Larisa Manastirli: Where is Bulgaria After Ten Years in the EU?

.

In November 2016, Bulgarian opposition Socialist, Rumen Radev, won the presidential election, defeating the centre-right speaker of parliament, Tsetska Tsacheva, an ally of Prime Minister, Boyko Borissov. The PM had pledged to step down if his candidate lost, and he did thus triggering an early election.

Larisa Manastirli, Director for Bulgaria at the European Bank for Reconstruction and Development (EBRD), which is a leading investor in the Bulgarian economy, spoke to Andrew Wrobel, about the reforms the country has introduced and the improvements that are still required, ten years after Bulgaria joined the European Union.

Larisa Manastirli (courtesy of the EBRD)

Exactly ten years ago, Bulgaria became a member of the European Union. How have these ten years changed the country?

Well, a number of infrastructure investments have been undertaken, for example we have a Metro here in Sofia, public transportation, etc., companies, the banking sector and culture have received significant support among other sectors. 

Also, the EBRD’s approach to Bulgaria has changed. Previously we were supporting the accession process and helping companies prepare for it. The first years after the accession were the peak of our investment in infrastructure. We worked with municipalities and utility companies and, most importantly, with the private sector.  It was also a period when FDI really picked up. There was a lot of interest for Bulgaria and a lot of foreign companies were entering the country, as it joined the large EU market. 

However, if we look towards the end of that ten-year period, a feeling persists that certain reforms haven’t been implemented; the pace and the quality have not been as were expected.

Has the political situation had any impact on that?

To some extent. If we look at the political situation, I think 2013 and 2014 were quite volatile. It is true that any changes in the government slow the economy down. In 2014, these internal uncertainties were compounded by the external challenges in Syria, Ukraine and Russia. 

You mentioned the fact that a lot of expectations haven’t been met.

That is correct. Many were inspired by the EU accession and we thought those issues would be sorted out quickly. Unfortunately, many rankings currently place Bulgaria among the EU countries with the highest level of corruption and with a relatively weak investment climate. There is a lot of room for improvement. 

There are complaints about public tenders, especially in the construction sector. There is a lot of discussion about how the global financial crisis has affected the level of FDI in Bulgaria and how the internal situation has had a negative impact on our returning to the pre-crisis FDI level. 

When I spoke to Bojidar Loukarsky, the Minister of Economy, in April last year during his visit to London, he said that Bulgaria remained an island of stability, both politically and economically, in Europe.

Indeed, since the autumn of 2014, when Boyko Borisov’s government came to power, and until the recent elections and the resignation of the government, Bulgaria remained a relatively stable country. 

The coalition government has had a difficult job and a somewhat slower pace of reforms is the price it has paid for political compromises. However, the situation has changed now and we are facing new uncertainties. 

We hear that Bulgarians could go to polls in the spring at the earliest. President-elect, Rumen Radev, will take over on January 22, and will dissolve the Parliament.

I am hoping to see more political stability soon. This is crucial for investors. 

So, we have another six months of uncertainty. What does it mean for the economy?

Our latest forecast, which was published in November 2016, predicted growth of 2.8 per cent in 2016 and 2017. We expect internal consumption, backed by the increased wages, to drive this growth. 

So you stick to the forecast. Do you think the current situation will have an impact on foreign direct investment?

It’s difficult to predict. Nowadays, when you look at FDI, these are mainly smaller companies which are less affected by the political situation. It is different though for larger companies, who might delay their decision to enter the market. 

In general, I don’t think we will have a drastic decrease in FDI, as we haven’t really had a boom period either. The level of foreign direct investment in Bulgaria is rather modest. 

I would like to circle back to the reforms we discussed earlier. The EBRD is known for its policy dialogue. You’ve mentioned a couple of areas that haven’t improved since Bulgaria joined the EU, in 2007, but which areas need immediate improvement?

I don’t think there is an area which hasn’t seen any improvement at all. However, these improvements haven’t met expectations as far as the pace and the quality are concerned.

