BULGARIA

Bulgaria is a unitary country and a parliamentary democracy with a multi-party system, as declared by the 1991 Constitution. The unicameral Parliament is composed of 240 deputies, directly elected by the population for four-year terms. Members of Parliament appoint the Prime Minister and Head of Government, who chairs the Council of Ministers (CoM). The president, i.e. the head of state, is directly elected by universal suffrage for five years.

Bulgaria is a unitary country, with a single tier of subnational government, composed of municipalities. However, at the subnational level, the territorial organisation is quite complex, comprising of a mix of decentralised authorities and state deconcentrated administrations. The principles of self-governance are defined in articles 135-146 of the 1991 Constitution. A consolidation of guidelines on Self-Government provided by the Constitution are further explained in the Local Self-Government and Local Administration Act adopted later in 1991. This act regulates the administrative-territorial structure of Bulgaria and defines the organization and functions of local self-governments. The consolidation of local governments was established by a legal and regulatory framework, starting in 1995 with the Act on Administrative and Territorial Structure of the Republic of Bulgaria and the Municipal Property Act; the Local Taxes and Fees Act in 1997; the Municipal Budgets Act (replaced by the 2014 Law on Public Finance) and the Municipal Debt Act in 2005. The Citizens’ Direct Participation in the State Power and Local Self-Government Act was adopted in 2009.

In 2002, the adoption of a concept paper on fiscal decentralisation set a new stage in the decentralisation process. This was followed by the EU accession in 2007 and the adoption of the Decentralisation Strategy: 2006-2015. A revision of the strategy was undertaken in 2010 and was monitored by the Council for Decentralisation of State Governance, which was set up in 2006. The strategy underlined the decentralisation of services, powers, and resources from higher to lower levels of government as main objectives. A revision by the Ministry of Regional Development and Public Works in 2016 identified some aspects and measures that needed further attention while highlighting that the impact of the global crisis and its effects during that period might explain delayed implementation.

In 2008, The Regional Development Act (RDA) was promulgated and was further amended in 2009. This act introduced regional development councils whose members are appointed by the minister of regional development with an order. They include representatives of ministries, representatives of local authorities, and representatives of organizations of employers and workers. In 2020, the RDA was amended to enhance involvement of the regional level in the implementation of policies. These amendments have led to the creation of the Regional Development Council (RDC), which acts as a key body in decision making for the development of planning regions and defines partnerships between central institutions, regional executive bodies of central government, local government, business, academia, and the civil sector.

The decentralisation strategy 2016-2025 emphasised four strategic areas: the transfer of powers and functions from central to local authority in key sectors; fiscal decentralisation with better assignment of revenues across levels of government to expand municipalities' revenue bases; development of civil control of public institutions; and, increasing the role of regional institutions for the implementation of co-ordinated policy for regional development.

In 2021, the Monitoring Committee of Local Self-Government from the Council of Europe reported distinctive progress in the Decentralisation Strategy 2016-25, in particular in objective 4: “increasing the influence of regional institutions for the implementation of a co-ordinated policy for regional development”. The committee also welcomed major amendments in the Regional Development Act and a significant increase in powers, functions, and responsibilities of the RDC. The report highlights the key role of the RDC as a decision-making body for regional planning and development.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2021)
265 municipalities
Average municipal size: 26 166 inh.
265			265

OVERALL DESCRIPTION: After decades of centralised socialist system in Bulgaria, the 1991 Constitution introduced a decentralised level of government based on the municipality, which is considered as the basic administrative territorial unit of local government.

MUNICIPAL LEVEL: Bulgaria is divided into 265 municipalities which contain the administrative centre and its surrounding settlements. Municipalities are governed by municipal councils and mayors. Municipal councils (Obshtinski sŭvet) represent and determine policies for the municipality, so they are considered as deliberative bodies and are elected by direct universal suffrage for a four-year term. The number of municipal councillors depends on the population size, and they are headed by a chairperson elected from among its members. Sofia capital municipality has nine deputy mayors, while smaller municipalities have less deputy mayors (two under 10 000 inhabitants and one under 2 500 inhabitants). Mayors (kmet) perform executive functions with the support of municipal administration, so they are considered an executive body elected for a four-year term by popular vote.

Additionally, according to the 1995 Act on Administrative and Territorial Structure of the Republic of Bulgaria, the capital municipality and municipalities with more than 300 000 inhabitants shall be subdivided into composite territorial administration units (quarters) (gradski rayon). Municipalities with over 100 000 inhabitants may also establish quarters by a decision of the municipal council. There are 24 quarters in the capital municipality of Sofia.

