Bulgaria has Europe’s largest grey economy, IMF says

Bulgaria has Europe’s largest grey economy, IMF says
By bne IntelliNews February 8, 2018

The average level of the grey economy in Bulgaria is estimated at 29.2% for the period 1991-2015, according to a report from the International Monetary Fund.

The share of the grey economy in Bulgaria was the highest among 31 European countries surveyed by the IMF in 2017. It stood at 29.6%, ahead of Turkey (27.2%), Croatia (26.5%), Romania (26.3%) and Greece (21.5%).

Over the years, the share of the shadow economy in Bulgaria has ranged between 20.83% and 35.3%.

The report assesses the share of the shadow economy in 158 countries.

Within Europe, Switzerland had the smallest share of grey activities in its economy, followed by Austria, Luxembourg, the Netherlands and the UK. Slovakia had the smallest shadow economy as a share of its total economy among the former communist countries. 

Factors affecting the size of the shadow economy include the tax burden and other regulatory burdens, the quality of institutions combatting corruption, effective deterrence and the unemployment rate, the study said. 

Bulgaria has consistently been reported as having among the largest informal sectors in the EU, according to studies by the IMF and other organisations, a situation that worsened with the onset of the global economic crisis in 2008. 

The latest report comes at a time when the main opposition party in Bulgaria – the Socialist Party (BSP) – is attacking the government for an alleged breach in the revenue agencies' systems that is allowing smuggling of goods and causing serious financial damage to the budget.

The BSP has accused the government of not making any efforts to tackle the shadow economy or to prevent the alleged export and import of goods without payment of customs fees of VAT.