Good governance and the fight against corruption are crucial areas. There was a momentum last summer, and the draft law on anti-corruption was approved in its first reading. However, with subsequent changes in the government, this momentum has been somewhat lost.

The EBRD is committed to supporting the implementation of the future anti-corruption law. We will be happy to help build the capacity of the anti-corruption bureau, the creation of which is envisaged in this law.  

We are also considering working with the commission on protection of competition. In addition, we have offered the government our support in public procurement. Positive steps were taken to enable electronic public procurement and we intend to encourage SMEs’ access to smaller public contracts. 

So, fighting corruption is critical. Any other area that seems urgent?

The judiciary system, the rule of law. The EBRD can help with training for judges on accounting, taxation, commercial and insolvency issues.

The public-private dialogue between the government and the private sector is another area. We have a lot of experience here, in supporting investment councils in the several countries where we invest. 

We are also helping develop the local capital market. There are opportunities to create alternatives to banking — the development of the non-banking financial market is crucial as small and large companies are seeking alternative sources of funding. 

Yet another area where we are trying to work with the government is the EU-funded financial instruments in Bulgaria and a new structure to create a sustainable vehicle which could be used to improve the efficiency of EU funds’ absorption.

Larisa Manastirli (courtesy of the EBRD)

So, there is quite a lot of room for improvement but going back to the corruption issue, how would you compare this to how that problem has recently been dealt with in Romania? The are comments that the perceived level of corruption is falling and it is easier to do business. The down side is that government officials sometimes delay making decisions, so as not to be thought of as corrupt.

Bulgaria is indeed often compared to Romania, including in fighting corruption.  I believe Bulgarians can draw conclusions with the Romanian experience. Bulgaria is lagging somewhat. It is behind in fighting corruption. 

But Bulgaria is not only negatives, is it?

Of course, not. Bulgaria is a wonderful country. There are the Black Sea, mountains, fabulous weather and nature. There are amazing tourist destinations, archaeological sites and cultural places. Take Plovdiv as an example.

Indeed, I spoke to the Mayor of Plovdiv last year.

The people want to live in a fair society. They want to work in order to improve the situation in their country. People in Bulgaria are very hardworking, well qualified and with a good command of foreign languages. 

Despite the brain drain, the potential is enormous. With some incentives, the demographic situation can be improved and those who left could be convinced to come back. 

There is also industry, where foreign companies can invest. Which sectors do you see as most promising? 

Bulgaria is a very good example of a diversified economy with many industries being developed. Great examples are agriculture and food production, automotive, pharmaceuticals, chemical, metallurgy, machine production, mining, tourism, services.

RELATED ARTICLES

Prospering Czechia Still Needs a Bigger Workforce

prague emerging europe

Mayor: Armenia And Its Capital Yerevan Offer Safe Investment And Tourism To a Growing World

Retail Rents Rise Across Emerging Europe

Na Prikope Prague

Azerbaijan, Georgia, Turkey Launch New ‘Silk Rail’ Link

21st century Manufacturing Arrives at Great Stone

Great stone

Czechs Hold Emerging Europe’s Most Powerful Passport

Emerging Europe Makes Some Progress on Closing Gender Gap

world economic forum gender gap report

Estcoin: Estonia’s Own Digital Currency?

1 euro coin money (EUR) currency of European Union Estonia over blue background

IMF Urges Croatia to Speed Up Reform

croatia

PE and VC Investment In CEE Is At an Eight-Year High

venture capital

Tech Giant Expands Romanian Operations

Emerging Europe to Record Positive Growth Across the Board in 2018

coins growth

Belarus Steps Up Liberalisation of Business

belarus

CEE Tech Growth Continues: Poland and the Czech Republic Lead the Way

technology

Nadiya Savchenko: I Dream of a Great Ukraine

Panorama of the top part of the Andrew's Descent from Castle Hill in springtime in Kiev Ukraine.

