Bulgaria is a unitary state and is divided into 28 administrative regions. The president is elected by direct popular vote and can serve a maximum of two five-year terms. Real power lies with the executive, in the form of the Council of Ministers (government cabinet), which is headed by a prime minister. The government is elected by the unicameral National Assembly (legislature) for four years; the party or coalition with the most votes receives the mandate to form a government. The 240 members of the National Assembly are elected every four years through an electoral system of proportional representation with preferential voting. The National Assembly has the right to initiate and scrutinise legislation, and oversees the government. Regional governments are appointed by the central government, have limited powers and enact central government policy, with some veto powers on local self-government. Municipalities have substantial powers, with mayors elected by direct vote and municipal councils through a proportional system. 

Political and government instability are the key drivers of political risk in Bulgaria. Frequent government changes since 2012 and several rounds of early elections have contributed to growing policy instability. Governments rarely complete a full term in office, and their policy agendas tend to remain largely unfulfilled. The key reasons behind growing political instability are the fragmented party system and an erosion of public trust in political parties. Similar to other consolidating democracies in the region, the political party landscape in Bulgaria is volatile, with new parties formed ahead of elections, and others disintegrating after one term in government. This makes stable government coalitions difficult to achieve. This has led to increased policy uncertainty and a lack of regulatory predictability for businesses. As different governments enter office with different policy agendas and priorities, businesses face delays because of stalled policy processes and the change of key staff in state institutions. 

The current coalition government between the centre-right Citizens for European Development of Bulgaria (GERB) and the right-wing United Patriots (OP) is unlikely to be more stable than its predecessors. The OP’s right-wing views on many issues – including security, immigration, and relations with Russia, the EU and Bulgaria’s neighbours – do not sit well with the GERB’s more moderate ideology. Policy disagreements are likely to recur and undermine government stability. However, any change in government is likely to be through democratic means. In fact, democratic standards of governance are improving, although the rule of law remains weak and unevenly applied.

The government retains a significant role in the economy, despite the successful privatisation of most state-owned enterprises (SOEs) since the 1990s. Close links between politicians and a small group of influential domestic businesses continue to skew the business environment in favour of well-connected domestic companies. The threat of non-payment by government entities and state-owned companies is generally low. Several public enterprises are known to have large debt, such as the National Electricity Company (NEK), which over the past two years has gradually been repaying its debt to foreign energy companies operating in the country. The threat of non-payment by public sector companies is likely to continue to decline, due to general low public debt. 

The risk of nationalisation and expropriation is low. Since the fall of communism in 1989, governments have protected the right to private property and pursued a thorough privatisation process. Although many of the early privatisations suffered from a lack of proper competitive and transparent procedures, no government has considered re-nationalisation. However, in some sectors, such as energy, which are considered of strategic importance, the state retains ownership and influence.

Both high-level and petty corruption pose a threat to businesses, though the overall threat from corruption is declining and is likely to reduce further in the coming years. Companies are most likely to face corruption when bidding for large public procurement tenders, which can be rigged in favor of politically connected domestic companies. The threat also extends to applications for various licences and concessions for exploitation of mineral and other natural resources. In addition, business practices and culture among private sector companies are not aligned to the latest anti-bribery and corruption regulations, and interactions with local partners and suppliers could expose businesses to corrupt practices.

While the broad regulatory direction in many policy areas is constrained by EU legislation, and is therefore largely stable and predictable, the enforcement of adopted regulations is often slow and uneven. Weak administrative capacity and the selective application of regulations are the main drivers of regulatory risk. Local administration, especially in smaller and rural areas, does not have the necessary human and financial resources to enforce all regulations. Moreover, politically well-connected businesses can benefit from their connections to avoid compliance with regulatory requirements, especially if compliance is costly. Overall, the government is positive towards foreign investors and businesses, and most regulatory intervention is aimed at either improving the business environment or complying with new EU legislation. 

Regarding its foreign relations, as a member of NATO and the EU, Bulgaria’s foreign policy is largely aligned to the values and priorities of these two regional organizations. Governments rarely take up independent foreign policy initiatives or positions that are not in line with EU priorities.Relations with neighbouring states are generally friendly, despite occasional diplomatic disputes with North Macedonia and Turkey. Bulgaria has no open border issues with any neighbour.

Additionally, Relations with Russia are very important. Although Bulgaria is part of EU and NATO structures, Russia remains a crucial economic partner and supplier of oil and gas. Biggest opposition party the centre-left Bulgarian Socialist Party (BSP) and some far-right nationalist parties are supportive of closer relations with Russia. However, the current government is pursuing a foreign policy balancing act between the EU/NATO and Russia. Getting this balance right will remain a key challenge for Bulgarian leaders in the next few years. 

