EC recommends removal of Bulgaria from the excessive deficit blacklist

The European Commission (EC) recommended the removal of Bulgaria and Germany from a list of countries facing the threat of sanctions since they have brought their budget deficits under the EU 3% limit. This became clear from the report of Brussels on all 27 countries during the so-called economic semester. The progress made by Bulgaria and Germany was noted by both European Commissioner for Economic and Monetary Affairs Olli Rehn and EC President Jose Manuel Barroso. The EC said that Bulgaria reduced the budget gap to 2.1% in 2011, down from 3.1% in 2010. It also reminded of Brussels' forecast that the budget deficit would drop to 1.9% of GDP in 2012 and to 1.7% in 2013.

Germany’s performance was even better. Its 4.3% of GDP budget gap in 2010 declined to merely 1% a year later. If the European Council approves the proposal of the EC, Bulgaria and Germany will rank among the best performers in Europe – the countries which have brought their finances in order. Estonia, Finland, Luxembourg and Sweden are the only other countries which have avoided the excessive deficit procedure.

The EC believes that the regulatory environment in Bulgaria is unstable and unpredictable from an economic point of view because of the frequent legislative amendments. In order to increase our growth potential, we must improve the business environment, enhance innovation and reduce energy dependence. Steps should be undertaken to intercept illegal practices by simplifying and reducing administrative fees and burdens. Bulgaria was also criticised for the inadequate absorption of EU funds due to complicated procedures. The reduction of poverty and social exclusion were pointed out as a major challenge for the Bulgarian Government.