Bulgaria has also municipal deconcentrated entities at the sub-municipal level, totalling 5 257 settlements, of which 257 towns and 5 000 villages in 2020 (20 per municipality). Among these settlements, there are around 3 187 mayoralties (kmetstvo) in rural areas, 35 quarters (gradski rayon) in the main cities and around 1 070 villages (settlements below 350 inhabitants). Mayoralties and urban wards are governed by mayors elected through universal suffrage for a four-year term. In settlements with less than 350 inhabitants that are not an administrative centre of a mayoralty, the municipality mayor appoints a delegate mayor to conduct executive duties.

The average municipal population size in Bulgaria was 26 166 inhabitants in 2020, which is quite large compared to the OECD average (9 600 inhabitants) and to the EU average (5 900 inhabitants). Stolichna municipality is the largest municipality in Bulgaria with about 1 308 412 inhabitants while Treklyano (Kyustendil district) is the smallest with 768 inhabitants in 2020. The median size of municipalities in Bulgaria remains also quite high compared to the median size in the EU: 10 017 inhabitants versus 5 370. About 50% of municipalities in Bulgaria had a population below 10 000 inhabitants, which accounted for 10.8% of the total population in 2020.

HORIZONTAL COOPERATION: Horizontal co-operation of municipalities was imposed through legislation by the central government for the provision of water, sewerage and waste management (i.e. Waters Act 2000 and legislative amendments for waste management in 2000). However, except where legally mandated, there are a few examples of effective inter-municipal co-operation in Bulgaria. While districts aim to foster local development and municipal co-ordination on large-scale projects (see below), their limited administrative capacity and political power prevent them from performing their role. There are also some examples of inter-municipal co-operation resulting from EU policies (e.g. “Local Action Groups” to reinforce rural-urban partnerships and local development through LEADER5 approach to Community-Led Local Development) but these forms of co-operation are complex and were not always successful in Bulgaria.

STATE TERRITORIAL ADMINISTRATION: At the regional level, Bulgaria has 28 districts (oblast) that are deconcentrated government units (established in the 154/1998 amendment of the Act on Administrative and Territorial Structure of the Republic of Bulgaria). The role of districts involves the monitoring of municipal council decisions (article 144 of the constitution), participation in the co-ordination of municipal activities as well as co-coordination with the national level. Districts are headed by a governor, appointed by the Council of Ministers and supported by deconcentrated administrations. Over the last two decades, around 36% of districts have lost at least 20% of the population. This is attributed to the emigration to larger cities: Sofia has experienced over a 10% increase in its population during the same period.

According to the NUTS classification, Bulgaria is divided into three hierarchical levels. NUTS 1 (statistical zones) and NUTS 2 (statistical regions) that are not considered administrative-territorial units, while NUTS 3 (districts) is defined as an administrative-territorial level (the 28 administrative districts). At the NUTS 3 level, districts comprise a deliberative organ, the District Development Council (DDC), which is responsible for the district development strategy and the coordination of municipal initiatives.

In 2000, as part of the requirements to gain access to EU pre-accession funds, six planning regions were defined. These planning regions do not constitute administrative-territorial units (Law No. 14/ 2004). They act as conduits for regional planning and programming pertaining to EU structural funds.

The Local Self-Government and local administration act, adopted in 1991, stipulated the competences of subnational governments. Municipal responsibilities are divided into two categories: i) state-delegated responsibilities including education, social protection and health care that are shared with the national government; and ii) exclusive responsibilities including housing and community amenities, economic affairs, environmental protection, etc.

Municipalities also run around 800 municipality-owned enterprises, which are established mainly on waste collection, engineering, real estate management, waste recycling, maintenance of green areas, sport facility maintenance, etc.

