Public – Private Partnerships in Bulgaria: First Steps Round table CREATING SUCCESSFUL PUBLIC-PRIVATE PARTNERSHIPS June 13, 2007 Federal City Council, Washington D.C. Ruslan Stefanov Coordinator, Economic Program

Overview Why PPP? Economic and governance issues Doing PPP in Bulgaria: recent experience What PPP for Bulgaria: models and best practice Lessons from the U.S. and the road ahead

The case for PPP regulation in Bulgaria The Bulgarian economy virtually no capital investment in public services and infrastructure for 10 - 15 years the average asset size of Bulgarian companies is two to ten times smaller than European peers 30 – 50% of new capital formation comes from abroad Governance – introducing more horizontal accountability European Union accession – a window of opportunity to leverage private funds, incl. int’l investors

The grey economy is declining but remains LARGE

Less companies give bribes Share of Bulgarian companies that have paid a bribe for the following public services (%)

Bribes particularly damaging in public procurement Public procurement is a channel for political and administrative corruption in Bulgaria The direct fiscal damage of corruption in public procurement 2.4% of GDP = $890 million in 2006 Equal to what the country will receive in annual EU funds in 2007 – 2009 The indirect economic damage: Damaging free market functioning Reducing competition Increasing transaction costs for the business and the government Will EU funds money have an impact on the economy? How?

Recent PPP experience in Bulgaria Positive (Sofia Economic Council) though small Negative (Nuclear Power Plant, highway concessions, etc.) though large Lack of PPP policy and/or regulations. Existing channels are rigid and do not allow partnership.

Lessons from the U.S. and the road ahead The Federal City Council in D.C. and the Allegheny Conference in Pittsburgh The ‘visible’ ingredients of PPP (rules and regulations) The ‘invisible’ ingredients of PPP (social capital and experience) Making the best of U.S. experience – thinking locally, acting globally

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