Bulgaria is considered a Flawed Democracy in the 2020 Democracy Index, developed by The Economist Intelligence Unit (EIU), where the country ranks 47 out of 167 countries scored.

The country ranks 56 at the 2019 Human Development Index developed by the United Nations Development Programme.

Although the quality of infrastructure has significantly improved in the past 20 years, it remains below Western standards. Much modernisation needed in some regions, especially for rail. Consecutive governments have pursued business environment reforms aimed at reducing the bureaucratic burden and cutting red tape. However, lack of administrative capacity and poor efficiency  (regulatory constraints, mismanagement, and corruption) mean that business continue to face obstacles and delays when dealing with state institution, leading to a slow progress .

Restrictions imposed in response to the global coronavirus disease 2019 (COVID-19) pandemic are likely to cause significant operational disruption for business in the coming months, as some restrictions remain in place. 

Current planned projects include rail lines refurbishment, a rail connection from Sofia to Skopje (North Macedonia), a tunnel under the Balkan Mountains, and the Hemus and Struma motorways. Attracting foreign direct investments and EU funds for such projects is a priority. The labour force is relatively cheap, and there is a low risk of long and disruptive strikes. Labour movements are weak and not particularly effective. Trade unions exist mostly in the state sector and in formerly state-owned large enterprises. Nevertheless, unions tend to periodically organise strikes and protests, and in most cases receive concessions from the government. Labour activism in the private sector is even lower, with only a small fraction of employees in foreign owned companies joining trade unions. Businesses can expect some disruption to transport and supply chain routes as a result of strikes and protests, though damage to assets is much less likely. However, there is a high risk of political corruption, particularly at the municipal level.

Labour shortages pose an increasing threat to businesses operating in Bulgaria. Although the country’s labour force is generally reliable and high-skilled, many Bulgarians, especially the young and well-educated, are leaving the country for other EU member states, which have better pay, job prospects and a higher quality of public services. As a result, the country’s population growth is set to slow down over the next two decades, exacerbating current demographic challenges. The government aims to accelerate efforts to import labour, especially from neighbouring, culturally close countries, such as North Macedonia, Serbia, Moldova and Ukraine, to help it sustain future economic growth. 

Foreign businesses do not face any local content or hiring restrictions in Bulgaria.  However, and despite continuous judicial reforms since the early 2000s, courts remain inefficient and subject to persistent political influence. Domestic businesses, especially those with links to local and national politicians, tend to be treated favorably by courts. Obtaining work permits for non-EU workers tends to be a complicated and lengthy process. Although the country has improved in the past two decades,  inefficiencies in administration persist and make doing business in Bulgaria comparatively more difficult than in Western Europe. Businesses accustomed to Western management standards will likely find dealing with officials time-consuming and frustrating. 

Obtaining licences and permits can be a long and opaque process. Buying land is generally not a problematic issue for investors and the government has created several economic zones where leasing land is very easy. The only exception is in the agricultural sector, where over the past two years the government has sought to alter regulations to limit the EU single market in agricultural land.  

Power shortages are unlikely, except in exceptionally bad weather, which can sometimes affect transmission infrastructure. As a result of overdevelopment, some residential areas and resorts are likely to experience delays connecting to the power network. The water supply network is reasonably well developed and the country in general has good water resources. However, the outdated pipeline system needs urgent replacement. Some residential locations – particularly smaller towns and villages – can experience temporary shortages.

The telecommunications network is well developed and compares favourably to that in Western Europe. Mobile and landline services are provided by all three main telecoms companies – A1, Telenor and Vivacom. Internet access is cheap and widely available, particularly in the main cities.

Overall, Bulgaria ranks 61 out of 190 countries scored at the 2020 Doing Business Index by the World Bank and 69 out of 198 at the 2020 Corruption Perception Index by the Transparency International Organization. It is one of the most corrupt countries in Europe. 

Security risks are low. As a member of NATO since 2004, Bulgaria’s security has been linked with broader Euro-Atlantic security structures and its military capacity has been increasing in line with NATO plans and priorities. However, Bulgaria has a persistent problem with organized crime. The threat from organised crime since the 1990s has significantly declined, but several well-organised criminal networks continue to operate across the country. Some have expanded their operations into legitimate businesses, posing a reputational threat. Moreover, economic crime – such as the misappropriation of funds, embezzlement and smuggling – remains also a major problem. Much of it is carried out by increasingly sophisticated organised crime syndicates and gangs. The forgery of legal documents is also a serious problem and businesses should seek legal advice to independently verify documentation.

