How Bulgaria Performs in the line with Copenhagen Criteria?

    Our assessment is basically the following:
    a) Functioning market economy: The progress is the following:

      - The credit to private sector to GDP ratio had risen by 1/6 from 11 to 13% of GDP;
      - Credit to the public sector has declined, which contributed to the overall (domestic) credit to GDP ratio decline in 2000 by 0.7%;
      - The lower threshold for credit by the end of the first quarter had fallen from roughly BGN 40,000 to BGN 15-16,000;
      - Use of credit cards in the first quarter of this year doubled the amount of last year (from roughly 1,200 to 3,000), in the debit cards usage the grew three time (from roughly 250,000 to 600,000);
      - The average creditors right enforcement deadline, measured by foreclosure deadlines, improved from 24 months to 18 months (on annual basis); by the first quarter of 2002 it would reach the average for the candidate countries of 8-9 months due to provisional amendments to the Civil Procedures Code (drafted but not yet adopted);
      - Bulgaria has been resilient to oil and energy resources price shocks: for the period of 1997-2000 the share of imports of those resources had fallen from 10% of GDP in 1994-1996 to 5% (suggesting better energy efficiency and more value added in the output); - Corruption perception index improved to the level of equality with Croatia and Czech Republic, with some advantage towards those countries in the links of the domestic banking sector with foreign players, protectionism treatments and in terms in terms of regulated prices.

    b) Competitive pressures (the methodology is not well fixed):
      - Bulgaria did not suffer from the EURO depreciation against US dollar, which is an evidence of "a" and a sign of normality; - Export increased (most significantly in more value added sectors producing consumer goods), converting a down trend since 1996 and the deficit shrieked twice);
      - Bulgarian share in EU markets remained roughly flat (with a slow decline) to the extend it is visible from scares measurements), the major improvement was to CEFTA and Balkan markets; however, some traditional Bulgarian exports shrieked (notably, wines and tobacco);
      - There are factors that would support competitiveness, namely: 1. FDI ( 2000 - a record year with a good prospect to sustain this phenomenon in 2002 and 2003) with a better structure than ever (more than 60% green field); 2. Better structure of the investment (both domestic and foreign), i.e. into sectors with more value added. E.g. FDI in software and electronics scheduled (signed) for 2001 there is five-six times increase, with a tendency these investment to reach the unprecedented level of 6-8% of total FDI.
      - Foreign retail chains performed well in Bulgaria and excised pressure to innovate and reduce cost but with no significant political impacts and for consumer benefit.

    In brief, the impression is that "a" is there, on "b" - the development is in the right direction.

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