Bulgarian economy is gradually gaining lighter shades. This is a conclusion of the Association of Industrial Capital in Bulgaria (BICA), which has been working over the past 5 years on a project for the limitation and prevention of informal economy. Shady practices are a negative phenomenon that is part of contemporary societies’ everyday life. In Bulgaria however, those were seriously pushed up in the period of the change of ownership /1990 – 2000/ and as a result in 2010 informal economy reached some 30 – 40 percent of GDP. Thus normal business was placed in a really unprofitable position. Experts from the association created within that project a new index for monitoring the grey economy, named Economy into the Light Composition Index. In 2010 its value was 63 /out of 100/, while last year it reached 68. Expert Prof. Dr. Stefan Petranov says the most serious lightening was observed in 2011 and the first half of 2012. Here is what he explains:

“That was the period, when mandatory online connection was established between cash registers and the National Revenue Agency, measuring facilities were introduced at gas stations, as well as at alcohol producers’ and excise warehouses. Customs inquest was retrieved as a form of control. There were enhanced measures, provoked by budget problems.”

VAT frauds, customs procedures within trade with non-EU countries, tobacco smuggling, the lack of cash receipts in the sphere of services and dummy labor contracts – those are the main problems due to grey economy. Tourism, followed by infrastructure construction business, milk processing, the systems of healthcare and agriculture – those are the sectors, facing the greatest number of grey practices. They are fewest in the spheres of engineering, post services, shipbuilding and repairs. “Most companies in the shipbuilding sector work with foreign partners and cannot afford the implementation of grey practices,” says Associate Prof. Dr. Emilia Chengelova, an expert sociologist on the project. Informal economy has a serious presence in North Bulgaria - the towns of Targovishte, Razgrad, Montana, Shumen and Pleven. Business in Veliko Tarnovo and Kyustendil has registered the biggest improvement. The BICA has identified 18 grey practices, whose progress has been monitored since 2010. Here is what Associate Prof. Chengelova says on their development in time:

“There is a common trend for limiting the range of these practices. Some of them have even been reduced by 50 percent – for instance labor with no contract. The only practice that still bothers us is the so-called dummy labor contracts, when employees receive more under the table. We couldn’t win over that practice… For a first time over the past 3 -4 years we register a negative sign before inter-company indebtedness. Traditionally it used to grow. For instance, if we had 15 percent of companies with delayed payment towards suppliers in 2010, in 2013 those reached ¼. A decline has been registered for the first time this year and the share is now 19 percent."

The association marks as a positive trend the increasing of public intolerance towards grey practices. Some 50 percent of employees tended to tolerate those in 2010, but now these people are only 25 percent. Despite the results achieved, Bulgaria is still among those EU member-states with the greatest share of grey economy.

English version: Zhivko Stanchev