More recently, Bulgaria has committed to a decentralisation strategy for 2016-2025 with the aim of transferring powers and functions from central to local authorities. Key sectors are targeted, such as administration, property management, service delivery, education, culture, local economic development, environment, natural resource management, agriculture, social security and other areas. Correspondent fiscal decentralisation is included with better assignment of revenues across levels of government to expand municipalities’ revenue bases.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Municipal level
1. General public services (administration)	Municipal administration; Civil registers. Issuance of building permissions, categorisation for tourism accommodations, permits for use of beaches; Management of municipal property (municipal airports, ports, etc.); Management of municipal companies; Cemeteries
2. Public order and safety	Municipal commissions for juvenile delinquency, prevention (shared); Municipal programme for disaster risk reduction (shared); Traffic signs (shared)
3. Economic affairs / transports	Municipal roads; Parking; Implementation of the policy for investment promotion upon the elaboration of the municipal development plan; Adoption of local programmes for tourism development, building and maintenance of tourism infrastructures; Urban public transport (shared); Upgrading of local infrastructure for electricity (shared), heat and natural gas networks (shared).
4. Environment protection	Environmental protection; Waste management; Sewerage systems; Development and implementation of programmes to decrease pollution levels; Local air quality maintenance
5. Housing and community amenities	Spatial planning; Water supply; Housing (together with housing associations); Urban heating; Urban rehabilitation and development plans
6. Health	Municipal hospitals (exclusive) and district hospitals (shared); Nursery schools (shared)
7. Culture & Recreation	Theatres (shared), libraries (shared); Local media (shared); Sport (shared); Leisure implementation of the cultural heritage preservation policy (shared)
8. Education	Pre-school education, primary and secondary education (delegated); Construction and upkeep of buildings; Canteens and extracurricular activities
9. Social Welfare	Child protection; Centres for homeless children; Home-based assistance for the elderly; Socialinclusion; Residential homes for senior citizens (delegated)

Scope of fiscal data: municipalities and municipally-owned hospitals.

SNA 2008

Availability of fiscal data: High

Quality/reliability of fiscal data: High

GENERAL INTRODUCTION: Subnational governments´ financial provisions are found in a legal framework established by the following legislation: the Constitution (amended in 2007 to grant taxing powers to municipalities), the Local Self-Government Act and the Local Administration Act, the Local Taxes and Fees Act (enacted in 1999 and amended in 2018) and the 2014 Law on Public Finance, which contains the legal basis for preparation of the autonomous budgets of municipalities. The latter legislation emphasised that exclusive municipal responsibilities are financed through local taxes, whereas delegated activities are financed by transfers from the national budget. It also stressed that local councils may allocate additional resources from its own revenue to finance the provision of delegated tasks. Since 2000, a series of reforms have been implemented to provide municipalities with more fiscal autonomy. Despite these efforts, fiscal decentralisation remains a challenge in Bulgaria where transfers represent a large share of subnational government revenue. In March 2022, the Local Taxes and Fees Act was amended to enhance own-source revenue of municipalities.

Subnational government expenditure by economic classification
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure	1830	7.4%	17.7%	100%
Inc. current expenditure	1584	6.4%	17.5%	86.6%
Compensation of employees	928	3.7%	34.8%	50.7%
Intermediate consumption	476	1.9%	37.3%	25.9%
Social expenditure	5	0.0%	0.1%	0.3%
Subsidies and current transfers	169	0.6%	12.2%	9.2%
Financial charges	6	0.0%	4.6%	0.3%
Others	0	0.0%	0.0%	0.0%
Incl. capital expenditure	246	1.0%	19.3%	13.4%
Capital transfers	9	0.0%	2.8%	0.5%
Direct investment (or GFCF)	236	1.0%	25.2%	12.9%

EXPENDITURE: Expenditure of Bulgarian subnational governments accounted for 7.4% of GDP and 17.7% of public spending in 2020, well below the EU27 average (18.3% and 34.3% respectively) and OECD average (17.1% and 36.6% respectively). Staff expenditure accounted for around half of subnational government expenditure, which was above the EU27 (32.1%) and OECD averages (34.4%). In contrast, social expenditure represented a low share of subnational government expenditure in 2020 (0.3%), which was significantly below EU and OECD averages (16.6% and 16.9% respectively).

DIRECT INVESTMENT: In 2020, subnational government investment represented 1% of GDP and 25.2% of total public investment, which remained below the EU27 average (1.8% and 54.4% respectively) and OECD average (1.9% GDP and 54.6% respectively). In 2019, more than half of subnational investment was allocated for housing and community amenities (housing, potable water, public lighting, etc.), which is significantly higher than in the EU27 average (7.3%) and OECD average (9.3%).

Municipal investment remains highly dependent on the transfers from the central government and EU funds, making it harder for local governments to cover their investment needs, such as transport in rural areas. Despite the significant support provided by the EU, small municipalities often encounter many obstacles when competing for funds as they have limited administrative capacity and face difficulties in fulfilling co-financing requirements. This reflects the concentration of EU investment funds in large municipalities in Bulgaria. For example, in 2019, 10 cities that represent 36% of the population, absorbed 41% of total funds received by municipalities.