ICT Growth Continues to Boost Bosnian Economy

ict, it

Hungary Today: Potential and Challenge

Chain bridge on Danube river in Budapest city. Hungary. Urban landscape panorama with old buildings and domes of opera

Estonia Leads Baltics in Cutting Sugar in Food and Drink

China Agrees to Build High-Tech Business Park in Serbia

BELGRADE SERBIA - SEPTEMBER 29 2016: View on the city center and the junction of Rivers Sava and Danube in Belgrade Serbia.

One in Five Poles Unaware of Source of Funds for 500 Plus Programme

Chickens Blamed for Romanian Budget Deficit

Two white chickens or hens inside a chicken coop or hen house seen through chicken wire.

Bad Payers Still Causing Problems for Romanian Firms

Close up Romanian currency note, LEI or LEU, Romania

Lviv Is the Pearl and the Soul of Ukraine

Georgia Leads Emerging Europe in Ease of Doing Business Report

Baltic Bank Merger May Tempt Polish Heavyweight

DNB Bank Vilnius

Ukraine’s Economic Recovery: Good, But Slow

ukraine money

Poles Still Keen on German Jobs

Brandenburg Gate in Berlin in Germany. The Brandenburg Gate is a triumphal arch a city gate in the center of Berlin. It is one of the most known sites in Berlin.

Beyond Borders: Immigration Within the EU

refugees immigrants

Warsaw Rising: The Polish Capital’s Skyline Gets Even Taller

varso

Belarus’ Economy Is Slowly Recovering From Past Declines

Air Passenger Volumes Reach Record High in the Baltics

airbaltic

Estonia Leading CEE Country in WEF Competitiveness Index

pharmaceutical factory woman worker operating production line at pharmacy industry manufacture factory

HSBC Reports CEE Growth Surge in Q3

romania national bank

Ukraine’s Finance Ministry Wants Urgent Tax Reform

All for One, and One for All

GE

Kaczyński Defends PiS Record

Does the Sceptre of Separatism Haunt Emerging Europe?

Szekely Land Flag

Despite Public Anxieties, Migration is Playing a Key Role in ECA Growth

Bratislava city aerial panoramic view. Bratislava is the capital of Slovakia.

SEE Link — Sharing SEE Europe’s Hopes for a Brighter Investment Future

Albania’s Economy Booms Despite Political Infighting

Panorama view to the city Tirana Albania

Lithuania Gives Innovation a StartUp

MILAN ITALY - MAY 2: People visit Lithuania pavilion at Expo universal exposition on the theme of food on MAY 2 2015 in Milan.

A Risky Evaluation of Croatia’s Economy?

ZAGREB, CROATIA - JULY 17, 2017: Square Ban Josip Jelacic with tourists and trams on a summer day in Zagreb. City of Zagreb is the capital of Croatia.

IMF Wants Banking Sector Reform in Western Balkans

croatia national bank

Changes Are Making Ukrainian Banking More Aligned with International Standards

CEE Nation Brands Still Behind Western Counterparts

TALLINN ESTONIA- JUNE 17: View of the modern high rise buildings on border with an old part of the city on June 17 2012 in Tallinn Estonia

Macedonia — Stepping Out Of the Shadow Of the Balkans

More Brexit Fears As the UK Proves To Be A Needed Member

City of London view from Waterloo Bridge. This view includes: St. Paul`s Cathedral The Gherkin Tower 42 and Blackfriars Bridge.

Latvian Deputy Prime Minister Highlights Riga’s Potential

riga

Lithuania Handed Top Marks for Business Services

Beautiful panorama of Vilnius Old Town taken from Gediminas hill; Lithuania

Georgia’s Growth Continues

Batumi, Adjara, Georgia - May 27, 2016: Batumi, Adjara, Georgia. Gogebashvili Street Road And Marine Station Or Maritime Station Building Batumi On Background

e-Estonia: Believe the Hype

IMF Increases Growth Forecast With Emerging Europe Prominent

Dambovita river and center of Bucharest at sunset time Romania.

