Bulgaria will need 40 years to achieve full convergence to European Union income levels, even with a sustained growth differential of two percentage points, the International Monetary Fund (IMF) said.
"Convergence to EU income levels over the coming decades requires accelerated growth. In the baseline, [Bulgaria's] GDP growth is projected to increase from 0.5% in 2013 to 3.0% in the medium term, whereas the EU is projected to reach a growth rate of 2.0% by 2018—a difference of one percentage point that implies only very gradual income convergence," the IMF said in a country report last week.
Bulgaria, which joined the EU in 2007 together with Romania, remains its poorest member, with income levels about half the EU average.
More ambitious and politically challenging reforms will be needed for Bulgaria to increase the pace of convergence to European income levels, the fund noted. Adverse demographic changes, accelerated by emigration, add to the challenge.
“Progress will require addressing long-standing institutional and broader structural rigidities to enhance domestic competition, reinforce the rule of law, address infrastructure gaps, and strengthen human capital,” the IMF commented.
The fund also said it views the country's judicial system problematic, and that corruption and cronyism are widespread.
The IMF noted that increased absorption of EU funds through improvements of the administrative capacity and upgrading planning, execution, and monitoring systems will support growth and investment.