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Finance, Accounting and Business Analysis 
Volume 6 Issue 1, 2024 

http://faba.bg/       
ISSN  2603-5324 

 

Assessment of Regional Economic Integration in Bulgaria Through 

EU Funding and Implementation of Financial Instruments Under 

The Operational Program "Regions in Growth" 2014-2020 

 
Mladen Dilov 

Finance and Accountancy Faculty, University of National and World Economy, Sofia, Bulgaria 
 

Info Articles   Abstract 
 

History Article: 

Submitted 28 April 2024 

Revised 14 May 2024 

Accepted 17 May 2024 

 

 The study aims to monitor whether the implementation of 

investment projects in the 2014-2020 programming period is in line 

with the approved national strategic framework for economic 

integration of the regions in Bulgaria. The focus of the report is on 

financial instruments as an alternative form of financing. 

A method of deduction was used to describe the financial 

instruments. In order to investigate the effectiveness of the 

implementation of investments through them, an analysis of 10 

selected municipal projects was made by tracking the progress of the 

financial resource absorption on a quarterly basis. From the official 

website of the Institute for Market Economics, data on the level of 

asymmetry of the different regions in terms of investments made and 

infrastructure are obtained. 

As a result of the study, it was found that despite the successful 

implementation of the Operational Programme "Regions in 

Growth" 2014-2020, the imbalance in the development of the 

different regions in Bulgaria remains significant. The lack of 

sufficient administrative capacity of municipalities and various 

procedural delays make municipal projects financed by the financial 

instrument unfeasible within the deadlines set for them. 

The findings of the study could be useful while new financial 

instruments in Bulgaria are implementing.  The increased risk of 

non-compliance with municipal projects has be taken into 

consideration along with targeted action for the economic and social 

integration of Bulgaria's lagging regions 

 

Keywords:  

Financial instruments, 

Regional integration, 

Project investments. 
 

 

JEL: F15,  R42  

Address Correspondence:  

 Email:  mladendilov@mail.bg  

 

 

  



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INTRODUCTION 

 

The European Union provides support to all 27 counties in various forms of funding - grants, long-

term loans, and/or combined support. Supporting sustainable development is linked to completing the 

Single Internal Market of the European Union and mobilizing various common policies - economic 

development, social policy, and environmental policy (Boneva 2011). The main goal is to supply investment 

intentions that lead to economic growth, development, and innovative solutions to reduce harmful emissions 

in the environment. In underdeveloped countries such as Bulgaria, EU funding holds significant important 

to overcome problems with imbalances in the development of different regions. Effective implementation of 

European financing could result in sustainable development for the country. The signing of the Contract for 

EU membership in April 2005 was the first stage of Bulgaria's integration process in accordance with 

European politics. In the context of full membership, the need for a coherent national integration policy that 

is not only responsible for compliance with EU requirements is growing (Hubenova 2022).  

Analyzing official data under 2014-2020 Program period in Bulgaria for the type and amount of 

investments could be important for determining the effective utilization of financial resources from European 

Union. The opinions of economic experts are that the lack of financial experience causes ineffective fund 

disbursement. Further action has to be made to optimize these processes to overcome the transition to green 

energy, improving macroeconomic performance, and societal well-being. 

Along with grant funding, the EU offers an alternative option to support projects in accordance with 

cohesion policy. The official website of the European Commission provides detailed information on 

financial instruments, which help to trigger investments on the ground for revenue-generating and cost-

saving activities while maximizing private investment with minimum public support to deliver the Cohesion 

Policy objectives of economic, social and territorial cohesion. Financial instruments represent a more 

efficient and sustainable alternative to complement traditional grant-based support. The European Regional 

and Development Fund and the Cohesion Fund support projects on the ground through financial products, 

such as loans, guarantees and equity (European Commission 2024). The European Regional Development 

Fund (ERDF) is part of the five European Structural and Investment Funds whose main goal is to deliver 

the EU's cohesion policy. All funds foreseen under financial instruments in Bulgaria for 2014-2020 Program 

period come from the ERDF. The goal of the study is to analyze the entire process of financial instrument 

disbursement in the country, from budget allocation to actual project implementation, in order to accomplish 

the main national strategic goal – achieving sustainable regional development. 

