Bulgaria’s Recovery Plan: What Could Have Gone Wrong, Went Wrong

Phoenix detail from Aberdeen Bestiary // Public domain

It is the summer of the second year of the COVID-19 panemic, and the European Union has generously opened its coffers to spend on post-pandemic recovery. Various governments of the EU are scrambling to put forward their best ideas to be funded by the new support scheme.

Against this backdrop, leaderless Bulgaria seems to be lost as to how to address the situation and take advantage of the opportunities to reform its economy. Failing to form a government and waiting for another election in early July, Bulgaria missed the deadline for introducing its plan to the European Commission on April 30, 2021.

This is not to discuss whether the policy objectives and directions set by the EU for the recovery investments are correct or not. Some objections are certainly valid, and the jury is not out whether there is a need for public investment in innovation (whatever this hollowed-out buzzword means today) or if the greening of Europe’s economy will be sufficient to curb climate change.

Debating the goals is mostly pointless, as the decision on them was taken a long time ago and changing them is not on the table. Therefore, the member states are left to fit in whatever reforms, spending, and projects in those broad goals.

And this is where Bulgaria is failing – the version of Bulgarian national reform plan as of this writing does not have the support of the majority of the political spectrum, and if it is presented to the EU institutions in its current state it is unlikely that it will bring much change to the Bulgarian economy.

Some of this is a consequence of the political instability of the country. It started only months after the begging of the pandemic and the economic crisis, with mass protests against mismanagement and general corruption erupting in the late summer of 2020

The 2021 general election failed to produce a working majority, as the previous government lost support and its nationalist coalition partner did not make it to parliament, but the newcomer parties were unable to agree on a joint government either. As a result, the country will be facing a new general election in early July, in hopes that a clear winner may emerge.

This leaves the recovery plan in a bit of a weird position. Those who originally wrote it are no longer in power, and cannot bear the responsibility for implementing it and defending it in front of the EU. The current caretaker government has clearly stated its desire to introduce significant changes and improvements to the plan, but it has little democratic mandate to do so, and no guarantee that those who take power after the next election would share its priorities and vision of the future.

Then, there are significant issues with the plan itself (at least at its current version). Its primary purpose, at least as intended by the EU, is to accelerate recovery and assure the bloc’s governments that they can spend more now without much concerns over matters such as debts and deficits. As it stands, however, instead of focusing on the here-and-now, the Bulgarian plan is looking far into the future, its spending spread over half a decade.

Of course, when this spending happens in the middle of the decade the crisis will be long forgotten and in little need of aid (one could argue the same for the EU’s overall slow and tardy response, but this is another matter).

Probably the most jarring element in the plan is the lack of any substantial reform in it. From the EU’s perspective, the spending package was a great opportunity to provide governments with funding to pass much-needed reforms that will improve their economic performance in the face of the crisis and going forward.

Instead, what Bulgaria offers is a heap of whatever projects the government had lying around, hastily bound together in a singular package and vaguely aimed at the stated goals of the EU. It is evident that the approach has been identical to that of, say, cohesion funds, but the recovery and resilience package is a completely different beast, which creates a substantial risk that Bulgaria’s proposals get shut down by the EU.

Then, there is also the matter of public support. The relevant parties – from business organizations, unions, NGO’s, to some branches of the government itself – have expressed various concerns regarding the expedience and purpose of the various measures proposed by the Bulgarian plan’s authors.

A good portion of the flak has been focused on the proposals for improving the energy efficiency of residential buildings, improving irrigation and the vague plans for reforming Bulgaria’s coal mining and energy regions, which will inevitably fall victim to the EU’s greening policies.

For the time being, there is little evidence that the now-out-of-office government has given any attention to such concerns, but this may well change with the next government.

This is not to say that Bulgaria is alone is mismanaging this opportunity; on the contrary, very similar stories to the one told above have been heard from many EU countries, and the EU itself is far from blameless.

The prospects of what the country can get from the plan, however, for the time being are bleak – it lacks leadership, does not offer substantial reform even in the medium term, and has failed to attract popular support.

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Adrian Nikolov