Continental Launch Largest Ever Lithuanian Greenfield Investment

kaunas lithuania

Regional News Outlets: The Real Target of Poland’s New Media Law?

poland media

Euroscepticism in Serbia: An Image Problem?

TV Still a Star for CME

Valga and Valka – Where Estonia and Latvia Work Together

Valga valka emerging europe

EU: Consumption Still Driving Growth

More EU Help for Belarus SMEs

GRODNO BELARUS - DECEMBER 13 2013: Seamstress in textile factory sewing with a industrial sewing machine .

Baltics Seek Lockstep With High Tech States

Euro money: Macro view of euro coin and bill. Suitable for financial, monetary, euro or European Union concepts and ideas

Fitch And the World Bank: Economic Growth To Remain Solid Within CEE In 2016

Ukraine to Restart Privatisation to Realise Profits

Pricatisation electricity ukraine

Emerging Europe Back on Track to Convergence

wiiw

Chris Lowney — What Jesuit Spirituality Can Teach Us About Global Leadership

Romania’s Budget Deficit ‘Should Start Alarm Bells Ringing’

BUCHAREST ROMANIA - June 29 2017: Romanian Prime Minister Mihai Tudose during a swearing-in ceremony at Cotroceni palace in Bucharest capital of Romania June 29 2017.

Czech Election Result Could Delay Euro Adoption Until 2025

czech banknotes nominal value two and five thousand crowns on white background. 300 000 Kc is approximately 12 450 US dollars (USD) or 11 100 Euro (EUR)

Bulgaria and Romania Get EBRD SME Boost

Startup Diversity Teamwork Brainstorming Meeting Concept

Poland’s Flying Circus

airport poland

Slovakia: Growth Continues But Problems Remain

Poland Fails to Spend Billions of Euros in EU Funds

euro banknotes

Croatian Salaries Are Growing in Line With Other CEE Countries

Dubrovnik Croatia emerging europe

Belarus Introduces New Business-Friendly Auditing Procedures

MINSK, BELARUS - AUGUST 15, 2016: Aerial view of the southwestern part of the Minsk with Palace of Sport and old and new other buildings. Minsk is the capital and largest city of Belarus.

After Economic Shocks Armenia Plans for Macroeconomic Stability

yerevan armenia minister of finance

Economy Minister: Internationalisation Is the Key To the Slovenian Economy

EconMin: Bulgaria — Number One Outsourcing Destination And an Island of Stability in Europe

EY: Belarus’ IT Scene Is Thriving

High tech park minsk

Still Potential for Growth in CEE as Economies Stabilise

Georgian PM Reshapes and Reshuffles Cabinet

Giorgi Kvirikashvili

The Reality in Romania Exposes False Perceptions Of The Country

Poland to Switch from Emerging to Developed Market by September 2018

warsaw stock exchange

Kraków: Officially Emerging Europe’s Most Elegant City

Krakow. Image of Krakow Market square, Poland during sunrise.

Trans Adriatic Pipeline Will Fuel Albanian Growth

Xanthi. Greece - July 30 2017: aerial view of construction of gas pipeline Trans Adriatic Pipeline - TAP in north Greece. The pipeline starts from the Caspian sea and reaches the coast of southern Italy

Meghri Becomes Armenia’s Third FEZ

armenia emerging europe

Chinese Electric Car Maker Seeks Emerging Europe Base

zhi dou d2

CEE Emigrants Could Boost Their Countries’ Economies

Londoners walking through Millennium Bridge with St.Paul's Cathedral at the background after sunset - London, UK

Do Your Homework First and Starting Business in Poland is Easier

Lithuania Set to Streamline Competition Legislation

Industrial dock with cranes on the quay

Romanian Economy Grows Fast in 2017

Brasov cityscape panoramic and aerial view over medieval architecture of Brasov town, in Transylvania Romania

Ukraine to Make New Privatisation Push

Moldova Launches New e-Procurement System In Search For Positive Change

Photo team work process, holding contract hand, signs documents. Account managers young crew works with startup project.New idea presentation, analyze marketing reports.Blurred, film effect, horizontal.