 

LITERATURE REVIEW 

 

Theories of regional economic integration  
The process of regional convergence in European Union is inextricably linked to policies aimed at 

integrating lagging regions by providing financial resources. 

On the official website of the CFI, economic integration is defined as an agreement that eliminates 

trade barriers and introduces a single monetary and fiscal policy to create an interconnected global economy. 

The first theories to define regional economic integration emerged in the 1950s and 1960s. According to 

liberal theory unrestricted market competition is the best regulator of the economy, which cannot be equally 

replaced by instruments of state economic regulation (Hadjinikolov et al. 2004:28). A well-known 

representative of neoliberal theory is the Hungarian economist Bela Balassa. In 1976, his scientific work 
„Types of Economic Integration“ defended the thesis that full economic integration requires the creation of 

supranational institutions whose decisions are mandatory for the members of the Union. Effective 

international integration, according to dirigistes, requires not only the elimination of national discrimination 

but also the development and consistent implementation of an effective general policy by integrating 

countries in a wide range of areas (Hadjinikolov et al. 2004:33). 
According to the publication in „European Economic Integration“ from 2004, developing countries 

due to limited potential for pure market integration have supported dirigiste theory (Hadjinikolov et al. 

2004). In reality, for countries like Bulgaria, excessive political-institutional support causes conflict within 

the Union. An example of this is the controversy over the country's entry into the Schengen area. The liberal 

theory is also inapplicable because it completely denies political support that could optimize integration 

processes. In reality, the liberal theory could lead to unfair competition from developed countries that have 

a huge production capacity, allowing them to realize economies of scale. Only neoliberal theory is close to 

actual economic integration in the EU, which approves of free trade availability with support from European 

institutions. 
  



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National Strategy for Regional Development  
Implementing European cohesion policy at the national level is linked to activities aimed at 

identifying the main threats to the European community over a period and transposing them at the local and 

regional levels. The National Strategy for Regional Development (NSRD), published on the MRDPW 

official website, is the primary document that defines the strategic framework of state policy for achieving 

balanced and sustainable development of the country's regions and for overcoming intra-regional and inter-

regional within the framework of the EU-wide cohesion policy. The information from the NSRD confirms 

disturbing data regarding the lag of Bulgaria's regions, which are far behind the European average. The only 

region that is close to the European average in economic and social indicators is the Southwest region. The 

reasons can be summarized as population decline, migration, and depopulation of underdeveloped areas, as 

following graphic shows: 
 

 
Source: National Statistical Institute 

Figure 1. Population of Bulgaria 

 
In the Bulgarian National Strategy for Urban Development 2012-2022, it is not mentioned that the 

demographic crisis in the country is the worst among all EU Member States. In that case, the main goals of 

NSRD should mainly focus on social development. Nevertheless, the NSRD focuses on achieving cohesion 

in three dimensions - economic, social, and territorial. According to Ministry of Regional Development and 

Public Works, the main strategic goal is ‘Achieving sustainable, integrated, and balanced regional 

development by building on local potential and bringing regions more closely together economically, 

socially, and territorially’ (National Strategy for Regional Development 2012-2022). 

Professor Stoykov (2012) confirms the statement that regions in Bulgaria are far behind the European 

average in his study „The Bulgarian economy in the terms of European integration“, published in 2011. According 

to the study, the economic crisis is the cause of continuing lag behind for weaker economies, increasing their 

dependence on developed countries. In Professor Stoykov's opinion, Bulgaria's membership in the EU 

should create favorable financial and organizational conditions which, in the long term, could lead to an 

equal level of convergence in economic and social development with other EU member states. In the first 

few years of the Programming Period 2007-2013, problems have been identified with a lack of administrative 

capacity, a clear economic outlook, and strategic objectives. Moreover, there are weak project and 

organizational readiness, as well as incorrect use of funds. All of these reasons are prerequisites for ineffective 

Financial Instrument disbursement in Bulgaria. The experience gained in the first Program period for 

Bulgaria have to be taken into consideration while programme periods are implementing.  

