World Bank2014-08-192014-08-192009-12https://hdl.handle.net/10986/19475The newly elected government takes office at a time of stark economic challenges. The outfall of the global economic crisis threatens to undo many of the achievements of the recent past, derail convergence with the European Union (EU), and heighten social vulnerability. The election of a strong government offers a timely opportunity to restore and broaden the economic reform agenda which had been initiated before EU accession and but lost some momentum since 2007. Decisive action could shorten the length and reduce the depth of the crisis by restoring market confidence and improving economic prospects. Restoring the health of the economy and returning to the convergence path requires concerted policy actions to unwind economic imbalances and advance much needed structural reforms. The two-way policy response would aim to: 1) bring about fiscal consolidation and restructure public finances, strengthen financial stability, and mitigate the social impact of the crisis in the short-run; 2) and step up structural reform to address deep seated economic problems which both magnify the impact of the international crisis and hamper longer-term convergence prospects in the medium-run. The World Bank stands ready to support the structural transformation of Bulgaria. The Government is strongly committed to maintaining the currency board with the euro adoption as an exit strategy. Yet, a continued worsening in private and public sector balance sheets could trigger a loss of confidence in the currency board. As international investors take a closer look at the vulnerabilities of emerging economies, there is a large premium on strong domestic policies. While financial markets may have under-priced the risks relative to the fundamentals in Bulgaria and other countries in the region prior to the crisis, this under-pricing has now disappeared. The pendulum is now likely to swing into the opposite direction.en-USCC BY 3.0 IGOACCOUNTINGACCOUNTS RECEIVABLEASSET MANAGEMENTBALANCE SHEETBALANCE SHEETSBANK REGULATIONSBANKING SECTORBANKING SYSTEMBANKRUPTCIESBANKRUPTCYBANKRUPTCY PROCEDURESBENEFICIARIESBENEFICIARYBONDBOND MARKETBUDGET CONSTRAINTSBUDGET SURPLUSBUDGET SURPLUSESBUDGETINGCAPITAL ADEQUACYCAPITAL INFLOWSCAPITAL INVESTMENTCAPITAL SHORTAGESCAPITALIZATIONCENTRAL BANKCENTRAL BANKSCOLLATERALCOMMERCIAL BANKSCOMMODITY PRICESCONSUMER CREDITSCONSUMER PROTECTIONCONSUMER PROTECTION LEGISLATIONCORPORATE DEBTCORPORATE LAWCREDIT CONSTRAINTSCREDIT DEFAULTCREDIT DEFAULT SWAPCREDIT GROWTHCREDIT LINESCREDIT QUALITYCREDIT REPORTINGCREDIT RISKSCREDITORCREDITOR RIGHTSCREDITORSCURRENCYCURRENCY BOARDCURRENCY MISMATCHESCURRENT ACCOUNT DEFICITCURRENT ACCOUNT DEFICITSDEBT RESTRUCTURINGDEMAND FOR CREDITDEPOSITDEPOSIT INSURANCEDEPOSITORDEPOSITORSDEPOSITSDOMESTIC BANKINGDURABLESECONOMIC POLICIESEMERGING ECONOMIESENTERPRISE CREDITENTERPRISE PERFORMANCEEQUITY INVESTMENTSEQUITY MARKETEXCHANGE RATEEXPENDITUREEXPENDITURESEXTERNAL DEBTFINANCIAL CRISISFINANCIAL INFORMATIONFINANCIAL INSTITUTIONSFINANCIAL MANAGEMENTFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL SECTORFINANCIAL STABILITYFINANCIAL SUSTAINABILITYFINANCIAL SYSTEMFINANCIAL SYSTEMSFISCAL CONSOLIDATIONFISCAL CONSTRAINTSFISCAL DEFICITFISCAL DEFICITSFISCAL POLICIESFISCAL POLICYFIXED INVESTMENTFOREIGN BANKSFOREIGN CAPITALFOREIGN CURRENCYFOREIGN CURRENCY EXPOSUREFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN EXCHANGE RESERVEFOREIGN INDEBTEDNESSFOREIGN INVESTMENTFOREIGN INVESTORSFRAUDGOVERNMENT BUDGETGOVERNMENT FINANCINGGOVERNMENT POLICIESGOVERNMENT SPENDINGGROSS DOMESTIC PRODUCTHEALTH CAREHEALTH SECTORHOLDINGHOLDINGSHOME MARKETSHOUSEHOLD INCOMEHOUSEHOLD INCOMESHUMAN CAPITALINCOME LEVELINFLATIONINFORMATION SYSTEMINFORMATION TECHNOLOGYINFRASTRUCTURE DEVELOPMENTINFRASTRUCTURE INVESTMENTINSTITUTIONAL INVESTORSINSURANCEINTELLECTUAL PROPERTYINTEREST RATESINTERNATIONAL INVESTORSINVESTINGINVESTMENT CLIMATEINVESTMENT DECISIONSINVESTMENT FINANCINGINVESTMENT PORTFOLIOINVESTMENT PORTFOLIOSINVESTMENT PROJECTSINVESTMENT REGULATIONSLABOR MARKETLABOR MARKETSLAND OWNERSHIPLEGAL FRAMEWORKLIQUIDITYLIVING STANDARDSLOANLOCAL CURRENCYLOCAL GOVERNMENTSLOSS OF CONFIDENCEMACROECONOMIC ENVIRONMENTMACROECONOMIC POLICYMARKET BORROWINGMARKET CONFIDENCEMARKET DISCIPLINEMARKET INFORMATIONMARKET INTEGRATIONMARKET REFORMSMARKET RISKMASTER PLANMATURITIESMATURITYMEDIUM TERM EXPENDITUREMEDIUM TERM EXPENDITURE FRAMEWORKMINISTRY OF FINANCEMORTGAGESMOVABLE PROPERTYNATIONAL BANKNON-PERFORMING LOANSNONPERFORMING LOANSOUTSTANDING STOCKPENSIONPENSION FUNDSPENSION REFORMPENSION SYSTEMPENSIONSPOLICY CREDIBILITYPOLICY RESPONSEPORTFOLIOPORTFOLIO QUALITYPRIVATE CREDITPRIVATE DEBTPRIVATE INVESTMENTPRIVATE SECTORPROFIT MARGINSPROPERTY RIGHTSPRUDENTIAL REGULATIONPUBLIC FINANCEPUBLIC FINANCESPUBLIC FINANCIAL MANAGEMENTPUBLIC INVESTMENTPUBLIC INVESTMENTSPUBLIC SPENDINGRATE OF RETURNRECURRENT EXPENDITUREREFORM AGENDAREFORM STRATEGIESREGULATORY AUTHORITIESREGULATORY FRAMEWORKREGULATORY OVERSIGHTREMITTANCESRESERVE REQUIREMENTSRESERVESRETURNRETURNSRISK MANAGEMENTSAFETY NETSECURITIESSHAREHOLDERSSHORT-TERM BORROWINGSHORT-TERM EXTERNAL DEBTSOCIAL ASSISTANCESOLVENCYSTOCK EXCHANGESTOCK MARKETSTOCK MARKET PRICESSTOCKSSTRUCTURAL REFORMSTRUCTURAL REFORMSSTUDENT LOANSSWAPTAXTELECOMMUNICATIONSTOTAL DEBTTRADE UNIONSTRANCHESTRANSPARENCYWITHDRAWALWORKING CAPITAL10.1596/19475