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Press Conference: The Hidden Economy in Bulgaria after the Economic Crisis
 
On 15 April 2011 the Center for the Study of Democracy and the Friedrich Ebert Foundation organized a press conference on the topic: The Hidden Economy in Bulgaria after the Economic Crisis. During the press conference CSD experts presented the results of the Hidden Economy Index for 2010.

Dr. Marc Meinardus, Director of the Friedrich Ebert Foundation, Bulgaria, opened the discussion pointing out that the results of the study represent the actual concerns of the Bulgarian business and population related to the hidden economy in the country. Dr. Meinardus announced the upcoming presentation of a book on the same topic, which seems timely in the context of Bulgaria’s continuing struggle through the economic crisis.

Mr. Ruslan Stefanov, Director of the Economic Program at the Center for the Study of Democracy, presented the Hidden Economy Index for 2010, which reflects the dynamics of the hidden economy in Bulgaria since 2002. The Center for the Study of Democracy has been developing the Hidden Economy Index since 2002, covering the different components of the hidden economy, such as hidden employment, hidden turnover, VAT fraud, etc.

Mr. Tihomir Bezlov, Senior analyst in the European Program at CSD, reiterated that foreign observers’ evaluations of the hidden economy in Bulgaria stand at over 30% of the country’s GDP. Thus, according to Mr. Bezlov, the size of the hidden economy is of paramount importance for the GDP of countries like Bulgaria and Italy, for example (as compared to larger economies with a smaller grey sector, such as the UK).

Mr. Todor Yalamov, Senior analyst for the Economic Program at CSD, presented some of the positive aspects of hidden economic activity with regards to businesses. According to Mr. Yalamov, Bulgarian companies do not report the full costs of their research and development (R&D) and innovation activities, which means that the business sector has much higher growth potential than presented in the official data.

Mr. Nikolay Uzunov, Bulgarian Association for Apparel and Textile Producers and Exporters, brought up the issue of unfair competition by firms operating in the hidden economic sector, as well as the overabundant control measures of the regulators, which have unnecessary burdened both the public administration and the honest taxpayers.

During the discussion several questions were raised over the size and the share of the hidden economy in the country; the corruption in public procurement; the lack of transparency and control in the energy, health, and pharmaceutical sectors, as well as the losses from VAT fraud.

Agenda (Adobe PDF, 147 KB, in Bulgarian)
Presentation by Mr. Ruslan Stefanov, Director of the Economic Program at the Center for the Study of Democracy (Adobe PDF, 1.2 MB, in Bulgarian)
Media coverage (in Bulgarian)

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