Subnational government expenditure by functional classification
2019	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure by economic function	1833	7.4%	-	100%
1. General public services	201	0.8%	8.8%	11.0%
2. Defence	8	0.0%	2.8%	0.5%
3. Security and public order	21	0.1%	3.1%	1.1%
4. Economic affairs/transports	137	0.5%	7.4%	7.5%
5. Environmental protection	133	0.5%	79.7%	7.3%
6. Housing and community amenities	283	1.1%	94.1%	15.4%
7. Health	156	0.6%	9.9%	8.5%
8. Recreation, culture and religion	97	0.4%	31.8%	5.3%
9. Education	648	2.6%	66.8%	35.3%
10. Social protection	148	0.6%	5.1%	8.1%

Education was the most significant expenditure item in 2019, accounting for around 35.3% of subnational government expenditure and 66.8% of public expenditure, which is well above the EU27 average (18.5% of subnational government expenditure in 2019). Education was followed by housing and community amenities, public services, social protection, and health, which altogether accounted for around 42% of subnational government expenditure. In terms of subnational governments in total public expenditure, subnational governments are the most involved in housing and community amenities, as well as environmental protection (94.1% and 79.7% of total public expenditure respectively in 2019).

Subnational government revenue by category
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	1900	7.7%	20.4%	100%
Tax revenue	220	0.9%	4.2%	11.6%
Grants and subsidies	1570	6.4%	-	82.6%
Tariffs and fees	70	0.3%	-	3.7%
Income from assets	40	0.2%	-	2.1%
Other revenues	0	0.0%	-	0.0%

OVERALL DESCRIPTION: Municipalities are highly dependent on subsidies and grants from the local government. Other sources of revenue (such as local taxes on property, vehicles and waste) can be set freely, within a given range, but they do not represent a substantial share in local revenue. In 2020, subnational government revenue represented 7.7% of GDP, which ranks below the EU27 average (17.9%) and OECD average (17.0%). Grants and subsidies represented the vast majority of subnational government revenue in 2020 (82.6%), while the remaining 17.3% was distributed among tax revenue, tariffs and fees and income from assets. The share of tariffs and fees is particularly low compared to the EU27 average (10.3%) and OECD average (13.3%).

TAX REVENUE: Fiscal reforms in 2003 and 2007 significantly changed the structure of tax revenue in Bulgaria. The 2003 tax reform shifted the focus from tax sharing arrangements (based on shared personal income tax) to a system based on own-source taxes. The tax reform was further developed in 2006 with the decentralisation of tax collection and the establishment of local tax administration. In 2007, municipalities were devolved the power to set the rates of local taxes independently (within legal limits). However, they cannot set the local tax base or provide additional (or remove the existing) legal breaks for certain taxpayers. Municipal tax revenue includes the property tax, the tax on property transactions, the vehicle tax, and other taxes such as inheritance tax, the patent tax and the tax on tourism.

Property taxes represented 31.7% of subnational tax revenue in 2020 and 3.7% of subnational revenue in 2020. The tax amounted to 0.3% of GDP, well below the OECD average (1%). Property tax is paid by property owners and levied on buildings and land, based on the assessed value of the property. Property tax rates are determined by an Ordinance of the Municipal Council within the range of 0.1 to 4.5 per thousand of the tax value of the immovable property. A local taxes and fees act in 2020 granted a 5% discount to persons who have paid the real estate tax or the vehicle tax for the whole 2020.

GRANTS AND SUBSIDIES: In Bulgaria, there are different types of intergovernmental transfers: a general subsidy to finance state-delegated responsibilities, a general equalisation subsidy and earmarked subsidies for capital investment. The general subsidy is designed to finance education (70% of the subsidy), social services (10%), health, culture and municipal staff. It accounts for the large majority of transfers from the central government. The general subsidy is composed of a portion of PIT revenue, as well as of a subsidy based on the amount of expenditure and on the national average of revenue capacity. The second subsidy, the general equalisation subsidy, is unconditional and municipalities have full autonomy over how they spend it. This subsidy aims to secure a minimum level of local service provision by each municipality. A limit for the equalisation subsidy is set by law and cannot be less than 10% of the own revenue of all municipalities in the previous year. Additionally, a small proportion of transfers (5%) is made up of earmarked subsidies for capital expenditure, allocated according to the number of inhabitants, number of settlements, surface area and other criteria. This share can be used for both local and delegated activities. Infrastructure investment in municipal roads and streets have been the main purpose of the subsidies for capital expenditure since 2007.

