Bulgaria needs to implements reforms to modernise its economy, improve the business environment and enhance workforce skills in order to overcome the economic fallout caused by the COVID-19 pandemic, the Organisation for Economic Co-operation and Development (OECD) said on Friday.
As an open economy specialised in manufacturing exports, Bulgaria remains exposed to further shocks to external demand, even though prudent management of public finances has put the country in a solid position to provide continued support, the OECD said in an e-mailed statement, following the virtual launch of the organisation's economic assessment of Bulgaria.
"There is also room for investment in areas like transport, energy and digital infrastructure, which would invigorate the recovery," the OECD noted.
The OECD also said that it expects Bulgaria's economy to contract by 4.1% in 2020, and then expand by 3.3% in 2021 and 3.7% in 2022, confirming its December projection.
Bulgaria's gross domestic product (GDP) fell by 5.2% year-on-year in the third quarter of 2020, following an 8.6% decrease in the second quarter, according to the latest data published by the National Statistical Institute (NSI).
According to the OECD, Bulgaria's infrastructure investments should focus on improving Internet and transport connections in rural regions. Furthermore, housing reform has become more urgent to foster mobility and to ensure there is enough affordable housing in cities for workers taking up new jobs.
"Reducing regulatory barriers and business red tape, modernising competition policy and improving the governance of state-owned enterprises would all help to stimulate business dynamism in an economy where close to a third of public procurement contracts are granted without a call for tender. A more rapid insolvency framework would also reduce cases of non-viable firms holding back resources and banking credit," the OECD noted, adding that the recovery of Bulgaria's economy should also be used to accelerate the transition to a lower-carbon economy.
The OECD also called on Bulgaria to continue its efforts to fight corruption and organised crime, strengthen accountability, safeguard judicial independence, establish a coherent system of public integrity as well as to regulate lobbying and protect the independence of the media.
Bulgaria ranked the lowest, together with Romania, among EU member states in Transparency International's 2020 Corruption Perception Index (CPI) global survey, published on Thursday.