Romanian Cabinet Reshuffled as New Splits Emerge in Ruling Party

BUCHAREST ROMANIA - MAY 25 2014: The Victoria Palace. Victoria Square.

Measure, Strengthen, and Grow

dacia brand

CEE Lags in Business Connectivity

ANIS romanian ICT

High Real Estate Prices at Home Force Czech Investors Abroad

Construction of the Petrin lookout tower in Prague Czech Republic

Czech Republic Raises Interest Rates

czech koruna

Western Ukraine Could Be an Entry Point into the Country

Ukraine Is Offering Europe Unique Combat and Technological Experience

Serbia, Belarus and Ukraine Ranked Lowly by Wharton Business School

Kyiv Ukraine - April 172017: The postal square in Kiev on Podol the Dnipro river. view of the square from the river panorama

Poland’s Business Constitution Must Be Finalised

Front of finance ministry in Warsaw Poland with a fountain framing the entrance. Could be used for images about Euro currency problems

CEE Is Key to China’s Belt and Road Initiative

Shanghai skyline Panoramic view of shanghai skyline and huangpu river Shanghai China

Putin Urges Belarus to End Oil Transit Through Lithuania

Athens Greece - May 27 2016: Russian President Vladimir Putin delivers

World Bank: Brexit Hides Greater Challenges to the European Union and the CEE Region

Škoda too Strong for VW Group

MLADA BOLESLAV CZECH REPUBLIC - MAY 30: Skoda Octavia on conveyor line during Doors Open Day at Skoda Auto a.s. factory. Skoda auto celebrated 120 years since its founding on May 30 2015 in Mlada Boleslav.

Sunday Trading in Poland Under Renewed Threat

Serbia Drafts New Competition Law

serbia belgrade flag

GE Inaugurates Its New Bucharest Software Centre

Asian Outsource Developer Team Sitting At Desk Working Laptop Computer Mobile Application Software Real Office

Polish Shoppers in Hunt for Eggs

eggs in rack

EU Membership and Transition into Market Economies Have Helped CEE Achieve Social Progress

Lviv Region in Double Logistics Boost

goods train logistics

Global Players Dash for Tempting CEE

dollar pound euro coin on euro background.

Romanian Car Maker Dacia Sees Sales Boom

Sables d Olonne France - May 07 2017 : Dacia Tour 2017 is a commercial operation organized by the car builder in order to present its cars throughout France - Close-up on cars

Bulgaria: Real Estate’s New Frontier?

Lithuania Wants to Bring Home its Skilled Workers

VILNIUS - FEBRUARY 25: Many people choose books at the indoor book

EU Commissioner Launches Veiled Attack on Poland and Hungary

eu commission

Budapest’s Property Boom Goes Nationwide

building

UK Economic Growth Slows as Brexit Uncertainty Bites

flags of UK and EU combined over icons of London - Brexit concept

Hungary’s Solar Dreamer

hand sun and blue sky with copyspace showing freedom or solar power concept

Košice Business Matchmaking Event Brings in Hungarians

kosice, slovakia

Latvia Urged Not to Increase Expenditure As Economy Grows

Riga, Latvia - August, 2010: Panorama view from Riga cathedral on old town of Riga, Latvia

Effective Policies Have Strengthened the Georgian Economy

TBILISI GEORGIA Jul. 18 2017: Bridge of Peace is a bow-shaped pedestrian bridge a steel and glass construction over the Kura River in downtown Tbilisi capital of Georgia

Is Prague the New Face of Overtourism?

prague tourists

Slovenia Sets Green Vehicle Deadline of 2030

ljubljana

IMF: Institutions Key to Sustainable Growth

IMF

Poland Stays Cool on Euro Adoption

Euro cash and Zloty on one photo.