Other resources include funds from the EU to support environmental, social, and technical infrastructure needs. Other earmarked subsidies and financial compensation from the central government are defined by the Public Finance Act. The National Association of municipalities in the Republic of Bulgaria (NAMRB) has a crucial role in negotiating standards, allocation mechanisms and annual levels with the Local Government Financing Directorate at the Ministry of Finance.

OTHER REVENUE: Since 2003, subnational governments can set the rates and fees by municipal order. However, user charges represent a small share of own-sources revenue for municipalities. Local fees include household waste disposal, retail and wholesale markets, fairs, kindergartens, specialised social service institutions, technical/administrative services, dog ownership, and the use of sidewalks, squares, and roadways, etc. The Local Taxes and Fees Act was amended in 2008, providing for changes related to the determination of garbage collection fees. These changes were however postponed to 2022. Sales and management of municipal property, fines and penalties, dividends from municipal enterprises and revenue from concession contracts also represent a significant source of revenue. Revenue from assets represents 2.1% of subnational government revenue in 2020, above the EU27 average and close to the OECD average (1.0% and 2.0% respectively).

Subnational government fiscal rules and debt
2020	Dollars PPP / inh.	% GDP	% general government debt	% SNG debt	% SNG financial debt
Total outstanding debt	609	2.5%	7.1%	100.0%	-
Financial debt	284	1.1%	4.3%	46.6%	100.0%
Currency and deposits	0	-	-	0.0%	0.0%
Bonds / debt securities	18	-	-	3.0%	6.4%
Loans	266	-	-	43.6%	93.6%
Insurance pensions	0	-	-	0.0%	-
Other accounts payable	325	-	-	53.4%	-

FISCAL RULES: A balanced budget requirement was reaffirmed by the 2014 Public Finance Act. This act also reinforces the medium-term budgetary framework (MTBF) and fiscal discipline. The procedure for preparing and adopting municipal budgets and the corresponding fiscal rules in Bulgaria are consolidated in the Public Finance Act. The National Association of Municipalities in the Republic of Bulgaria plays a key role as the representative of the municipalities in the budget procedure and in the negotiations on the State Budget Act for the upcoming year (Article 77- PFA).

Fiscal restrictions for municipalities involve:

i) A limit for new liabilities, implying that liabilities for expenditure at the end of the year may not exceed 15% of the average annual amount of reported expenditure for the last four years.

ii) The commitments for expenditure available at the end of the year may not exceed 50% of the average annual amount of reported expenditure for the last four years (the restriction does not apply to commitments for expenditure financed by grants and donations).

iii) The maximum annual amount of payments on municipal debt should not exceed 15% of the average annual own revenue and the general equalisation subsidy for the last three years and the nominal value of the issued municipal guarantees may not exceed 5% of the total amount of revenues and the general equalisation subsidy in the latest annual report on the municipal budget implementation.

DEBT: According the Municipal Debt Act adopted of 2005, municipalities can tap into the credit and capital markets by issuing bonds. There are however some prudential rules: long-term borrowing is authorised only for investment projects (“golden rule”), refinancing of existing debt, ensuring payments required for municipal guarantees, and for municipal public-private partnerships projects. The 2014 Public Finance Act clarified the legal requirements regarding municipal debt and municipal guarantees. Subnational governments can take out loans from the "Fund for Local Authorities and Governments in Bulgaria -FLAG", which provides long-term and short-term funding to Bulgarian municipalities (or groups of municipalities) to implement projects funded by EU programmes. Local authorities may also borrow through interest-free loans from the central budget and financial leasing.

In 2020, municipal debt reached 2.5% of GDP and 7.1% of public debt, well below the EU27 average (13.9% of GDP and 15.4% of public debt in 2020) and OECD average (27.9% of GDP and 20.2% public debt). Financial debt (“Maastricht debt”) represented 46.6% of the outstanding debt in 2020, the remaining part being made up of “other accounts payable” (i.e. commercial debt, arrears, etc.). The breakdown of outstanding financial debt was as follows: 93.6% loans and 6.4% bonds. In 2021, Sofia municipality signed a EUR 60 million loan with the European Investment Bank to undertake sustainable mobility projects.