 

STUDY 

 
The study uses the method of deduction to analyze the implementation of cohesion policy in Bulgaria. 

As mentioned in the introduction, ERDF is the only source of FI funds. The European Regional and 

Development Fund invests in four key areas: Innovation and research; The digital agenda; Support for 

SMEs; The low-carbon economy. The official website of the European Commission provides data about the 

total ERDF (2014-2020) planned budget for every member of the EU. The scope of the study includes 10 



Mladen Dilov / Finance, Accounting and Business Analysis, Volume 6, Issue 1, 2024 

 

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countries, including Bulgaria, along with Poland, Czech Republic, Romania, Greece, Hungary, Croatia, 
Lithuania, Latvia and Estonia. The data is illustrated in the following graphic:  

 

 
Source: author's calculations with data from European Commission 

Figure 2. ERDF (2014-2020) budget allocation 

 
Financial resources for Bulgaria under ERDF are smaller compared to countries like Romania, 

Greece, and Croatia. The amount of the funds is EUR 4,521 million, which accounts for 1.5% of the total 

budget of the Fund. In comparison, funding for Croatia is 1.8%, for Greece 4.4%, and for Romania 4.8%. 

Among all 27 members, Poland has the largest financial resource – EUR 49,513 million, which is 16% of 

the total budget of ERDF. According to the scope of the study, next are Czech Republic and Romania with 

a difference of 3 million from the total funding budget – EUR 17,862 million and EUR 14,802 million, 

respectively. The countries with the lower budget than Bulgaria are Lithuania – EUR 4,285 million, Latvia 

– EUR 3,101 million, and Estonia – EUR 2,692 million. 

The Operational Programme 'Regions in Growth' 2014-2020 makes a major contribution to the 

implementation of the funds planned by the European Commission under the European Regional 

Development Fund, accounting for 36% of all planned financing for Bulgaria for that period. According to 

the official website of the Ministry of Finance, the OP fund amount is EUR 1,609 million, including EUR 

1,378 million of European financing and EUR 231 million of national funding.  

Financial instruments in the Operational Programme 'Regions in Growth' 2014-2020 help to 

overcome problems with trade limitations for private investors and the lack of projects to improve the urban 

environment and raise the standard of living among the residents of the regions. The idea of FI is to support 

investments per a viable financial perspective but cannot generate sufficient funding from market sources. 

The financial resource for implementing FI under Operational Programme "Regions in Growth" 

2014-2020 is EUR 369.7 million, including additional private co-financing from financial intermediaries. 

Investments are allocated to the following two priority axes: 
 Priority Axis 1“Sustainable and Integrated Urban Development“ – EUR 138.7 million  

 Priority Axis 6 „Regional Tourism“ - EUR 50.3 million.  

 

On the official website of the Fund Manager for Financial Instruments in Bulgaria, detailed 

information is published about the main goals of the financial instruments. They include improvement of 

the urban environment, energy efficiency, development of economic areas in cities, as well as tourism 

development. An advantage of FI over grant funding lies in terms of the final recipients, which can include, 

in addition to municipalities and municipal enterprises, private companies, public-private partnerships, and 

individuals. The financing is provided in the form of low-interest investment and working capital loans, 

including non-recoverable VAT of up to BGN 40 million, with a repayment term of 20 years, a grace period 

of 36 months, a beneficiary's self-participation of up to 15% of the loan amount, and reduced collateral 

conditions. The Managing Authority in Bulgaria delegates execution rights of financial instruments to two 

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

50 000

49 513

17 862
14 802 13 541 13 257

5 650 4 521 4 285 3 101 2 692

ERDF budget in million EUR



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68 

 

financial intermediaries – the Sustainable Cities Fund and the Regional Fund for Urban Development. The 

scope of investments for the Sustainable Cities Fund includes regions in Southern Bulgaria and Sofia, with 

funding of EUR 175.1 million. Northern regions in Bulgaria are eligible for funding from the Regional Fund 

for Urban Development with a financial resource of EUR 102.4 million. 

