Bulgaria Systematic Country Diagnostic

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Public Disclosure Authorized

Public Disclosure Authorized

Public Disclosure Authorized

© 2021 International Bank for Reconstruction and Development / The World Bank

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Cover design:

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CONTENTS

Acknowledgments				8
Abbreviations			10
Benchmarking coverage and country acronyms		12

EXECUTIVE SUMMARY

13

1

2

INTRODUCTION

19

MEGATRENDS AND CROSS-CUTTING ISSUES THAT SHAPE DEVELOPMENT PATHWAYS		23
Governance and institutions					24
Population aging and demographic trends			25
Green transition				26
Digitalization				27
COVID-19crisis			28

3 RECENT DEVELOPMENTS				30
Trends in inclusion									31
What has held back progress in poverty reduction and shared prosperity?		34
4 OPPORTUNITIES FOR BULGARIA TO GROW FASTER
		44
Regulatory environment			45
Innovation and R&D					49
Upgrading skills					52
Fiscal policy for growth				57
Access to finance			61
Infrastructure			64

5 STRENGTHENING THE INCLUSIVENESS OF BULGARIA'S GROWTH								68
Economic participation and mobility															69
Social safety net																							75
Pensions																						79
Health and long-termcare																		82
Inclusive and sustainable regional development												88
Social stability and trust																		90
6 GREENING BULGARIA'S GROWTH MODEL											92
Government strategy and policies to achieve the goals set by the EGD									93
Decarbonizing Bulgaria's economy															95
Reducing waste and pollution by shifting to a circular, resource efficient economy				102
Leveraging natural assets and adapting to climate change						106
Resilience to natural hazards and climate shocks								110
7 PRIORITIZATION FOR FAST, INCLUSIVE, AND SUSTAINABLE GROWTH			113
References							122
ANNEXES							125
ANNEX 1Comparison with SCD-1:priorities and knowledge gaps			126
ANNEX 2Bulgaria Institutional Assessment
			129
ANNEX 3Poverty annexes with profile				146
ANNEX 4Gender dashboard			153
ANNEX 5Prioritization table			156
ANNEX 6Evolution of topics and priority areas from the original SCD to the SCD Update		160