BULGARIA Trends and Developments Contributed by: Yordan Naydenov and Hristian Gueorguiev, Boyanov & Co.
As of the time of preparation of this material (March 2026), there were no signs of any approaching de- escalation of the US-Israeli conflict with Iran. This new hotspot so close to Bulgaria may have several sig - nificant negative implications, ranging from economic instability to heightened national security concerns. Since the start of the conflict, fuel prices have surged from approximately USD70 to over USD110 per bar - rel, and the possible prolonged blockade of the Strait of Hormuz could push oil prices to unknown heights. Bulgaria does not buy Iranian oil directly, yet the ongo - ing US-Israeli-Iran conflict affects the country through rising global prices and possible fuel shortages. As far as national security is concerned, Bulgaria, due to a multitude of reasons, has materially delayed the so-needed rearmament of its military forces, and that is now leading to serious concerns about Bul - garia’s capabilities to react in case of air strikes or other threats. While the government maintains there is no immediate military threat to the country, security measures have been heightened, and Bulgaria must rely on its immediate neighbours and members of NATO – Romania, Greece and Türkiye – to support it in guaranteeing the safety of its airspace. When discussing Bulgaria’s future development, its business environment and its potential for growth, it is essential to acknowledge other significant interna - tional elements that will play a pivotal role for Bulgaria (not necessarily in 2026 but over a longer term): • OECD membership: Bulgaria’s roadmap for OECD membership was established in June 2022, outlin - ing the specific requirements and steps neces - sary for accession. OECD membership is widely expected to enhance economic growth, attract foreign investment and elevate the country’s overall standard of living. Bulgaria is continuing its active work on implementing the recommendations of the OECD and is aiming to complete the accession process within 2026. • Recovery and Resilience Plan (RRP): Although the RRP was devised to mitigate the adverse effects of the COVID-19 pandemic, it encompasses broader goals aimed at stimulating economic growth and job creation. The RRP aligns with the EU’s sustain - able development objectives, emphasising green and digital transformation. Investments will target
energy efficiency, renewable energy sources (RES), digitalisation of education, and more. The RRP also seeks to reduce regional and social inequalities in Bulgaria through investments in education, health - care, infrastructure, etc in less developed regions, thereby enhancing the competitiveness of the Bul - garian economy and improving the living standards of its citizens. The EU Recovery and Resilience Facility has allocated EUR6.3 billion to Bulgaria to achieve these goals. Sadly, Bulgaria is still miles away from accomplishing this financial target. In 2025, Bulgaria received only EUR438.6 million out of the EUR653 million belonging to the second instalment, the request for which was submitted in 2023. When the payment came, Sofia had until that point received only one tranche in December 2022, amounting to EUR1.37 billion. It is to be noted that following an era of political insta - bility marked by the failure of the parliamentarily rep - resented political parties to form a stable government, after a series of consecutive parliamentary elections and six caretaker governments, which came into and went out of power in the period 2021–2024, Bulgaria finally managed to form a regular government on 16 January 2025. The new government efforts were main - ly directed at adopting the state budget in conform - ity with the eurozone criteria and dealing with related issues such as the tax and social security payment rate indexations. Another pertinent question, inherited from the previous era of instability, which is regret - tably still ongoing, is the expeditious election of inde - pendent regulators, as the mandates of many expired over three years ago, rendering them indecisive and reluctant to implement reforms or take serious meas - ures when necessary. Lastly, the completion of judicial reform following the latest amendments to the Bulgar - ian Constitution (in early 2024) is of great importance but is still falling behind the schedule of the Bulgar - ian Parliament. The Bulgarian courts currently lack a high degree of trust, which is crucial for the stability of the business environment and the execution of sig - nificant M&A transactions. In part, this is also due to the expired mandate of the Supreme Judicial Council, which is responsible for the appointment, promotion and dismissal of state judges. The parliament needs to elect those members of the Supreme Judicial Council that by law belong to the parliamentary quota of its
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