This the Executive summary of the Country Commercial Guide (CCG), which presents a comprehensive look at the Republic of Bulgaria’s commercial environment, using economic, political and market analysis.

Bulgaria is a market that deserves closer attention by U.S companies for its trade and investment potential. Bulgaria has been blessed with and has worked hard to preserve its economic and political stability in the midst of ongoing Balkan turmoil. It has greatly expanded its commercial ties with Western Europe and the United States and is continuing to work hard to attract foreign investment. Over half of Bulgaria's exports currently go to Western Europe, and the United States is currently one of Bulgaria's top foreign investors. A small nation of 8 million mostly ethnic Bulgarians located on the Black Sea south of Romania, north of Greece and northwest of Turkey, with FYR Macedonia and Yugoslavia to the west, Bulgaria has aspirations to join the European Union and NATO over the next several years. The Soviet Union's staunchest ally in the Communist bloc until 1989, Bulgaria's current commercial climate is a great contrast to the woes presently facing the Russian Federation.

Former President Clinton’s visit to Sofia in November 1999 heralded the start of a mutually more productive, more rewarding U.S. relationship with Bulgaria. The visit was the best evidence that U.S.-Bulgarian relations have never been better. Former Secretary of Commerce William Daley was also in Bulgaria that autumn to host a regional conference of 350 representatives from the six-country South-eastern Europe region, along with 100 U.S. companies. This was the largest and most impressive trade promotion the U.S. Government has ever staged in Bulgaria. It helped to demonstrate that there are business opportunities in Bulgaria and that the U.S. Embassy and Commercial Service in Sofia are prepared to follow up and assist those companies new to Bulgaria to get established.

Bulgaria has followed a sure path towards a market economy since former Prime Minister Ivan Kostov of the Union of Democratic Forces (UDF) took office in April 1997. Since 1997 the lev stabilized and inflation was tamed. Confidence in the banking system is starting to return with very credible and well-endowed corporate banks coming on the scene. The Gross Domestic Product (GDP) was $12 billion in 2000 and real GDP grew by 5.8 percent. Official statistics underreport economic activity, with an unofficial market representing an additional 20 to 30 percent of the official GDP. However, with a per-capita GDP of only $1,500, Bulgaria’s citizens’ dissatisfaction with their economic situation was a major factor in the defeat of the UDF by the National Movement Simeon II (NMSS), led by new Prime Minister Simeon Saxe-Coburg, Bulgaria’s last king until his forced removal from the throne in 1946 after the Communist takeover. In the election, the UDF dropped to 51 seats in the 240-seat National Assembly compared to 120 for the NMSS, which has formed a governing coalition with the 21-seat National Rights and Freedom party.

The new government has pledged to continue a conservative fiscal policy and maintain a zero budget deficit. It also plans to cut taxes, work to attract increased foreign investment, and take steps to combat corruption.

Bulgaria has a leading role to play in regional economic and infrastructure integration: more efficient border crossing stations to promote regional trade, European Corridor 8 road transport links, rail links, and a number of energy and telecommunications projects will keep Bulgaria and some of its neighbors unrelentingly busy improving the overall image and economic prosperity of Southeast Europe.

Transparency in general has improved, and recent developments show that Bulgarians have rededicated themselves to achieving high standards of ethical business practices. For example, Bulgaria was the first non-OECD nation to ratify the Anti-Bribery Convention. However, corruption remains a serious problem in Bulgaria, as do bureaucratic delays and barriers to economic activity including investment.

Additional market-oriented changes have been made to the laws governing foreign investment, taxation and land ownership by international investors.

The pace of privatization of thousands of state-owned enterprises, from the very largest to hotels and resorts, must continue, since privatization is the only practical way for Bulgaria to restructure its economy, create new jobs, and introduce new technology. Privatization is also crucial to efforts to attract foreign investment, halt the slide in production and increase exports to generate revenue to support needed imports. The Bulgarian government has also recognized the importance of small and medium sized enterprises in creating jobs.

While Bulgaria’s consumers have limited purchasing power for relatively expensive U.S. products, Bulgaria's work force offers attractions to manufacturing investors for its good education, especially in engineering and foreign-language ability, and the low cost of labor.

With the improved economic climate, a wide variety of products of all types can now be found in Sofia's increasing numbers of shops, and the Bulgarian government and some large state-owned enterprises can finance priority imports by themselves. Bulgaria has an active trade show calendar attracting exhibitors from all over the world. Bulgaria is moving forward on $2 billion in transport and environmental remediation projects. Nonetheless, international financing of major infrastructure projects remains essential, and Bulgaria is still very dependent on financing from multilateral banks and other non-Bulgarian sources. Financing from the Export-Import Bank of the United States (Eximbank) is now available to finance certain U.S. exports to both state-owned and private Bulgarian enterprises. A recent agreement to finance a nuclear safety upgrade involving Westinghouse Electric and Citibank represents the first Eximbank project in Bulgaria in more than thirty years.

The Stability Pact, a comprehensive regional plan for economic development, democratization and security, will lead to new and expanded trade and investment opportunities in Bulgaria over the long term. The U.S. Government vigorously supports efforts to bring Stability Pact benefits to Bulgaria.

Despite the current international situation, many American high technology, industrial, and consumer products whose only substantial competition is European do offer significant price and quality advantages and enjoy good markets in Bulgaria. U.S. technology and know-how are widely respected and financing very much needed. The price, quality, technological leadership and reputations of U.S. companies are often viewed in Bulgaria as effective counterweights to pressure from European Union (EU) companies to "buy European."

The industry sectors with the best prospects for U.S. firms include electrical power generation equipment, building materials, telecommunications equipment and services, computers, software and information technology, pollution control equipment, automotive parts and service equipment, agricultural equipment, and medical equipment.

Country Commercial Guides are available for U.S. exporters on the website of the Commercial Service, U.S. exporters seeking general export information/assistance and country-specific commercial information may also contact the U.S. Department of Commerce, Trade Information Center by phone at 1-800-USA-TRAD(E) or by fax at (202) 482-4473, or contact Commercial Service Sofia.