Why Was Zapad-2017 So Important?

russian tank belarus zapad

Poland’s Q2 2017 Growth Is Stronger Than Expected

WARSAW, POLAND - MAY 07, 2016: Building Palace of Culture and Science among the modern buildings of the city

Poland Is Set To Become a Large Economic Zone

Aerial view over the building materials processing factory. View from above.

CEE Boosted by Positive Tourism Trends Across the Region

cruise ship in Kotor Bay Montenegro. Aerial view panorama. Kotor bay Montenegro.

Baltic States to Launch Combined Capital Market

capital markets

Budget Chaos Hits Romanian Leu

Different Romanian Lei Banknotes on the table

Jadranka Joksimović: Serbia Takes Its Candidacy of the EU Seriously

bigstock-Joint-Press-Conference-Of-Serb-155400338.jpg

Ukraine’s Q2 Growth Climbs

kyiv ukraine emerging europe

Derek Chollet: There Is a Resurgence of Supporters of the Transatlantic Relationship

white house

Albania’s Construction Sector Supports the Country’s Growth

SARANDA, ALBANIA - MAY 18: View of the city Saranda, most important tourist attraction of the Albanian Riviera on May 18, 2017 in Saranda, Albania.

World Bank’s Doing Business Report 2016 Resume For Emerging Europe

Non-Financial Reporting No Longer a Secondary Consideration in CEE

Go East

Kosovo: A Population of Talented Young Entrepreneurs Waits at Europe’s Door

Digital Business Space Gives All Businesses an Office in Sarajevo

Sarajevo Bosnia and Herzegovina - August 24 2015. View from Vraca Memorial Park with building of Avaz Twist Tower

Doing Business Across Eurasia Could Be Easier

Eurasia emerging europe schneider group

Automotive and Transport Companies Dominate the CEE Region

Car bodies on the production line inside automobile factory

Growth Continues for State-Owned Azerbaijan Airlines

Azerbaijan Baku - September 16 2015: View of the Heydar Aliyev International Airport sign in Baku Azerbaijan. The airport is the home of Azerbaijan Airlines the national flag carrier.

Montenegro Accelerates Legal Reform

montenegro law reform

Romania Cuts Income Tax, Introduces Solidarity Tax

CLUJ NAPOKA ROMANIA - OCT 2 2016: People on the central street of Cluj Napoka - the unofficial capital of Transylvania.

Sarajevo Stock Exchange Connected to SEE Link

sarajevo stock exchange

CEE Must Improve Infrastructure and Logistics

Aerial view of Gliwice Sosnica motorway junction. There are international traffic in four directions

Investigations Into the Corrupt Ukrainian Fuel and Energy Sectors

Ukrainian money hryvnia. The national currency. Corruption in Ukraine

‘Traditional Values’: A Potent Weapon Against LGBT Rights

gay rights putin

Polish Labour Market Deficits Are Impacting All

Construction site with crane and building. Construction site in western europe - in Poland.

Bosnia and Herzegovina: Focussing on Stability and Business Climate

Sarajevo Bosnia and Herzegovina - August 23 2015. View of Miljacka River in Sarajevo city

Visegrad Group Looks East

Estonia Proposes Bill of Rights and Responsibilities for Robots

Robotic hand accessing on laptop the virtual world of information. Concept of artificial intelligence and replacement of humans by machines.

Business Standards Are High in SEE But Vary Widely

Aerial view of The Cathedral of the Assumption in Varna

EU May Offer Georgia, Moldova and Ukraine Customs Union and Schengen Access

schengen

The Polish Government’s Mid-Term Report: Must Do Better

Front of finance ministry in Warsaw Poland with a fountain framing the entrance. Could be used for images about Euro currency problems

GSA Names Ukraine as UK’s Offshoring Destination of the Year

map of ukraine emerging europe

Lech Wałęsa: Hard Options Can Force Nations to Get Down to Work

Economic Confidence Rises Across Eurozone

Leave a Reply

Your email address will not be published. Required fields are marked *