IME

Bulgaria has adopted the euro. After more than 28 years under a currency board arrangement, the country is entering a new stage of its development. The bank failures and hyperinflation of 1996–1997 wiped out people’s savings and pushed Bulgaria to the bottom of Europe, below 30% of the EU average in GDP per capita in purchasing power parity by the end of the 1990s.

The first few weeks after the introduction of the euro have passed, and all indications suggest that the new currency is gradually becoming dominant in everyday circulation. Despite some attempts to stir up tension, the initial days went relatively smoothly—with the expected pressure on cashiers in retail outlets, but without any serious systemic problems.

In 2024, just over 10,000 people moved into the Plovdiv district from other parts of Bulgaria. The largest group, almost 5,000 people, changed their address within the province itself, while there was also a significant inflow (over 700 people) from the capital, a clear sign that Bulgaria’s second-largest city is becoming increasingly attractive.

By a narrow vote, the European Parliament has effectively blocked the entry into force of the partnership agreement with Mercosur. This is yet another failure by the EU to improve its prospects for prosperity and economic transformation. The agreement that was signed is a step in the right direction, but delaying it means accumulating lost benefits—at a time when growth in the core of the euro area is dangerously close to zero.

After the summer recess, the Bulgarian Parliament rushed to change the rules for electing the chair of the National Statistical Institute (NSI). However, under the pretext of improving independence, this is simply an attempt to remove an inconvenient director who refuses to comply with the demands of political parties and institutions, even when they are contrary to the legislation and principles on which the statistical institute is based.

This week, it became clear[1] that hundreds of administrative judges received stuffed rabbits upon taking office. Some may say, ‘So what? It is a harmless gesture. However, such an act is not merely infantile. It: on the one hand, takes away from the judge (or at least some of the administrative judges) the human dignity […]

One of the recommendations of last week\'s IMF mission in Bulgaria is to \"cool down wage growth in the public sector.\" This is not the first time that the IME has commented on the accumulation of risks to fiscal stability as a result of ill-considered decisions to increase spending, and in particular wages in the defense and security sectors over the past year.

According to the European Court of Human Rights (ECtHR) in the case of Bosev v. Bulgaria the inclusion of rules for judicial recusal and withdrawals in national legislation reflects the legislator’s care “to eliminate any legitimate doubt as to the impartiality of a judge or court and represents an attempt to ensure impartiality by removing the causes of concern in this area”.

The declining number of nurses in Bulgaria over recent decades puts hospital healthcare services at risk. There is an unwritten rule that every doctor should have between two and three nurses to support their work effectively. However, in Bulgaria, this ratio is lower. While smaller hospitals in remote and sparsely populated areas are most affected by this issue, larger hospitals are not immune to it either.

In 2024, Romania will break the 50% government debt limit, becoming the EU country with the largest increase in the debt-to-GDP ratio since the start of the pandemic. High budget deficits - levels of 6-9% of GDP - have pushed Romania\'s debt from 35% in 2019 to 52% in 2024, with a forecast of close to 60% in 2026. In just a few years, Romania will likely have a higher debt than Germany.