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Accurate understanding of the dynamics of the hidden economy is essential for improving public and private sector management. In the case of Bulgaria, the high level of hidden economic activities signals many deficiencies in the functioning of the public institutions and the rule of law, and undermines the economic development of the country. Limiting the grey economy ought to be an issue of imminent priority for policy makers. The recent unparalleled global growth of digitalization of economic activities provides ample opportunities to reduce hidden cash flows and directly contribute to positive economic development of the country. Comprehensive, sustained reforms focusing on improvements in market and administrative efficiency are needed to facilitate the process of economic convergence and limit the negative effects of the hidden economy in Bulgaria.