Despite the political stalemate preventing any legislative movements and access to recovery and resilience funds, Bulgaria's markets are humming, according to Kambourov & Partners Partner Angel Rizov. Which is just as well, as the political crisis shows no signs of abating.
“Bulgaria has been in a political crisis for almost two years now,” Rizov begins. “We’re probably looking at our fifth round of elections in a period of under two years. The President has performed his constitutional duties to offer a mandate for the formation of a new government to the largest parliamentary group in the National Assembly, and they are attempting to gather support for a coalition, yet the rumors point to this not being likely to occur,” Rizov reports. New elections are likely to take place in March.
“We had no actual legislative body in action, save for the first half of 2022 when we had a coalition government in place,” he continues. “Everybody is waiting for the legislation which would enable funds for Bulgaria to start flowing under the EU Recovery and Resilience Facility. A little over EUR 6 billion have been allocated to Bulgaria, yet most of these funds cannot be accessed without the relevant legislation in place,” Rizov explains.
“The worst case scenario would be yet another protracted process of attempting to form a government in the spring of 2023, which would lead to our sixth consecutive round of parliamentary elections in the summer of 2023,” he says. “The proposed Recovery and Resilience Plan will, thus, be postponed even more. Hopefully, Bulgarian politicians will be able to get together and try to clear their differences soon, so that the country can move forward in these troubling times,” he says.
Rizov continues to report that once the Recovery and Resilience Plan starts, “R&D and innovation and digital infrastructure funding” will start flowing, improving the overall status of the economy. Additionally, “there is a part of the funding which will go to the e-Justice program, which has been running for a few years now. Hopefully, these funds will help with the work of all lawyers in the country by improving the initiative to digitize the work of courts and the justice system as such,” Rizov explains. “There are still some courts in Bulgaria that are not part of the existing online databases and offer no online access to files and procedures, despite best efforts to change this over the past five years,” he says.
Turning to the overall market status, Rizov reports that there have been “a lot of transactions taking place in the areas connected to energy and construction, which have traditionally been strong in Bulgaria. Also, the outsourcing IT sector has been growing steadily as well.” He attributes this vibrant activity to a post-COVID-19 restart. “New business opportunities presented themselves as well and, after another slowdown around the time the conflict in Ukraine started, the market continued its recovery,” Rizov says. “There has been a high influx of highly-qualified specialist immigrants coming in from Ukraine and other affected countries, and this will assuredly have a positive impact.”