EU Freezes 1.2 Billion Leva Payment to Bulgaria Due to Reform Delays

Bulgaria's request for the second tranche of funding under the Recovery and Resilience Plan (RRP) has been met with resistance from Brussels. The European Commission has withheld the release of the payment, which amounts to 1.2 billion leva (653 million euros), citing the country's failure to meet several key reforms outlined in the plan. Although Bulgaria submitted its request for the second payment on October 7, 2023, the Commission's preliminary assessment revealed that while 53 out of 62 milestones had been completed, eight milestones and one objective remain unsatisfied.

The unsatisfactory implementation of these crucial reforms is primarily focused on areas such as energy, corruption prevention, and public procurement, which are among the key challenges identified by the European Commission in its country-specific recommendations for Bulgaria. The Commission's methodology allows for the suspension of payments if key milestones are not met, which could result in Bulgaria losing the entire tranche if the issues are not addressed.

Bulgaria has been granted a one-month period to respond to the Commission's assessment. By December 29, 2024, the Bulgarian government must present its comments and take corrective action. The European Commission will then issue its final decision within a month of Bulgaria's response. If the reforms are successfully implemented by mid-2025, the funds may be released. However, the lack of progress on key reforms has already created significant budgetary issues, as the 1.2 billion leva was earmarked in the 2024 budget. As of October, Bulgaria's budget deficit had reached 4 billion leva, equivalent to 2% of GDP.

The Bulgarian government and the European Commission hold differing views on the extent of the...