Violent incidents are rare and there is a low likelihood of injury to bystanders. Extortion demands, which are facilitated by corruption particularly at the local level, are probable, especially in the tourism sector, but the risk to foreign investors is low. Bulgaria is an important transition country for smugglers of hard drugs, counterfeit products, and people. The government is keen to join the Schengen zone, the EU’s free-movement area, but this has repeatedly been blocked by various other member states, which have cited concerns over organised crime and corruption. Increased cyber-crime capabilities pose a threat to businesses, particularly financial institutions.

Bulgaria's relations with its neighbours are very likely to remain peaceful. While military conflict with Russia is highly unlikely, relations with Moscow have been strained because of Russia's opposition to Bulgaria's defence co-operation with the US. In 2015, NATO opened a regional co-ordinating unit in Bulgaria. Bulgaria will continue to actively participate in NATO military exercises in the Black Sea as part of the Alliance strategy to establish a deterrence capability against Russia along its eastern flank. This elevates the risk of maritime incidents between military and potentially commercial vessels, which could lead to transport disruption. Exploratory cyber attacks against governmental websites or CNI assets are likely.

Large-scale anti-government protests are likely to continue in the next few months. The demonstrations will probably remain peaceful, attract around several thousand people in capital Sofia, and cause transport disruption for up to a day. In the two-year outlook, demonstrations over mismanagement and environmental issues attracting up to several thousand people are likely in Sofia and other big cities, causing traffic disruption for around a day. Union-supported protests by public-sector employees, usually leading to road closures in Sofia, are also likely. They often occur in the run-up to legislative amendments on social or taxation issues.

Close co-operation with the US, troop contributions in Afghanistan (about 160 troops under the Resolute Support mission), weapons' sale to the Middle East, and an influx of refugees from Syria, Afghanistan, and elsewhere have increased the likelihood of domestic Muslim radicalisation, but home-grown terrorist risk remains low as the Muslim minority (10% of the population) is neither politically nor religiously radicalised, and is unlikely to provide support to Islamist extremists. Foreign terrorists in July 2012 targeted Israeli tourists in the country's first terrorist attack in decades. Five Israelis and one Bulgarian were killed when a bomb exploded on a bus near Burgas airport. Western and Israeli sources have accused Lebanese Shia movement Hizbullah of involvement, but the local authorities have not confirmed this. Overall security, particularly around main transport hubs, was increased in the aftermath of the attack. However, the capacity of law-enforcement bodies and specialised courts on organised crime and terrorism remains limited amid high corruption risks, including among security officials, and lack of a successful record in combating organised crime.

Bulgaria is very unlikely to become embroiled in an inter-state war, being a NATO member and surrounded by other NATO members (with the exception of North Macedonia and Serbia). The country enjoys generally good relations with neighbouring states, despite occasional diplomatic disputes with Turkey and North Macedonia. Internal conflict and civil war pose a minimal risk to businesses. Despite persistent discrimination against the ethnic Roma and, to a lesser extent, Turkish minorities, ethnic tensions are low. 

Overall, Bulgaria ranks 28 out of 163 within the 2020 Global Peace Index by the Institute for Economics and Peace.

Bulgaria is not currently among the most cyber-attacked countries in the world.  According to Kaspersky cyber threat map, it is ranked as the 65 most cyber-attacked country. 

No vaccinations are required to enter the country.

Bulgaria ranks 61 out of 195 within the 2019 Global Health Security Index, a project of the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHU), developed with The Economist Intelligence Unit (EIU).

Bulgaria is situated in an active seismic zone. In May 2014, a strong earthquake (6.9 on the Richter scale) struck under the Aegean Sea, shaking the country, and hospitalizing 300 in neighboring Turkey. In 2015, a 4.2 magnitude earthquake took place outside Sliven and a 3.8 magnitude earthquake off the Black Sea coast.

The country is known to experience severe weather from time to time. Snowstorms may severely disrupt travel and cause power outages during winter.

Flooding occurs in the spring and winter. Insufficient infrastructures in small towns and villages makes them more prone to flooding. In February 2015, two people were killed while rail and road traffic was several disrupted when floods hit the country. Melting snow and heavy rain increase the water level of reservoirs and rivers and leads to overflowing. In June 2014, flash floods and mud slides due to overflowing led to 11 deaths in Varna. For regular updates regarding weather alert you may visit the National Institute of Meteorology and Hydrology. 

Wildfires are frequent in mountain areas during summer and tend to be concentrated in Sofia, Haskovo, Sliven, Yambol, and Tazgrad. Summers can be particularly hot and heatwaves can cause transportation and health issues. In late July 2014, temperatures reached 37°C (100°F).

If you plan to visit Bulgaria, stay informed by the National Directorate General for Disaster Management, Ministry of the Interior (NDGDM).

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