Financial instruments have many advantages over other types of credit financing and are the preferred 

financial product among investors with project initiatives: 
 More efficient use of public resources – FI provide additional financial resources to supplement grant 

support for municipalities.    
 Overcoming market failures – providing opportunities for „funding for target groups with limited 

access to private sector financial resources whose economic activity is important for achieving the 

objectives of the relevant European programme, that is confirmed in official website of Fund 

Manager of Financial Instruments in Bulgaria. 
 Recycling of financial resources – From the beginning of 2024 there is strong possibility for financial 

intermediaries to reinvest accumulated finance resources from principal repayments on existing 

loans into new projects.   

 

RESULT AND DISCUSSION 

 
Alongside the range of opportunities available to beneficiaries using a financial instrument, there are 

some constraints observed in the past programming period: 2014-2020 in order of regional development 

success.  

 

Implementation of the financial projects on time 
One of the big challenges facing the financial intermediaries for the 2014-2020 Program period is 

linked with the timely implementation of approved projects for funding. Unlike private investments for the 

majority of municipalities, there is a tendency for non-observance of deadlines for credit utilization, despite 

the existence of a 'commitment' fee in the terms of the contract. This fee is charged as a percentage of the 

unused amount of the credit. When the deadline is not respected, it causes unnecessary administrative 

burden linked with the approval of changes in contract clauses. A meeting of the Investment Committee is 

formed to approve changes, and an Annex is concluded with the beneficiaries. This could also lead to 

deviations from the set implementation goals along with the Operational Agreement for managing Funds 

for Sustainable Cities. In most cases, there is a deviation from the planned funding amount to a specific 

reporting date, which has a negative impact on the financial intermediaries. Some of the reasons for delayed 

implementation of FI projects are: 

 Public Procurement Law procedures – In the procedures for the selection of contractors with public 

procurements there are risks of delays because of appeal of the procedure or refusal of contractor 

after has been already selected. This may lead to deviation from the initial deadlines for projects 

implementation.   

 Approval from National Institute for Immovable Cultural Heritage (NICH) – approval linked with 

projects under priority axis 6 - tourism and cultural heritage. For their implementation, Opinion 

from NICH is required but the procedures are long and unpredicted which cause significant delays 

for the investments 

 Projects with combined support – Projects with combination of financial instruments and grants have 

more complicated procedures for applying, approval and follow up changes in the contract that 

again results in implementation of the investments.  

 

To confirm the problem with delays in project implementation, a study will present 10 municipal 

projects funded by the Sustainable Cities Fund in the South region during the 2014-2020 Program period. 

Ten different municipalities are included in the study: Burgas, Kazanlak, Pernik, Gotse Delchev, Yambol, 

Smolyan, Karlovo, Blagoevgrad, Dupnitsa, and Kardzhali. The total amount for the projects is EUR 

30,969,117, including funding from the Fund for EUR 9,432,033, or 30.46% of the total project financing. 

The scope of the study is the initial absorption period, excluding Annexes for deadline extensions. The main 

goal is to analyze the percentage of funds that have been absorbed until the end of the contract period. The 

scope of the study is 36 months, which is the maximum period allowed under the Operational Agreement 

with the Managing Authority. The values are presented as a percentage of the total amount of the projects 

(without accumulation) for the relevant quarter from the first day of contract signing until the contract 

deadline for absorption. The following information is from SCF's official website: 
  



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Table 1. Percentage of amount disbursed under Contracts with FUD South 

Beneficiary/ 

Name of project 
Total 

3 
Months 

6 
Months 

9 
Months 

12 
Months 

15 

Months 

18 

Months 

21 
Months 

24 

Months 

27 

Months 

30 
Months 

33 
Months 

36 
Months 

Burgas "The 
power of the 

water" 
74,3% 0,0% 0,0% 15,0% 9,0% 26,2% 8,5% 4,6% 11,0%         

Kazanlak „Тhe 
world of the 
Thracians „ 

34,0% 0,0% 0,1% 0,3% 1,3% 0,8% 2,7% 12,4% 1,9% 0,3% 3,4% 4,2% 6,6% 

 Pernik „Palace 
of Culture“ 

41,3% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 34,4% 6,8%     

 Gotze Delchev 
„House of 
Culture" 

