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Bulgaria
Please note: All linked documents are in PDF format
| Objective |
SO Number |
FY 2004 |
FY 2005 |
FY 2006 |
| Private Sector Development |
183-0130 |
8,221 |
7,120 |
6,790 |
| Rule of Law |
183-0220 |
5,744 |
7,050 |
7,900 |
| Local Governance |
183-0230 |
4,850 |
4,860 |
5,062 |
| Cross-Cutting Programs |
183-0420 |
3,610 |
2,989 |
3,082 |
| Transfers |
|
5,410 |
4,981 |
5,166 |
| Total (in thousands of dollars) |
27,835 |
27,000 |
28,000 |
|
The Development Challenge:
Bulgaria's transition to a fully-functioning, free-market democracy is marked by strong public support for full Euro-Atlantic integration. In 2004, the country achieved its primary foreign policy goal of entering NATO, finalized negotiations with the European Union (EU), and is expected to sign its EU accession treaty in early 2005, thus making EU membership in 2007 almost certain. The country has asserted itself as a stabilizing force in Southeast Europe. Bulgarians have a clear sense that their future lies with the political, economic, and social values of the West and are eager for that future to arrive.
U.S. national interests in Bulgaria are two-fold: Bulgaria remains a dependable and reliable ally in the war on terrorism and has the potential to continue as a stable political and economic anchor in Southeastern Europe. In this context, after U.S. presence in Bulgaria for 15 years, Bulgaria has demonstrated repeatedly that it is a staunch friend of the U.S. and a reliable partner in a conflict-ridden region. USAID believes that by the time USG programs end in 2007, Bulgaria will be securely grounded at all levels and its successful market economy will be better integrated in the international markets. USAID legacy programs are expected to continue the tradition of a strong and strategic alliance between the U.S. and Bulgaria.
Despite Bulgaria's impressive developments and the irreversibility of Bulgaria's transition, the majority of the population has yet to feel the change for the better. Bulgaria remains a lower middle income country with reforms that are far from complete. Like many countries in the region, Bulgaria suffers from high levels of organized crime and corruption. Reform of the judicial system is a pressing need. Lack of transparency and accountability; serious delays in the judicial system; legal professionals with inadequate legal expertise and experience; the politicization of the judiciary; human trafficking; and waste, fraud, and abuse in government procurement feed general distrust in public institutions, hamper business investment, and prevent Bulgaria from meeting international and EU standards in regards to the rule of law. Fiscal decentralization is far from complete and requires political will to speed it up. Notwithstanding the favorable legal environment and increased number of active non-governmental organizations (NGOs), the sustainability of the civil society sector remains fragile, with more than 80 % of its funding still coming from foreign sources. Media, while generally free, face pressure from the government and special interest groups. People from ethnic and cultural minorities, notably the Roma, continue to be marginalized.
Bulgaria has achieved sustained economic growth of over 4% annually during the past six years. In spite of the solid macroeconomic performance and sound fiscal discipline, the country has failed to regain its actual pre-transition gross domestic product levels and remains among the poorest of the EU applicants. Per capita income is still about 30% of the EU average and unemployment and low living standards persist. With a monthly minimum wage of $76, average monthly salary of $190, and an average pension of $80 monthly, the compensation received by Bulgarians, on average, is among the lowest levels in Southeast Europe. Living standards have not yet improved for all Bulgarians. Ethnic minorities, the long-term unemployed, and people with low education continue to face poverty. One of the key challenges, therefore, is to ensure that growth generates wealth for all groups in society. To realize Bulgaria's potential and meet the aspirations of all, the country will need to continue to tackle the remaining challenges in its transition agenda such as: creating an efficient and competitive business environment, finalizing second generation economic reforms, creating better and more transparent government systems, and improving the quality and access of social services for all citizens.
