site.btaBulgaria's Economy Continued Coming to Light in 2021 - Survey

Bulgaria's economy continued to come to light in 2021, shows the Business to the Rules Composite Index (BRCI), which the Association of Industrial Capital in Bulgaria (AICB) and the Business to the Rules National Centre use to measure the informal economy, both in Bulgaria and across Europe. 

BRCI shows that the informal practices on the labour market are also decreasing.

The BRCI has a value of 78.40 for 2021, up from 77.49 for 2020. The Employment to the Rules, which is a component of BRCI, was 82.08 in 2021 and 77.96 in 2020, Prof. Dr. Stefan Petranov, the head of the team that created the BCRI, said at a news conference. He commented that the coming to light is ever greater on the labour market.

"The shadow economy paves the way for corrupt practices," said Vasil Velev, Chairman of the Board of AICB. It also leads to failures in governance, he added. Velev pointed out that the most direct and visible damage is the fiscal damage.

He said the size of the shadow economy is still above the EU average and AICB's efforts would be to reduce it by another 6-7 percentage points to bring it permanently below 15%. These 7 percentage points, calculated through the gross domestic product (GDP) and 35% of tax and social security revenues, add up to over BGN 4 billion, Velev said.

From 2010, when the BIC started calculating BRCI, to 2021, there has been a steady upward trend: from 63.35 to 78.40. The exceptions to this trend are the years 2014 and 2020, when the index shows a decline from a year earlier, but these declines were temporary - only for one year, said Prof. Dr. Stefan Petranov. He highlighted the impact of crises on the "coming to light" of the economy, recalling that 2014 was marked by the Corpbank failure and political tensions, and 2020 was marked by the COVID crisis and an economic slowdown.

Outside of these years of crises, the coming to light of the national economy has been a long-term and stable trend, the scholar said. 

The shadow economy remains biggest in the services with direct contact with customers, restaurants, hotels, construction and agriculture. The highest reported rates in some of these sectors exceed 40%, Prof. Petranov said. 

The political crisis in the country has also had its impact on the size of the shadow sector, but the effect will be felt next year, the professor said.