18,9% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 4,7% 14,2% 0,0% 0,0% 

Yambol 
„Renovation of 

the Art 

Gallery“ 

3,9% 0,2% 0,5% 0,4% 0,6% 0,3% 0,5% 0,9% 0,4%         

Smolyan 
„Planetarium“ 

31,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 31,0% 

Karlovo 
"Tourism" 

31,6% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 10,1% 0,0% 0,0% 21,5% 0,0% 

Blagoevgrad " 
Chamber Opera 

and 
Community 

Centre“ 

31,0% 0,0% 0,0% 0,0% 0,0% 0,0% 1,4% 0,0% 0,0% 26,2% 3,4%     

 Dupnitsa 
„Youth House“ 

0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0%     

Kardzhali 
„Perperikon" 

22,2% 0,0% 0,0% 0,0% 0,0% 9,4% 0,0% 0,0% 11,1% 0,0% 0,0% 1,8% 0,0% 

Source: author's calculations with data from Sustainable Cities Fund 
 

The analysis of the funds that have been absorbed on a quarterly basis as a percentage of the total 

amount of the projects can be summarized as follows:    

 None of the municipal projects included in the study has been fully implemented by the absorption 

deadlines specified in the financing contracts. Burgas municipality has the highest implementation 

rate, with 74% of the total funding amount absorbed. On the other hand, the absorption rate in 

Dupnitsa municipality is 0% for a period of 30 months. The average absorption rate for the ten 

chosen projects is extremely low - 28.8% 

 During the first 12 months from the conclusion of contracts between beneficiaries and SCF for 

the analyzed projects, it is confirmed that municipalities do not take the initiative to provide 

disbursement documents to financial intermediaries for project implementation. The average 

amount of absorbed funds for the ten projects is lower than 1%. 
 The tendency for most of the chosen municipal projects is active absorption in the last 6 months 

of the contractual term. In order to prove this thesis, a calculation was made for two periods: 1) 

Period 1: from the contract signing until the quarter before the last 6 months; 2) Period 2: the last 

2 quarters before the end of the contractual term. Two of the ten projects are excluded from the 

calculation – Municipal Burgas due to its high level of amount absorption, and Municipal 

Dupnitsa for its 0% implementation rate. Both projects would cause a significant deviation that 

would distort the final result. The average percentage of investment activity to total investment for 

the 8 projects in Period 1 is 1.1%, confirming low investment activity. The percentage for Period 

2 is 9.7%. Although the difference between the two periods isn't significant, the investment activity 

increases by the end of the contract period.  

  

The study, conducted with 10 municipal projects financed by FI, confirms that investments do not 

meet contractual deadlines. Implementation of key activities is delayed due to various administrative and 

procedural obstacles, combined with shortcomings in project management by beneficiaries. As a result, the 

established deadline for the absorption of funds under OP "Regions in Growth" 2014-2020 could not be met. 

A disbursement mechanism beyond 2023 for FI and combined support with grants is created with the goal 



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of completing projects financed by the Urban Development Funds that were not finalized at the end of the 

period. The procedure is related to municipalities' accounts blocking of the unspent amount within the 

partner bank, pending submission of supporting documents and preparation of a disposition of funds by the 

financial intermediary. Nine of the 10 municipal projects in the study fall under the Post-2023 Disbursement 

Mechanism. Only the project "The Power of Water" has disbursed 100% of the Sustainable Cities Fund 

South approved funding. The average percentage of the amount transferred for absorption in 2024 is high – 

54% of the total amount for funding. 

