EU Issues Five Recommendations on Bulgaria's Macroeconomic Imbalances

Following the assessment of Bulgaria's 2015 National Reform Programme and Convergence Programme, the European Commission issued five country-specific recommendations on Wednesday.

As Bulgaria was currently experiencing excessive macroeconomic imbalances, decisive policy action and specific monitoring was required.

The recommendations were in the areas of: fiscal consolidation, taxation and health; financial sector; labour market and wage-setting; education; insolvency.

Bulgaria is currently in the preventive arm of the Stability and Growth Pact and according to forecasts there is a risk that the country might not comply with the provisions of the pact.

The European Commission recommended to Bulgaria to avoid deterioration in public finances in 2015 and achieve an adjustment of 0.5 % of GDP in 2016.

The Commission also called on the country to take decisive measures to improve tax collection, address the shadow economy and improve the cost-effectiveness of the healthcare system.

According to the recommendations, Bulgaria should complete a system-wide independent asset-quality review and a bottom-up stress test of the banking sector by December 2015.

The country was also advised to perform a portfolio screening for the pension fund and insurance sectors as well as review and fortify banking and non-banking financial sector supervision.

The European Commission also deemed as necessary for the country to improve the corporate governance in financial intermediaries.

The Commission also recommended the development of an integrated approach for groups at the margin of the labour market and the establishment of a transparent mechanism for setting the minimum wage and minimum social security contributions.

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