spa Tourism estimating that no less than $5.4billion has been invested across the sector in recent years.


Bulgarian welfare system was significantly changed in the late 1990’s and early 2000’s following the whole economic and political changes since the collapse of communist system. 

One of the fundamental changes that were introduced in 1998 was the implementation of a Currency Board system that was used to fix the exchange rate of Bulgarian lev to the German mark (later to euro) and total abolishment of discretionary monetary policy. The profound character of this reform marked most of the policy measures undertaken in the following years in the country’s economy and in the social security system as an inseparable part of it. The strong discipline effect of Currency Board exerts on the government and the central bank made possible the implementation of difficult but needed reforms concerning privatization of state assets, taxation, and changes in the social sphere, especially in the pension system.

All changes that were made at the beginning of the new century were consistent with the regulations of the European Union. Unfortunately some of the reforms were delayed in time; others have not been introduced yet, some others have been stopped. For example in 2011 the ruling party adopted a regulation that stipulated a gradual increase both in pension age and contributory service required for retirement. As a result the age for receiving pension benefits was planned to increase by 4 months each year until it reaches 65 years for men and 63 years for women.

In early 2000’s new legislation was adopted in the employment policy and as a result a special fund was established. The so called unemployment fund, together with the pension fund, the employment injury and occupational diseases fund and the common disease and maternity fund have formed the first pillar of the Bulgarian social security system. Each of these funds has its own budget. All of them are financed by special contributions that are paid by all working individuals and their employers and the resources are used on a solidarity basis. The contributory rate for the unemployment fund has been changed several times after 2000.