The study showed that implementation of municipal projects funded with Financial instruments is 

difficult process to manage because of administrative obstacles that disrupted the originally planned 

absorption deadlines. On the other hand, private projects are much more effective with high level of loan 

absorption due to willingness of beneficiaries for project completion in order to generate incomes. To 

confirm this thesis, there is a study with two private projects, funded by SCF for Program period 2014-2020. 
The name of Project 1 is „Electronics manufacturing facility with warehouse and administrative part“ with 

approved funding from SCF for EUR 9.73 million and 24 months period for disbursement. Project 2, named 

„Construction of a new commercial and service complex of the company "Megatron EAD on the territory of the city of 

Sofia“ for EUR 3.55 million and the same period of amount absorption. Comparison of the above 2 projects 

is with the average absorption amount of the ten municipal projects on a quarterly basis. The results are 

shown in the next graph: 

 

 
Source: author's calculations with data from Sustainable Cities Fund 
Figure 3. Rate of absorption of private and municipal projects with FI 

 

Information from the Sustainable Cities Fund about absorption of FI projects confirms that private 

projects are much more effective. Both of them implementing 100% of approved funding for the 
disbursement period in contracts. In comparison, the average absorption of the ten municipal projects is 

37.6% and for longer period. Project 1 has almost even allocation of disbursements on a quarterly basis 

unlike Project 2 where the total amount has been disrupted within 3 quarters. 

 

Asymmetry in development indicators 
In the official website of the Institute for Market Economy (IME) a study about „Regional Profiles – 

Indicators of Development“ is available. The scope are the 28 regions in the country in total 73 economic 

and social indicators have been analyzed in such a way that the data can be systemized and reported 

dynamically. By drawing up separate profiles for each area and supplementing them with thematic analyses, 

the publication in IME describes both the economic and social aspects of life in the regions. As the focus of 

the report is implementation of the FI, the main goal of the study is to confirm or deny the statement that 

OP „Regions in growth“ 2014-2020 helped to solve the national problem with regional underdevelopment. 

Moreover, the National Strategy for Regional Development 2012-2022 focus is about conducting cohesion 

policy. 

 



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Investments: 
The total investments made in the country are a strategically important indicator for achieving 

economic growth. The data from IME should confirm or reject the statement that the Operational Programs 

2014-2020, including FI, have a negative effect of asymmetric reinforcement. A limitation of the analysis is 

the scope of the study, which includes all investment activities for a specific region. For the goal of the report, 

it is assumed that funding from the EU is crucial for a period of 2 years – 2022 and 2023. 

According to the information, there is an uneven distribution of investments in national regions in 

2022, excluding Sofia city, Sofia-region, Gabrovo, and Burgas. In the other 24 regions, there is a low level 

of financial support for implementing projects. The coefficient for amounts paid under OP to municipalities 

per person varies. The two regions - Sliven and Targovishte - are last due to the coefficient with 1,659 leva 

paid from OP to one person, in comparison to Sofia, which receives 4,264 leva. After 12 months, changes 

in the development of the 28 regions in Bulgaria are observed, according to the total amount of implemented 

investments. The information is shown in the following figure: 

 

 

Source: official website of IME 

Figure 4. Investment by regions 2023 

 
The derived data from the Institute for Market Economics in 2023 indicate some improvement in the 

distribution of investments made by regions, but the strong imbalance trend remains valid. The decrease in 

investments made in the Burgas Region leads to the conclusion that only 3 regions in the country report high 

investment activity – Sofia city, Sofia Region, and Gabrovo. The capital city is a leader in the indicator 

under study. For example, Sofia has the largest number of enterprises relative to the population – 95 per 

thousand people (the country's average is 60) 

The main analyzed indicator, in line with the objective of the report, is the value of funds disbursed 

under OP per capita. The data from IME shows that the average value of that indicator for 2023 is EUR 

1,464. For the three regions with high investment activity, the paid amounts under Operational Programs 

are EUR 2,180 for Sofia city, EUR 1,416 for Sofia Region, and EUR 2,215 for Gabrovo Region. Compared 

to the previous year, an increase in OP injections is reported respectively with 7.4%, 8.37%, and 13.0%. The 

region with the lowest per capita disbursement of funds under OP is Sliven – EUR 817, or BGN 1,598, or 

EUR 647 lower than the country's average. Only nine out of 28 regions in Bulgaria exceed the average size 

of the analyzed indicator. 

Statistics confirm the study made 10 years ago about the lag of Bulgarian regions behind the average 

European levels of development. Unfortunately, for PP 2014-2020, this lag has still not been overcome. 

