The state of Bulgaria, officially the Republic of Bulgaria has formed a significant part of the Balkans in south-eastern Europe for many centuries. It borders five other countries: Romania to the north (mostly along the River Danube), Serbia and the Republic of Macedonia to the west, and Greece and Turkey to the south. The Black Sea defines the extent of the country to the east. The capital city is Sofia.
Currently Bulgaria functions as a parliamentary democracy under a unitary constitutional republic. It has a population of approximately 7.6 million.
Bulgaria became a member of the European Union in 2007The World Bank classifies it as an "upper-middle-income economy”. Bulgaria has experienced rapid economic growth in recent years. The country continues to rank as the second-poorest member state of the EU, but standards of living have allegedly risen.
Due to high-profile allegations of corruption, and an apparent lack of willingness to tackle high-level corruption, the European Union has partly frozen EU funds of about €450 million and may freeze more if Bulgarian authorities do not show solid progress in fighting corruption and in speeding up reforms.
Bulgaria has tamed its inflation since the deep economic crisis in 1996-1997, but latest figures show an increase in the inflation-rate to 12.5% for 2007. Unemployment declined from more than 17% in the mid 1990s to nearly 7% in 2007, but the unemployment-rate in some rural areas continues in high double-digits. Bulgaria's inflation means that the country's adoption of the Euro might not take place until the year 2013-2014.
Bulgaria's economy contracted dramatically after 1987 with the dissolution of the Council for Mutual Economic Assistance (COMECON), with which the Bulgarian economy had integrated closely. The standard-of-living fell by about 40%, but it regained pre-1990 levels in June 2004. United Nations sanctions against Yugoslavia and Iraq took a heavy toll on the Bulgarian economy. The first signs of recovery emerged in 1994 when the GDP grew and inflation fell. During the government of Zhan Videnov's cabinet in 1996, the economy collapsed due to lack of international economic support and an unstable banking system. Since 1997, the country has been on the path to recovery, with GDP growing at a 4%–5% rate, increasing FDI, macroeconomic stability and European Union membership.
The former NMSII government elected in 2001 pledged to maintain the fundamental economic policy-objectives adopted by its predecessor in 1997, specifically: retaining the Currency Board, implementing sound financial policies, accelerating privatisation, and pursuing structural reforms. Economic forecasts for 2005 and 2006 predicted continued growth for the economy. Economists predicted annual year-on-year GDP growth for 2005 and 2006 of 5.3% and 6.0% respectively. Forecasters expected industrial output in 2005 to rise by 11.9% from the previous year, and by 15.2% in 2006. Projections of unemployment envisaged 11.5% for 2005, 9% for 2006 and 7.25% for 2007.As of 2006 the GDP structure comprised: agriculture 8.0%, industry 26.1%, services 65.9%.