Economic Restructuring and Growth

DEVELOPMENT CHALLENGES A transparent and predictable business environment is essential to sustained economic growth. Equally important, the economy must allow for the flexible and efficient use of resouces, particularly with regards to small and medium sized enterprises (SMEs) and the labor force, to encourage innovation, growth, and job creation. Bulgaria was successful in developing the essential regulatory framework in many areas; however, Bulgaria still struggles with its implementation, particularly in the areas of transparency, regulatory oversight, simplified administrative procedures, and resolving commercial legal disputes.

USAID INVOLVEMENT The current USAID economic portfolio consolidates the important work that the Mission has been doing in support of economic restructuring and growth over the years. The graduation focus of the efforts are projects that enhance the business enabling environment, contribute to job creation through strengthening the private sector, and improve access to financial resources. As part of the enabling environment, USAID continues to assist the government to plan and implement forward-looking economic reforms in the areas of small and medium enterprise growth, competitiveness, and foreign direct investment. By continuing its support to strengthening the capacities of the private sector and particularly SMEs, USAID strives to promote growth and job creation in a sustainable manner. A project aimed at efficiency of the labor market in Bulgaria seeks to significantly reduce the mismatch of skills between the supply of and demand for human resources.

Financial Sector Integrity Project (2004-2007): Building on the successful banking and capital markets programs already implemented by USAID, the primary goal is to further strengthen Bulgarian financial sector institutions in managing the new risks associated with a competitive economic environment. The primary focus is to strengthen the newly formed Financial Supervision Commission, which merged all financial regulators into one organization. USAID assistance focuses on improved institutional operations and more effective supervision practices. Assistance is within three major areas: Improved Regulation of the Financial Sector; Anti-Money Laundering; and Transparency of the Financial System.

Commercial Law Reform Program (2003–2007): The program’s goal is to establish a more stable and predictable business environment. CLRP activities include assessments, recommendations, legislative drafting, training, and public information campaigns. Activities are designed to enhance enforcement of contracts and rights in the court system, promote alternative dispute resolution in commercial matters, streamline business registration, and provide commercial law training to judges and lawyers.

Labor Market Project (2001-2007): The objective of USAID’s Labor Market Project is to identify and eliminate labor market constraints on job creation, with the ultimate goal of attaining sustained employment growth, and higher wages. USAID provides ongoing assistance at both the national and regional levels. USAID focuses on the implementation of three main components: the capacity of universities to deliver the skills sought by employers; the availability of quality training and certification programs in key economic sectors; and the capacity of Bulgarian government institutions to deliver services to employers and the unemployed.

Business and Trade Development (2004–2007): USAID provides a broad portfolio of training, volunteer and consultant-based business support services through demand-driven activities for Business Support Organizations (BSOs) and SMEs. These activities are designed to facilitate access to credit, identify international investment opportunities, promote international trade linkages, and provide export facilitation to trade-oriented enterprises in industry sectors with high growth potential. The aim is to achieve new business opportunities, jobs generation and poverty alleviation.The program focuses on participants in a market sector area and seeks to raise awareness of key capacity building issues within that area.

Micro Credit Finance, completed in April 2006: USAID’s micro finance program aims to stimulate private sector lending that will advance sustainable development in Bulgaria. Micro credit is the extension of small loans to entrepreneurs unable to qualify for traditional bank loans. It has proven an effective and popular measure in the ongoing struggle against poverty, enabling those without access to lending institutions to borrow at bank rates and start small businesses. For available micro credit opportunities please refer to Nachala Cooperative (www.nachala.bg) or Ustoi AD (www.ustoi.org).

Development Credit Authority (1999 - 2010): The Development Credit Authority is a financing tool that enables USAID to stimulate private sector lending. Specifically, this authority uses guarantees to cover up to 50% of a lender’s loss on the loan principal extended to qualified, creditworthy borrowers under approved projects. USAID has five active guarantee schemes aimed at improving energy efficiency, agriculture, and competitiveness, and providing support to SMEs.

Energy Regulatory Development (2003-2006), completed in December 2006: USAID provides technical assistance to the State Energy and Water Regulatory Commission to develop the energy sector legal and regulatory framework, transparent tariff mechanisms, and sound regulatory accounting and reporting practices. Another key aspect of the activity is focused on increasing the institutional capacity, autonomy and accountability of the Commission.

Roma Micro-Finance (2006-2008): USAID in partnership with Catholic Relief Services, MicroFund, and USTOI  offers microfinance loans and technical assitance to develop business skills for Roma entrepreneurs. For more information please visit the Ustoi website at www.ustoi.org or the MicroFund website at www.micro.ngorc.net.

Wind Farm Global Development Alliance Project (2006-2008): EnCon Services, in partnership with USAID and a yet to be identified Bulgarian municipality, will develop a 5-10 MW pilot wind farm. A USAID grant will support the implementation of the pilot project, to serve as a model for future replications.

ACHIEVEMENTS
Significant achievements in the area of economic restructuring and growth include:
- Passage of the Judgment Enforcement Act creating a private alternative to state enforcement agents.
- Passage of the Business Registration Act.
- Creation of over 60,000 jobs through micro finance programs.
- Creation of 20 Career Counseling Centers in universities throughout Bulgaria.
- Successful privatization of electricity distribution companies.
- Over $61 million in loans through the DCA program.
- Over 9,000 students and 180 schools participating in Junior Achievement programs.
- Establishment of the Authentic Bulgaria Quality Mark for tourism operators.

^{Last updated: 22 February 2007}