TERRITORIAL MANAGEMENT OF THE CRISIS: Initiatives to contain the spread of the virus and the management of the pandemic in general were headed by the central government. Bulgaria declared a state of emergency on March 13th, 2020, which meant the introduction of urgent measures and administrative restrictions.

Local governments played a key role in the provision of services, especially health services. According to the Act on the Measures and Actions during the State of Emergency Declared with the Decision of the National Assembly of March 13^th 2020 and On Overcoming the Consequences, municipalities were not allowed to close down social services or reduce the capacity of activities delegated by the central government and of local activities, except for specialised institutions for children, during the state of emergency and up to three months after it has been lifted.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: Municipalities in Bulgaria took several measures to contain the spread of the virus, such as social distancing and sanitary measures. Other measures to mitigate the social and economic consequences of the pandemic in their populations were taken to support for business and households and to protect the most vulnerable.

Regarding social measures, the municipality of Gabrovo identified non-beneficiaries or users of social services and tried to target them through a Municipal Social Fund for COVID-19, which aimed to support individuals and families experiencing economic hardship. Families received the support in the form of a food voucher. Other initiatives included the creation of a Crisis social Kitchen, which was coordinated by a group of specials working in social services with the support of volunteers, and delivered food and medicine to those more in need. Other municipalities such as Gabrovo, Burgas, Devnya, Hisarya, and Dimitrovgrad also relied on donations to provide food and cash to disadvantaged and vulnerable individuals. Moreover, the municipality of Lovech made use of volunteers to distribute food and medicine and in some cases contribute with psychological support to elderly people and vulnerable groups especially those with mental health problems. Finally, a national information system to register persons under quarantine was established, which facilities the role of municipalities on the managing of the health crisis.

Regarding economic measures, some measures to help local businesses were led by municipalities. For example, the city of Gabrovo has exempted tenants of restaurants and sites for educational activities from paying rent during lockdown. From July 2020, a targeted wage subsidy scheme was established for hiring of unemployed in hotels, restaurants, and tour operator businesses. The subsidy covered the minimum wage and social insurance expenses for up to three months and was allocated to municipalities based on registered unemployment figures. Some municipalities would benefit more than others as unemployment figures vary across regions, for example the region of Vidin recorded an unemployment rate of around 14% compared to Gabrovo, which had a rate of 6% in September 2020. Additionally, the municipality of Sofia created a fund of BGN 1 million (approx. EUR 510 000) for bank guarantees covering up to 50% of the principal, and up to 80% with additional guarantees by financial intermediaries.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: The impact of Covid on local finances was largely felt across municipalities. Bulgarian subnational governments experienced an estimated loss of 1% in tax revenue in 2020 compared to 2019, which was driven by the economic slowdown and mobility restrictions. Moreover, significant declines were recorded in tariffs and fees as well as revenue from assets (43% and 11% respectively) compared to the previous year. However, revenue from grants recorded a significant increase of 6%, which was mainly driven by earmarked grants for capital expenditure.

Local current expenditures increased by around 5% in comparison to 2019, which includes pandemic-related expenses in public health and support for individuals and businesses. Local governments also received additional funds transferred from the Ministry of Health to provide personal protective materials, such as disinfectants, masks, gloves, and materials for social homes for elderly people.

In terms of subnational government debt, outstanding debt recorded a reduction of 3% from 2019 to 2020, which was mainly driven by a decline of 16% in bonds.

ECONOMIC AND SOCIAL STIMULUS PLANS: Through the investment initiative in Bulgaria “EU Cohesion Policy Funding,” the EU aimed to support the health sector, to help the economy and to protect jobs. Funding for the health sector was estimated around EUR 20 million for the purchase of medical equipment, medicine and personal protective equipment. Other resources to reactivate businesses were allocated throughout the European Regional Development Fund, with about EUR 565 million aimed to support small business and SMEs.

The government of Bulgaria also set an EU Recovery and Resilience Plan that includes 57 projects as of April 2022, in areas such as innovation, climate transition, nature protection, connectivity and social fairness. The plan also considers 47 reforms, including mechanisms for energy efficiency, digital infrastructure, and public administration reforms. The recovery plan estimates a budget of around EUR 6.5 billion. The plan also considers a new regional approach with involvement of local communities in the management of EU funds and includes resources for local development in two areas: water supply and sewerage systems and digitisation for water management.

An initiative from the European Social Fund called Patronage Care service was created to support the elderly and people with disabilities. The scope of this programme was extended to allow local authorities to deliver packages of food, medicine and other essential goods to elderly or to those under quarantine during the crisis.