The outcome of the upcoming Parliamentary elections in the spring of 2005 poses a major challenge to the pace of the reforms in Bulgaria. The lack of strong support for any of the political parties that will run for the new Parliament imposes the need for establishing coalitions. This in turn raises concerns about the political stability of the new cabinet and its efficiency to drive the reforms. These issues will possibly be exacerbated by the lack of appropriate administrative capacity to absorb the upcoming EU structural funds, particularly at local and regional levels
The USAID Program:
USAID's objectives are in compliance with the priorities identified in Bulgaria's approved Graduation Strategy from AEEB assistance after FY 2007 (with no new funding after FY 2006). These are: enhanced rule of law, economic growth and increased prosperity, local governance, and program support. These objectives will continue to help USAID in FY 2006 achieve the highest impact possible and to ensure sustainability of USAID's legacies in Bulgaria. To assist in the process of institutionalizing the rule of law, USAID devotes resources to modernizing court administration, increasing the capacity of legal professionals to apply the law equally and swiftly, combating corruption, and anti-trafficking in persons. On the economic front, USAID fosters the development of a competitive and thriving market economy as an approach to spread the benefits of increased prosperity for the majority of Bulgarians. USAID will seek to improve the Bulgarian business climate, boost economic growth, and contribute to job creation by improving the legal/regulatory environment to attract investments and encourage the growth of small and medium enterprises, enhancing the competitiveness of priority industry clusters, facilitating trade, and providing access to credit. USAID will continue to support the reform of the labor market by targeting efficiency as a prerequisite for economic growth. In the area of local governance, USAID focuses on fiscal decentralization, building the capacity of municipalities to cope with increased responsibilities, and supporting NGOs that advocate on behalf of local governments. This effort is complemented by community level activities which provide increased opportunities for ethnic minorities and encourage greater ethnic tolerance.
FY 2005 funds will be used to implement ongoing programs primarily in the areas of the rule of law, economic growth and prosperity, and local governance, community development, and ethnic integration. USAID also intends to use FY 2005 funds to carry out a limited number of new activities such as political parties' election assistance and loan guarantee programs or modify existing ones in response to changing circumstances. Given the country's graduation from AEEB assistance after 2007, USAID will actively work with other donors and partners in FY 2006 to leave viable legacy mechanisms after U. S. funding ends. A significant part of FY 2006 funding (the last year of new funding) will be used to enhance the sustainability of indigenous institutions.
Other Program Elements: In addition to assistance managed by USAID/Bulgaria, the country receives assistance through USAID regional programs dealing with competitiveness, infrastructure, financial stability, the Southeast Europe energy market, energy regulators, academic training (the Eastern and Central Europe Scholarship Program), and media. Bulgarian non-governmental organizations benefit from the Balkan Trust for Democracy and the American University in Bulgaria continues to receive USG support.
Other Donors: With the EU currently being the largest multilateral donor, EU support to Bulgaria has progressively increased, providing nearly $350 million per year. Assistance from the EU encompasses institution building, regulatory infrastructure development, and economic/social cohesion; agricultural and rural development; and environment and transport infrastructure. The EU Accession Roadmap envisions a progressive increase in assistance towards 2006. Given that increased funding is subject to the country's absorptive capacity, Bulgaria might not be able to take full advantage of this opportunity. World Bank assistance to Bulgaria has been set at $750 million for 2002 - 2005. The United Nations Development Program centers its Country Cooperation Framework on good governance, job creation, information technology, and environmental protection.
USAID is the leading bilateral donor in Bulgaria actively working with other major donors to streamline coordination efforts. Other major bilateral donors include the Swiss Government (natural resources management, social services, small and medium enterprises (SMEs)); Dutch Government (agriculture, industry and technology, energy and environment, transport and infrastructure, civil society); German Government (agriculture, SMEs); Japanese Government (management training), and the British Know-How Fund (public sector, civil society, social welfare). While most bilateral donors have not officially tied their support to Bulgaria's EU accession date, their timing and priorities are in line with the major accession requirements.
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