 

Infrastructure: 

The lack of easy access to good transport infrastructure, water supply, electricity, and 

telecommunications can pose significant barriers to the key priority of balanced sustainable regional 

development. Infrastructure development is directly related to the number of investments made in the 

country. Regarding financial instruments in Bulgaria for the 2014-2020 period, part of the approved 

investment for private beneficiaries includes the construction of connecting infrastructure. On the other 



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hand, municipal investments for street renovation and inter-block spaces were successfully implemented 

with the support of SCF.  

Following a logical sequence of the report, the scope of the study covers regional profiles for 

infrastructure, according to data from IME. According to information from the official website, 11 regions 

in Bulgaria had well-developed infrastructure by the end of 2022. The average percentage for well-developed 

infrastructure in the country is a concerning 42%, according to 2022 data from IME. Motorways and first-

class roads in Bulgaria are equally poor, averaging 18.5% (based on 2021 data). Only household internet 

access is acceptable, with more than 80% coverage in 2022. 

In order to analyze the dynamics of the regional profile indicators for infrastructure, the data for the 

last reporting year is illustrated: 
 

 

Source: official website of IME 

Figure 5. Regional Infrastructure 2023 

Compared to the previous year, regions with well-developed infrastructure remain at 11, but with 

some changes. The analyzed indicator in regions Pernik, Haskovo, Stara Zagora, and Veliko Tarnovo is 

improving, unlike in Pazardzhik, Targovishte, Sliven, and Sofia Region, where the condition of the 

infrastructure is deteriorating. The average percentage for well-developed infrastructure in the country is 1% 

lower than in 2022, down to 41%. Household internet access rate is improving by 3.8%, up to 87.3%. The 

average percentage for motorways and first-class roads for 2023 remains the same as the previous year. The 

average rail network density is 3.6 km per 100 square kilometers, also unchanged in recent years. Many 

problems with depreciated and obsolete rail transport, combined with a lack of initiatives to renew rail 

routes, remain an unattractive way of deliveries for businesses. 

According to IME data, infrastructure asymmetries in the regions are confirmed. The condition of 

the road network is a major problem at the national level. According to data, nearly 60% of the national 

network is in bad condition despite the implementation of infrastructure projects for street renovation in the 

2014-2020 Program period. The poor condition of the existing asphalt pavement is causing emergency 

repairs. These repairs lead to additional difficulties for businesses and reduce opportunities for making new 

local or foreign investments. 

 

CONCLUSION 

 
Based on the results of the study on financial instruments in Bulgaria for the Programme Period 2014-

2020, the following conclusions can be made: 

 In general, the process for implementing financial instruments in Bulgaria should be optimized. 

Although the financing environment improved, problems identified in Prof. Stoykov’s study - such 

as lack of administrative capacity, clear economic outlook, and strategic objectives - persisted 

during the 2014-2020 period. 

 Implementation of municipal finance projects on time was identified as a serious obstacle to the 

completion of the financial instruments, according to the study. This aspect must be taken into 

consideration when planning new financial instruments for the 2021-2027 period. 



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 Despite the successful implementation of the "Regions in Growth" 2014-2020 Operational 

Programme, including the financial instruments as indicated by data from IME, Bulgaria's 

regional economic development still lags seriously behind average European regions. This implies 

that the primary goal of the National Strategy for Regional Development has not been achieved, 

and efforts need to be focused on priority funding to increase economic and social integration in 

the country. 

 

The analysis of regional economic integration in Bulgaria under the Operational Program "Regions 

in Growth" 2014-2020 provides empirical evidence of process weaknesses based on which the following 

recommendations can be made: 

 Increasing the administrative capacity of beneficiaries of projects funded by financial instruments, 

especially municipalities, to manage more effectively administrative obstacles that cause delays in 

the implementation of investments. This could be achieved through targeted training and 

seminars, including exchanges with other EU Member States. 

 Reducing asymmetries in regional development can be resolved through the focus of the national 

development strategy. More financial resources should be made available for investment in less 

developed regions, including through preferential terms in the implementation of financial 

instruments for 2021-2027. 

 

REFERENCES 
 
Boneva, S. 2011.  European Economic Integration: budget and EU budget policy. University Publishing House 

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