EU financing to Bulgarian economy Spyros Argyropoulos Latest Development in Bulgarian Economy & Prospectiveness for Cooperation Thessaloniki, 9 th November 2005

How far has Bulgaria progressed along the road to Europe? 1993Association Agreement 1995AA enters into force 1995Membership application 1997Candidate status 2000Opening negotiations 2004Closing negotiations 2007Membership

How does Europe assist Bulgaria along the road to Europe? PHARE SAPARD ISPA Strengthening public institutions to function effectively inside EU Promoting convergence with EU legislation (acquis communautaire) Promoting Economic and Social Cohesion Accelerating sustainable agriculture and rural development Assisting long-term adjustment of agriculture and rural areas development Assisting infrastructure investments in EU priority fields of environment and transport Accelerating sector and policy reforms in the infrastructure sector

Financial allocations by programmes PHARE  30% Institutional Building  70% Investment in acquis and ESC, including CBC programmes ISPA  50% Transport  50% Environment

Phare CBC programmes in Bulgaria

Increase in EU appropriations for …

… but less forgiving EU political climate  Bulgaria hopes to enter EU in 2007  Safety clauses that could delay the entry till 2008 concentrate on: Justice, Environment, Home affairs  October 2005 EC Monitoring Report did not spread much light on the final entry date but the final decision will be taken in 2006  Further efforts are needed to address certain shortcomings:  increase food safety;  reinforce the structures and mechanisms for participation in EU structural funds;  tackle industrial pollution;  organised crime more effectively.

From pre-accession to structural funds ( ) ISPA PHARE SAPARD ESF, ERDF EARDF under CAP Cohesion Fund STRUCTURAL FUNDS: ESF – employment and human resources development ERDF – productive investment and economic infrastructure CF – transport & environment infrastructure and energy efficiency

Financial framework for Bulgaria Agriculture 1,552 mEUR Structural actions 2,3 mEUR Internal Policies 268 mEUR Administration 116 mEUR Bulgaria EC Schengen and Cash-flow Facilities 240 mEUR

Total sum –% of GDP Bulgaria, Romania ( ) as compared to EU new member states ( )

New FDI data are also encouraging …

… but policy challenges remains It is crucial that Bulgaria takes immediate and decisive action to address issues of serious concern if it is to be ready by the envisaged date of accession:  strengthen the rule of law  improving public administration and the justice system  fighting corruption effectively

Overview  Where we’ve come from  lost years culminating in 1996 crisis  strong performance since 1997  Where we are now  strong growth despite weak world demand  tight fiscal policy, some delays on structural reform  credit boom and current account deficit pose policy challenge  Where we’re going  EU accession: real and nominal convergence  Preservation of currency board up to EMU  Precautionary program with the IMF

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