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Bulgaria Table of Contents



Investments in inefficient operations and subsidies on consumer items often led to budget deficits. Often the state simply printed more money to cover its obligations. Eventually this led to circulation of excess currency compared with consumer goods and services available at prevailing prices. Because prices were administratively set, shortages and long lines occurred more often than inflation under the CPE. But party-directed general price increases such as the average 15 percent rise in 1979 usually were quite steep.

In the post-Zhivkov era, economic planners saw marketdetermined prices for most goods and services as their long-term goal. In 1990 the prices of 40 percent of goods and 60 percent of services were freed from administrative control. In the second half of 1990, price liberalization raised consumer prices an average of over 50 percent. In February 1991, price controls were removed from all goods and services except fuels, heat, and electricity. Immediately after this step, average food prices were nearly six times their 1989 level; housing was up 3.7 times, clothing three times more expensive. These levels, established by an independent trade union study, were above the level triggering new talks on compensation payments. (For the second consecutive year, a government indexation program was established to reimburse a share (estimated at an average 65 percent) of the higher cost of living caused by the new price policy in the first half of 1991.) In a two-month period of early 1991, consumption dropped by over 50 percent, but total consumer spending still increased by 11.5 percent.

Data as of June 1992