Bulgaria's economy continues to brighten

Bulgaria's economy "brightened" in 2022, according to the composite index of the Bulgarian Industrial Capital Association (BICA). The annual Economy in the Light survey, which measures the legal part of the Bulgarian economy, shows that the index has reached its highest level in the history of the survey.

The share of the informal economy in Bulgaria is still high compared to the northern countries of the European Union, but is approaching the average level of the southern countries of the bloc.

The business association cites several reasons for the economic upturn, including the more proactive activity of the NRA and the Customs Agency, which is reflected in increased checks and controls. Another argument is the scheme to compensate companies for expensive electricity, which required the declaration of real turnover and profits.

In its report, the association describes this as a "powerful motive" that has led employers to cut corners.

The increase in cashless payments has also helped.

The labour market, however, stands in the way of this success. The Confederation of Employers, which is opposed in principle to the administrative fixing of the minimum wage, the maximum insurable income and the increase in pensions without a comprehensive reform, points out that these three things

have a definite negative impact on the economy and in no way motivate employees to insure their real earnings.”

As a result, their increased administrative rigidity has led some employers and employees to resort to “grey” practices.

There has also been a deterioration in VAT collection, which the association attributes to the negative impact of reduced rates on certain groups of goods.

BICA President Vasil Velev compared the grey economy to the demographic crisis:

There is no pill to cure it.”

He stressed the need for more efforts to make it easier to set and pay taxes, to use the collected public funds more effectively and efficiently, to reduce the administrative burden on honest businesses and to punish those who are not honest with the state in a timely manner.

This article was translated with the support of DeepL.