Instability at home, crises abroad push Bulgaria's shadow economy up in 2014: report

Instability at home and crises abroad have led to an increase in the share of the shadow economy in Bulgaria of 0.91 percent in 2014, a report showed on Monday.

The report, prepared by the Association of Industrial Capital in Bulgaria (AICB) and the National Centre "Business to the Rules", said that the shadow economy in the Balkan country was 31.72 percent of the gross domestic product (GDP) in 2014. The share in 2013 was 30.81 percent.

Political and financial instability related to the ruling of three governments along with the bankruptcy of the fourth largest bank in the country were among the key internal factors that contributed to the negative change, the report said.

The debt crisis in Greece, one of the main foreign trade partners and investors in Bulgaria, along with the problems in Ukraine and refugee pressure on the borders of Bulgaria, were among the international reasons, the report added.

The most common and problematic manifestations of the informal economy in the country in 2014 were losses from tobacco smuggling and VAT fraud, hiding revenues in the services sector and false employment contracts, according to the report.

Last September, another report showed that the shadow economy in Bulgaria in 2013 was almost twice as high as the European Union (EU) average.

The report, prepared by Rositsa Dzhekova from University of Sheffield and Vitosha Research, and published by the Center for the Study of Democracy, said that the shadow economy in the Balkan country was 31.2 percent of GDP in 2013 while the EU average was 18.5 percent for the period. Endit