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Bulgaria, Economy

Communist Bulgaria, Soviet system, Soviet bloc, industrial enterprises, economic reform

Until 1947 Bulgaria was predominantly agricultural, with virtually no heavy industry. In Communist Bulgaria following World War II (1939-1945), all industrial enterprises were nationalized and operated under a series of five-year economic plans, modeled after the Soviet system, with financial aid from the USSR. Heavy industry was the government’s highest priority. Bulgaria enjoyed one of the most prosperous economies of the Soviet bloc.

In 1990 Bulgaria began converting from a socialist to a market economy, which was expected to result in a positive economic reversal. The reversal did not happen, however, leading to popular dissatisfaction with the social effects of the reforms. Consequently, the legislature did not enact laws that would have resulted in mass privatization, and the major industrial sectors remained under state control. Some reforms and privatization had begun, however, and in 1994 more than twice as many state-owned enterprises were privatized than in 1993. In 1994 economic reform was further hindered when the country’s voters, yearning for the economic stability of the Communist era, elected former Communists into power. Rather than transferring money-draining state-owned enterprises to private ownership, the government continued to sustain them or had state-controlled banks extend loans that were never repaid. The absence of reform began to yield dangerous consequences by 1996, as the national currency plummeted in value and the fragile banking system came near collapse. The economy continued to deteriorate, and in late 1996 the country entered a deep economic crisis, with near-hyperinflation and a rash of bankruptcies in the banking system. In 1997, however, a newly elected pro-reform government undertook measures to stabilize the economy and to fight the deep-seated corruption prevalent in many of the country’s large enterprises.

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Article key phrases:

Communist Bulgaria, Soviet system, Soviet bloc, industrial enterprises, economic reform, national currency, economic stability, market economy, state control, private ownership, USSR, state-owned enterprises, Communists, legislature, World War, social effects, heavy industry, loans, Bulgaria, reforms, financial aid, laws, measures, collapse, power, value, money

 
 

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