Multi-Level Governance and Decentralization in Bulgaria

04.10.2019

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In the end of 2018 the Ministry of Regional Development and Public Works and the Organisation for Economic Cooperation and Development (OECD) signed an agreement for implementing a project reviewing the multilevel governance in Bulgaria and how decentralization can be a successful story for the regional development in Bulgaria. On the basis of an analysis concerning the regional governance in Bulgaria and European practices OECD should recommend models for its development. From the point of view of local government in Bulgaria the connection between regional development and decentralisation is particularly important.

As part of the project several meetings between OECD team and different stakeholders were held in Bulgaria, including with NAMRB Executive Director on 25 September. In addition a special workshop dealing with the topic "Regional Development and Decentralization" was organised in Sofia on 26-27 September. Deputy Prime Minister Tomislav Donchev, Minister of Regional Development Petya Avramova, district governors, and representatives of other state institutions, responsible for the regional development were present at the event. During the workshop NAMRB representatives had the opportunity to express their positive assessment on OECD's comprehensive research regarding the three main aspects of decentralization – administrative, financial and political decentralization. The significant growth of state transfers to municipalities in recent years was reported as one of the positive results, with almost 45% increase in the total amount of transfers. However, largely thanks to increased transfers for sector Education. The increase in transfers for the other state delegated activities is 31% and 21% for local activities.

Nevertheless, municipalities face other important challenges linked to the dynamics of the municipal budgets structure. While in 2016 the state transfers represented 61% of the total municipal revenues, in 2017 the share was 63% and in 2018 – 65%. In 2016 the municipalities collected 3.3% of all taxes and in 2018 about 3.1%. According to this indicator Bulgaria occupies one of the bottom places among European countries. Municipalities capability to implement local policies with own resources is shrinking. At the same time the increase of state transfers for pre-defined activities is limiting municipal own initiative.

In an effort to overcome this negative trend, NAMRB has for years been vocal on the necessity for extending the own revenue base of municipalities for example by collecting a part of the personal income tax. NAMRB will strive to make full use of the cooperation with OECD, the analyses and comparisons with international practices and subsequent recommendations to achieve a real restart of the process of decentralization in Bulgaria.