Country Listing

Bulgaria Table of Contents


Investment Policy

In choosing among alternative investment projects, Bulgarian planners in the Zhivkov era faced greater difficulties than investment decision makers in Western economies. True relative costs of labor and materials were masked by state assignment of prices, meaning that funding allocations among projects often were arbitrary. In most cases, investments were not based on efficiency criteria, but rather on plan goals. Artificially low interest rates also discouraged enterprises from efficient investment fund allocation.

The state budget also guided party economic policy under the old regime. Until the reforms of the 1970s, the budget was the primary source of funds for enterprise investment. Budget revenues were originally derived mainly from the turnover tax, a retail sales tax that was also used to regulate demand for various products. Beginning in the mid-1960s, budget revenues were derived progressively less from the turnover tax and more from taxes on net enterprise income.

Data as of June 1992