The Privatization Process in Bulgaria
The aims of privatization in Bulgaria are to increase productivity and efficiency, ensure economic survival, develop capital markets, resist corruption, and support stabilization of the economy. The Bulgarian national and local governments rely on privatization to cut budgetary deficits and to promote private entrepreneurship and investments.
Since macroeconomic balance and economic growth are difficult, the outlook in most Eastern European countries is not optimistic. Central planning has been abolished, but market mechanisms are underdeveloped and production is falling. Economic reforms require decades to develop, and there are various methods of privatization, including public offerings, auctions, tenders, leasing, and vouchers distributed to the public.
The Bulgarian economic programs of 1991 were the first step toward a market economy. They were instituted under unfavorable conditions: high foreign debt, a high balance-of-payments deficit, insufficient raw materials, and a high money supply. By 1995, the situation had improved somewhat; prices and foreign trade were liberalized, inflation rates had decreased (from 573 percent in 1991 to 35 percent in 1995), and private sector activities had increased. On the negative side, there were decreases in the gross domestic product (GDP), consumption, and household income during this period. For example, the GDP declined by 17 percent in 1991, 12.4 percent in 1992, and 6.2 percent in 1993, but by only 2 percent in both 1994 and 1995. In addition, the consumer price index fell from 334 percent in 1991 to 79 percent in 1992 to 56 percent in 1993 and to 95 percent in 1994, and the unemployment rate remained high: 11.1 percent in 1991, 15.2 percent in 1992, 16.4 percent in 1993, and 13.5 percent in 1994. Furthermore, the budgetary deficit continued to be high: 12 percent in 1995. The main reasons for the budgetary deficit are the losses incurred by state-owned