Bulgaria should reinforce the budgetary measures in the light of the emerging gap with the Stability and Growth Pact requirements, the European Commission (EC) said.
The Southeast European country should also scale up the reform of the energy sector in order to increase competition, market efficiency and transparency, the Commission said in its recommendation on the country's 2014 national reform programme and convergence programme, released on Monday.
"Based on the assessment of the 2014 Convergence Programme and the Commission forecast [...], the Council is of the opinion that there is a risk of deviation from the medium-term objective in 2014-15," it added.
The objective of the budgetary strategy outlined in the 2014 Convergence Programme is to reach the medium-term objective of a structural deficit of minus 1.0% of gross domestic product by 2016, the Commission said, adding that the medium-term objective is more stringent than what the Stability and Growth Pact requires.
In 2015, Bulgaria should strengthen the budgetary strategy to ensure reaching the medium-term objective and remain at it thereafter, it also said.
According to the Commission, Bulgaria should also implement a comprehensive tax strategy to strengthen tax collection, tackle the shadow economy and reduce compliance costs.
The Commission also recommended to Bulgaria to accelerate the reform in the energy sector.
"Competition in the electricity and gas sectors remains limited. Areas of particular concern for improving the functioning of the energy markets include the lack of electricity and gas exchanges and the absence of transparent wholesale market," it noted.
Bulgaria should remove market barriers, reduce the weight of the regulated segment, step up efforts for the creation of a transparent wholesale market for electricity and gas, phase out quotas, and strengthen the independence and administrative capacity of the energy regulator, the Commission said.
The country should also accelerate interconnector projects with neighbouring member states and candidate countries and enhance the capacity to cope with disruptions, it stressed.
"The free market in electricity is dominated by a sole supplier and its limited size means that competition cannot fulfill its function of ensuring cost efficiency," it added.
The Commission also recommended to Bulgaria to continue to improve the business environment, especially for small and medium enterprises, improve the public procurement system, enhance the quality and independence of the judiciary, and step up the fight against corruption.