Bulgaria 2000

Bulgarian economic reforms began in February 1991, but have had an uneven history. A political consensus was achieved on the following main economic reform targets:

• monetary and fiscal policies: financial stabilization, inflation curbing, money aggregates and budget deficit regulation;
• structural reform: changing patterns of economic behavior through prompt privatization;
• effective economic governance: exercising pressure on enterprises to adjust to the changing economic environment, and setting up fundamental market economy institutions in the country; and
• effective general economic policies: attempting to follow coherent economic policy.

In 1993-1996, privatization had virtually stopped, elements of central planning (price controls, transfers to loss-making state-owned enterprises, central government control over these enterprises, political control over central bank's board and policies, etc.) were restored, and in early 1997, the country entered a hyperinflation curve. The only feasible way to restrict the printing of money was to undertake a political change, eliminating the political element in the central bank's activities by fixing the exchange rate and the introduction of a currency board arrangement (CBA).

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